Tag: Ethics

Which ONE of the following would NOT normally be included in the overall audit strategy?

Select ONE answer:

1. Details of economic factors and industry conditions
2. The results of initial analytical procedures
3. Confirmation of management’s responsibility for the financial statements
4. Identification of specific audit risks

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 == >    Confirmation of management’s responsibility for the financial statements is contained in the letter of engagement.
4. Not correct

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

Which ONE of the following are auditors not helped by in setting a preliminary materiality threshold?

Select ONE answer:

1. How many items to examine
2. Whether to use sampling
3. What level of misstatement is likely to lead to the auditor not being able to give an unmodified opinion
4. What audit staff should be assigned to the audit

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 == > What audit staff to assign to the audit would depend more on the risks associated with the engagement than the level of materiality.

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

Which ONE of the following does NOT constitute analytical procedures?

Select ONE answer:

1. Consideration of comparable information for prior periods
2. Consideration of relationships between elements of financial information that are expected to conform to a predicted pattern
3. Consideration of whether a balance has been calculated correctly
4. Consideration of similar industry information

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 == >    The answer is 3 as consideration of whether a balance has been correctly calculated will require a procedure of recalculation as opposed to an analytical procedure.
4. Not correct

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

With respect to ISA 315 (UK), Identifying and Assessing the Risks of Material Misstatement Through Understanding of the Entity and Its Environment, which ONE of the following procedures will NOT be used in understanding the entity and its environment?

Select ONE answer:

1. Inquiries of management and others within the entity
2. Inquiries of third parties
3. Analytical procedures
4. Observation and inspection

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 == > The standard states that inquiries of third parties may be carried out if useful, but lists options 1, 3 and 4 as procedures that SHALL be carried out.
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 objective of audit planning?

Select ONE answer:

1. To determine the scope of the engagement
2. To ensure appropriate attention is devoted to the important areas of the audit
3. To identify potential problems and resolve them on a timely basis
4. To assign work to members of the audit team

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 == > The answer is not option 1 as to determine the scope of the engagement should have been done in the engagement letter.
2. Not correct
3. Not correct
4. Not correct

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