Tag: Topic 2

In the context of a statutory audit, which ONE of the following is NOT an example of the expectation gap?

The belief that?

Select ONE answer:

1. the auditor’s report certifies the financial statements as correct
2. the auditor’s principal duty is to detect fraud
3. the auditor is employed by the directors
4. the auditor checks all transactions

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 expectation gap is the gap between what users of financial statements believe the auditor does and what the auditor actually does. The following three are common manifestations of the expectation gap: • the auditor’s report certifies the financial statements as correct • the auditor’s principal duty is to detect fraud • the auditor checks all transactions. The belief that the auditor is employed by the directors is a common misconception but not a manifestation of the expectation gap. (The company employs the auditor, who is appointed by the shareholders in a general meeting.)
4. Not correct

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In any assurance engagement, there are a number of parties involved.

Select which party receives the final report?

Select ONE answer:

1. Responsible party
2. Practitioner
3. User
4. The public

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 == >    It is the responsible party that prepares the subject matter. The practitioner is responsible for gathering evidence. The user is the party who receives the final report.
4. Not correct

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

In any assurance engagement, there are a number of parties involved.

Select which party gathers evidence on the subject matter?

Select ONE answer:

1. Responsible party
2. Practitioner
3. User
4. The public

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 == > It is the responsible party that prepares the subject matter. The practitioner is responsible for gathering evidence. The user is the party who receives the final report.
3. Not correct
4. Not correct

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

In any assurance engagement, there are a number of parties involved.

Select which party prepares the subject matter?

Select ONE answer:

1. Responsible party
2. Practitioner
3. User
4. The public

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 == > It is the responsible party that prepares the subject matter. The practitioner is responsible for gathering evidence. The user is the party who receives the final report.
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 a benefit of an assurance report on financial information?

Select ONE answer:

1. enhances the credibility of the information being reported on
2. reduces the risk of management bias in the information being reported on
3. attests to the correctness of the information being reported on
4. draws the attention of the user to deficiencies in the information being reported on

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 == >    An assurance report does not ‘attests to the correctness of the information being reported upon’. Even a reasonable assurance engagement (which gives more assurance than a limited assurance engagement) does not provide a guarantee that the information being reported on is correct. Assurance can never be absolute as this statement implies.
4. Not correct

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