Audit and Assurance Exam Review
Course Introduction
Audit and Assurance is a course designed to provide students with a comprehensive understanding of the principles and practices involved in auditing financial statements and ensuring the credibility of financial information. The course covers the regulatory environment of auditing, ethical standards, risk assessment, audit planning, internal control evaluation, gathering audit evidence, and forming audit opinions. Students also explore the roles and responsibilities of auditors, the importance of professional skepticism, and the impact of audit quality on stakeholders. Through this course, learners develop critical analytical skills necessary for conducting assurance engagements in both public and private sector organizations.
Recommended Textbook
Auditing and Assurance Services 5th edtion by Grant Gay
Available Study Resources on Quizplus
16 Chapters
732 Verified Questions
732 Flashcards
Source URL: https://quizplus.com/study-set/2508
2
Chapter 1: Assurance and Auditing: An Overview
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/49894
Sample Questions
Q1) An auditor of a company finds that there are rare and exceptional circumstances where they are unable to comply with a relevant requirement in an auditing standard. They are however able to perform appropriate alternative audit Procedures. To whom do they have to report or document these circumstances?
A) The auditor must report these circumstances to either management or the audit committee and obtain their agreement that the alternative procedures are appropriate.
B) If the auditor can use appropriate alternative audit procedures, no reporting or documentation required.
C) The auditor is required to document the circumstances in the auditor's report.
D) The auditor is required to document the circumstances in the audit working papers.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
3
Chapter 2: The Structure of the Profession
Available Study Resources on Quizplus for this Chatper
17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/49893
Sample Questions
Q1) In pursuing its quality control objectives with respect to acceptance of a client, an audit firm is not likely to:
A) make inquiries of the proposed client's legal adviser.
B) review financial reports of the proposed client.
C) make inquiries of previous auditors.
D) review the personnel practices of the proposed client.
Answer: D
Q2) The Australian auditing standards issued by the Australian Auditing and Assurance Standards Board (AUASB) are intended to be applied to:
A) all audit, review, assurance and related engagements conducted by external firms.
B) all audits of entities listed on the Australian Securities Exchange.
C) all audits of companies incorporated under the Corporations Act 2001.
D) all audit, review, assurance and related engagements where the entity has more than five shareholders.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Ethics, Independence and Corporate Governance
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/49892
Sample Questions
Q1) In which of the following instances would the independence of the auditor most likely not be considered to be impaired?
A) He or she has been retained as the auditor of a charitable organisation in which the spouse of the auditor serves as treasurer.
B) He or she has been retained as the auditor of a company in which the auditor's investment club owns a 10 per cent interest.
C) He or she has been retained as the auditor of a large manufacturing company to which the auditor has a $6000 loan.
D) He or she has been retained as the auditor of a company from which the auditor purchased their latest motor vehicle at normal list price.
Answer: D
Q2) Independence implies that the auditor:
A) be impartial with respect to the client.
B) must adopt the attitude of a detective during the audit.
C) has an obligation solely to third parties.
D) cannot provide any other professional services to an audit client.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: The Legal Liability of Auditors Part Two: Planning and
Risk
Available Study Resources on Quizplus for this Chatper
24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/49891
Sample Questions
Q1) If an audit firm is being sued by a third party for common-law fraud based upon a materially false financial report, which of the following is the best defence which the auditors could assert?
A) Lack of a contractual relationship.
B) Contributory negligence on the part of the client.
C) Disclaimer contained in the engagement letter.
D) Lack of causation.
Q2) An auditor discovers a likely fraud during an audit, but concludes that its effects, if any, could not be material enough to affect the auditor's opinion. The auditor should:
A) perform additional audit procedures to determine whether fraud has occurred and, if so, the amount thereof.
B) report the finding to the appropriate level of the client with the recommendation that it be pursued to a conclusion.
C) notify the proper authorities.
D) note in the working papers that the amount is immaterial and that no further action is required.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Overview of Elements of the Financial Report
Audit Process
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/49890
Sample Questions
Q1) In planning an audit engagement, which of the following is a factor that affects the independent auditor's judgment as to the quantity, type and content of working papers?
A) The estimated occurrence rate of attributes.
B) The preliminary evaluations based upon initial substantive testing.
C) The content of the client's representation letter.
D) The anticipated nature of the auditor's report.
Q2) Auditors can eliminate engagement risk:
A) under no circumstances.
B) by establishing policies for client acceptance and continuance.
C) by lowering audit risk.
D) by lowering materiality.
