Tag: Ethics

An auditor’s report prepared in accordance with ISA 700 (UK), Forming an Opinion and Reporting on Financial Statements, expresses an opinion on a number of matters.

Some of these matters are required by the Companies Act 2006 to be reported on by exception only.

Which ONE of the following are reported on by exception only?

Select ONE answer:

1. The financial statements have been prepared in accordance with the requirements of the Companies Act 2006
2. Information in the strategic report and the directors’ report is consistent with the financial statements
3. Adequate accounting records have NOT been kept
4. Directors’ remuneration has been disclosed correctly

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 => As per Companies Act 2006, ‘Directors’ remuneration has been disclosed correctly’ is reported on by exception.

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

An auditor’s report prepared in accordance with ISA 700 (UK), Forming an Opinion and Reporting on Financial Statements, expresses an opinion on a number of matters.

Some of these matters are required by the Companies Act 2006 to be reported on by exception only.

Which ONE of the following are reported on by exception only?

Select ONE answer:

1. The financial statements have been prepared in accordance with the requirements of the Companies Act 2006
2. Information in the strategic report and the directors’ report is consistent with the financial statements
3. Adequate accounting records have been kept
4. Directors’ remuneration has NOT been disclosed correctly

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 => As per Companies Act 2006, ‘That adequate accounting records have been kept’ is reported on by exception.
4. Not correct

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

The two types of procedures used in gathering evidence are A – tests of controls and B – substantive procedures.

For each of the three examples below, select the type of procedure being illustrated: A – tests of controls or B – substantive procedures.

Example 1 – Observation of opening the post
Example 2 – Calculation of the gross profit margin and comparison with that of the previous accounting period
Example 3 – Reviewing invoices paid for evidence of authorisation

Select ONE answer:

1. Example 1. B and Example 2. B and Example 3. A
2. Example 1. A and Example 2. B and Example 3. A
3. Example 1. A and Example 2. A and Example 3. B
4. Example 1. B and Example 2. A and Example 3. B

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 => Observing the opening of the post is a test of control as it is the observation of a control taking place. Calculation of the gross profit margin and comparison with that of the previous accounting period is an analytical procedure (which is, in turn, a substantive procedure). Reviewing for authorisation is also testing that a control has been applied.
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 with respect to the concept of substantive procedures.

Statement 1 – The auditor must carry out substantive procedures on all material items.

Statement 2 – The auditor only carries out substantive procedures if the results of tests of controls are inconclusive.

Statement 3 – Substantive procedures include both analytical procedures and tests of details.

Identify whether the statements made above are true or false?

Select ONE answer:

1. Statement 1. True and Statement 2. False and Statement 3. True
2. Statement 1. False and Statement 2. False and Statement 3. True
3. Statement 1. True and Statement 2. True and Statement 3. False
4. Statement 1. False and Statement 2. True and Statement 3. 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 1 is True as material items must be tested with substantive procedures. However, the extent of these procedures will depend on whether reliance can be placed on the related internal controls.
2. Not correct
3. Not correct
4. Not correct

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

Which ONE of the following is not an assertion used by the auditor about account balances at the period end?

Select ONE answer:

1. Existence
2. Accuracy, valuation and allocation
3. Completeness
4. Cut-Off

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 – is incorrect because cut-off relates to classes of transactions (ISA (UK) 315)

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