Deck 22: Issues in Auditing

Question 1

Which of the following is generally considered to be a defining characteristic of a profession?

A) Belonging to an organization comprised of members with similar skills.
B) Working in a field that requires at least 3 years of post-secondary school education.
C) An expectation that the role requires adherence to a higher set of values than simply providing a service to clients.
D) Self-regulation of expected industry standards.

Answer 1

An expectation that the role requires adherence to a higher set of values than simply providing a service to clients.

Question 2

According to ICAS, which of the following areas of focus will play a major part in rebuilding public confidence and promote professionalism in the auditing profession? ?

A) Decreasing audit fees
B) Acting in the public interest
C) Introducing a code of ethics for auditors
D) Globalization

Answer 2

Acting in the public interest

Question 3

Which of the following have been a criticism of the FRC with regard to oversight of auditors? ?

A) The length of time it takes to investigate matters
B) The limited sanctions it can impose on accounting firms
C) A lack of independence from the auditing profession
D) All of the above

Answer 3

All of the above

Question 4

In addition to various technical standards IFAC also produces the International Accounting Education Standards. To what extent are these contributing to the convergence of global professional audit and accounting practice? ?

A) Only to a limited extent as there is significant diversity in the extent to which these standards are utilized.
B) Not at all, they have not been adopted in practice.
C) Extensively, all IFAC member bodies are required to follow these standards.
D) Extensively, most governments that have adopted IFRS Standards have also adopted the education standards.

Question 5

What does academic research indicate about the usefulness of the extended audit report? ?

A) It has encouraged users to read more of the audit report.
B) It has had a material impact on the quality of audits in jurisdictions where the extended audit report has been mandated.
C) It has not significantly closed the "audit gap".
D) All of the above.

Question 6

Which of the following statements most accurately describes what has happened with regard to audit and non-audit fees earned by firms from the FTSE 100 between 2002 and 2017? ?

A) Audit fees have remained relatively flat while other fees have increased significantly.
B) Audit fees have increased while other fees have decreased.
C) The mix of audit fees to other fees has remained at a fairly constant ratio of 1:2.
D) Audit fees have grown but have remained lower than other fees.

Question 7

What reason did Grant Thornton give for choosing to stop auditing FTSE 350 companies in 2018? ?

A) Concerns about the increasing size of damage awards for negligence
B) The cost of submitting ultimately unsuccessful tender bids for audit work
C) Increasing complexity of accounting standards
D) Increasing cost of undertaking a large company audit

Question 8

Which of the following has NOT been identified as a consequence associated with the growing use of audit data analytics? ?

A) The supremacy of the "big four" audit firms will be threatened as smaller firms are able to use data analytics to support them taking on larger audits.
B) Auditing standards have not been keeping up with changes in practice.
C) Auditors will be responsible for storing data that could breach data privacy rules.
D) Audit graduates will need to become more analytical and imaginative.