Q3) The situation and circumstances can dictate the level of certain risks no matter what the auditor does. However, the auditor is always able to decide to reduce one of the following risks:
A) control risk.
B) risk of management fraud.
C) detection risk.
D) inherent risk.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Planning, Understanding the Entity and Evaluating Business Risk
Available Study Resources on Quizplus for this Chatper
44 Verified Questions
44 Flashcards
Source URL: https://quizplus.com/quiz/49889
Sample Questions
Q1) Before accepting an engagement to audit a new client, an auditor is required to:
A) make inquiries of the predecessor auditor after obtaining the consent of the prospective client.
B) obtain the prospective client's signature on the engagement letter.
C) prepare a memorandum setting forth the staffing requirements and documenting the preliminary audit plan.
D) discuss the management representation letter with the prospective client's audit committee.
Q2) Analytical procedures that are required in all audits of financial reports are analytical procedures:
A) relevant to achieving important audit objectives related to particular assertions.
B) expected to be efficient and effective in the circumstances.
C) based on available and reliable financial data.
D) used in the planning and overall review stages.
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Assessing Specific Business Risk
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/49888
Sample Questions
Q1) The auditor is most likely to presume that a high risk of a fraud exists if:
A) the client is a multinational company that does business in numerous foreign countries.
B) the client does business with several related parties.
C) inadequate segregation of duties places an employee in a position to perpetrate and conceal thefts.
D) inadequate employee training results in lengthy IT exception reports each month.
Q2) When the auditor concludes, based on information obtained and, if necessary, consultation with legal advisers, that an illegal act has or is likely to have occurred, the auditor should:
A) express a qualified or adverse opinion, depending on materiality.
B) notify appropriate law enforcement agencies.
C) withdraw from the engagement.
D) consider the effect on the financial report as well as the implications for other aspects of the audit.
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Understanding and Assessing Internal Control
Part Three: Tests of Control and Tests of Details
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/49887
Sample Questions
Q1) The internal control environment includes all of the following except:
A) organisational structure.
B) management philosophy and operating style.
C) human resource policies and procedures.
D) tests of control.
Q2) An input control is designed to ensure that:
A) machine processing is accurate.
B) only authorised personnel have access to the computer area.
C) data received for processing are properly authorised and converted to machine-readable form.
D) electronic data processing has been performed as intended for the particular application.
Q3) Which of the following would be least likely to suggest to an auditor that the client's management may have overridden the internal control?
A) Differences are always disclosed on a computer exception report.
B) Management does not correct internal control deficiencies that it knows about.
C) There have been two new controllers this year.
D) There are numerous delays in preparing timely internal financial reports.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Tests of Controls
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/49886
Sample Questions
Q1) All of the following are important controls over credit memos except:
A) proper segregation of duties to ensure that sales discounts taken were earned.
B) credit memos should be approved by someone other than whoever initiated it.
C) credit memos should be supported by a receiving document for returned goods.
D) proper segregation of duties between access to customer records and authorising credit memos.
Q2) When undertaking tests of controls which are related to controls built around a major transaction flow, which assertion would be of least interest to the auditor?
A) Accuracy.
B) Completeness.
C) Occurrence.
D) Rights and obligations.
Q3) Evidence about which aspect(s) of internal control is usually gained when the auditor is assessing control risk?
A) Existence.
B) Effectiveness.
C) Continuity.
D) All of the given answers.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Substantive Tests of Transactions and Balances
Available Study Resources on Quizplus for this Chatper
84 Verified Questions
84 Flashcards
Source URL: https://quizplus.com/quiz/49885
Sample Questions
Q1) One of the primary reasons for preparing a reconciliation between interest-bearing obligations outstanding during the year and interest expense presented in the financial report is to:
A) ascertain the reasonableness of accrued interest.
B) detect unrecorded liabilities.
C) determine the validity of prepaid interest expense.
D) assess control risk for securities.
Q2) The auditor is least likely to learn of retirements of equipment through which of the following?
A) Review of depreciation calculations.
B) Review of the purchase returns and allowance account.
C) Review of insurance policy correspondence.
D) Analysis of the debits to the accumulated depreciation account.
Q3) The auditor tests the quantity of materials charged to work-in-process by tracing these quantities to:
A) perpetual inventory records.
B) cost ledgers.
C) material requisition forms.
D) receiving reports.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Audit Sampling Part Four: Completion and Communication
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/49884
Sample Questions
Q1) If auditors conducting attribute sampling found that the client deviated from a prescribed control in six of the first 10 items examined, the auditor is most likely to:
A) increase the computed upper deviation rate.
