Tag: Ethics

For each of the following statements, select whether they are true or false in respect of business risk:

A – Management is responsible for identifying and controlling business risks.
B – Business risk is of no relevance to the auditor. The auditor is only concerned with audit risk.

Select ONE answer:

1. Statement A – False, and Statement B – False
2. Statement A – True, and Statement B – False
3. Statement A – True, and Statement B – True
4. Statement A – False, and Statement B – True

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct => Statement A is true – Management are responsible for identifying and controlling business risks although the auditor will assess business risk as part of the audit. Statement B is false – Business risk is of relevance to the auditor as business risks may impact on the financial statements.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For each of the following statements, select whether they are true or false in respect of business risk:

A – Business risk is the risk inherent to the company in its operations.
B – Business risk is of no relevance to the auditor. The auditor is only concerned with audit risk.

Select ONE answer:

1. Statement A – True, and Statement B – False
2. Statement A – False, and Statement B – False
3. Statement A – True, and Statement B – True
4. Statement A – False and Statement B – True

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct => Statement B is false – Business risk is of relevance to the auditor as business risks may impact on the financial statements.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For each of the following statements, select whether they are true or false in respect of the limitations of a system of internal control:

A – Internal controls are only applied to material items.
B – Standard controls may not be designed to deal with unusual transactions.

Select ONE answer:

1. Statement A – False, and Statement B – False
2. Statement A – True, and Statement B – False
3. Statement A – True, and Statement B – True
4. Statement A – False, and Statement B – True

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct => Statement A is false – internal controls should be applied equally to all transactions, whether material or not.

This work is licensed under a Creative Commons Attribution 4.0 International License.

For each of the following statements, select whether they are true or false in respect of the limitations of a system of internal control:

A – The cost of implementing controls may be more expensive than the cost of any potential risk arising.
B – The effectiveness of many controls relies on the integrity of those applying them.

Select ONE answer:

1. Statement A – False, and Statement B – False
2. Statement A – True, and Statement B – False
3. Statement A – True, and Statement B – True
4. Statement A – False, and Statement B – True

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct => Both statements are true
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

ISA (UK) 315 states that an internal control system in an organisation consists of five components:

• the control environment
• the entity’s risk assessment process
• the information system
• the control activities
• the monitoring of controls

For each of the following examples, select the component which it illustrates:

• Review of actual performance against the budget

Select ONE answer:

1. the control environment
2. the control activities
3. the entity’s risk assessment process
4. the monitoring of controls

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct => Review of actual performance versus budget is a control activity.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.