B) increase sample size.
C) stop the test and increase control risk.
D) decrease the tolerable deviation rate.
Q2) Stratified sampling is a statistical technique that may be more efficient than unstratified sampling because it usually:
A) yields a weighted sum of the strata standard deviations that is greater than the standard deviation of the population.
B) increases the variability among items in a stratum by grouping sampling units with similar characteristics.
C) produces an estimate having a desired level of precision with a smaller sample size. D) is applied to populations where many monetary errors are expected to occur.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Completion and Review
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/49883
Sample Questions
Q1) After an auditor has issued an auditor's report on the financial report of a non-public entity, there is no obligation to make any further audit tests or inquiries with respect to the audited financial report covered by that report unless:
A) new information comes to the auditor's attention concerning an event that occurred prior to the date of the auditor's report that may have affected the auditor's report.
B) material adverse events occur after the date of the auditor's report.
C) final determination or resolution was made on matters that had resulted in a modification of the auditor's report.
D) final determination or resolution was made of a contingency that had been disclosed in the financial report.
Q2) When obtaining evidence regarding litigation against a client, the auditor would be least interested in determining:
A) an estimate of when the matter will be resolved.
B) the period in which the underlying cause of the litigation occurred.
C) the probability of an unfavourable outcome.
D) an estimate of the potential loss.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: The Auditors Reporting Obligations Part Five:
Other Assurance Services
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/49882
Sample Questions
Q1) Huggins Ltd is required to but does not wish to prepare and issue a statement of cash flows as part of its financial report. In these circumstances, the auditor's report should include:
A) an adverse opinion stating that the financial report, taken as whole, is not fairly presented because of the omission of the required statement.
B) an unmodified opinion with a statement of cash flows prepared by the auditor included as part of the auditor's report.
C) an unmodified opinion with an Emphasis of Matter section explaining that the company declined to present the required statement.
D) a disclaimer of opinion with a separate explanatory paragraph stating why the company declined to present the required statement.
Q2) When a client will not make essential corporate mins available to the auditor, the auditor's report will probably contain a(n):
A) disclaimer of opinion.
B) unmodified opinion.
C) unmodified opinion with an Emphasis of Matter.
D) qualified opinion.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Internal Auditing
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/49881
Sample Questions
Q1) According to the Institute if Internal Auditors, the best description of internal auditing is that it:
A) certifies the reliability and integrity of financial and operating information.
B) furnishes management with information needed to effectively discharge its responsibilities.
C) appraises the economy and efficiency with which resources are used.
D) reviews the means of safeguarding assets and verifies the existence of those assets.
Q2) Factors currently driving change in internal audit include all of the following, except for:
A) the ability of internal audit to demonstrate its value-adding nature to an organisation.
B) the provision of a broader range of assurance services by the external auditor.
C) increased emphasis on corporate governance and business risk management.
D) the increased ability to benchmark against internal audit best practice.
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Auditing and Assurance Services in the Public Sector
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/49880
Sample Questions
Q1) In a compliance audit, which of the following matters is the auditor primarily concerned about?
A) Whether the financial report is fairly presented in accordance with the identified financial reporting framework.
B) Whether the entity has achieved its stated objectives.
C) Whether the entity has followed the relevant requirements applicable to it.
D) Whether the entity has operated in the most economic and efficient manner.
Q2) A typical objective of a performance audit is for the auditor to:
A) determine whether the financial report presents the entity's operations fairly.
B) evaluate the feasibility of attaining the entity's operational objectives.
C) make recommendations for improving performance.
D) report on the entity's relative success in attaining profit maximisation.
Q3) Which of the following statements best describes the term 'efficiency'?
A) A reduction in costs through better contracting.
B) Clarifying objectives and policies.
C) Greater outputs from the inputs.
D) Rationalisation of facilities.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Other Assurance Services and Advanced Topics
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/49879
Sample Questions
Q1) The objective of assurance services is best described as:
A) improving the firm's outcomes.
B) comparing internal information and policies with those of other firms.
C) enhancing decision making.
D) providing reliable information.
Q2) The report in a limited assurance engagement provides:
A) positive assurance.
B) negative assurance.
C) a summary of findings.
D) assurance in the form of an audit opinion.
Q3) Which of the following would be suitable criteria for undertaking an assurance engagement on an environmental and sustainability report?
A) Australian Auditing Standards/International Auditing Standards.
B) The revised COSO framework.
C) ASAE 3000/ISAE 3000.
D) Global reporting initiative framework.
To view all questions and flashcards with answers, click on the resource link above. Page 18