Question 1

The assurance engagement that the normal auditing standards (ASAs 100-799) apply to is:
A) a part only of a financial report, rather than the full report
B) a summarised financial report
C) a review engagement
D) they apply to all of the above

Accepted Answer

C

Question 2

The ISO 9000 series is concerned with:
A) quality management.
B) audit requirements of specific businesses.
C) environmental management.
D) marketing management.

Accepted Answer

The ISO 9000 series is a set of international standards that focus on quality management systems and principles. These standards are designed to help organizations ensure they meet customer and other stakeholder needs within statutory and regulatory requirements related to a product or service.

Question 3

The ISO 14000 series is concerned with:
A) quality management.
B) audit requirements of specific businesses.
C) environmental management.
D) marketing management.

Accepted Answer

The ISO 14000 series is focused on environmental management, providing guidelines for organizations to minimize harmful effects on the environment caused by their activities, and to achieve continual improvement of their environmental performance.

Question 4

Which of these possible engagements by a firm with their accountants is an assurance engagement?
A) preparing financial reports
B) a management consulting service
C) an assessment of the internal control system
D) all are assurance engagements

Accepted Answer

An assessment of the internal control system is an assurance engagement because it involves evaluating the effectiveness of an organization's internal controls, often to express an opinion on their adequacy. This is in contrast to preparing financial reports or providing management consulting services, which do not typically involve issuing an opinion on the reliability of financial statements or systems.

Question 5

A special purpose audit report is one that relates to:
A) non-financial information.
B) entities that are listed on the stock exchange or have borrowed from the public.
C) entities that are not reporting entities.
D) reports that must comply with approved accounting standards.

Accepted Answer

A special purpose audit report is typically prepared for entities that are not reporting entities, meaning they do not have a wide range of users relying on their financial statements, and thus, the report is tailored to meet the specific needs of the users.

Question 6

A forensic audit in an organisation with an electronic environment may feature:
A) investigating employee emails and addresses, log-on times and messages.
B) searching for duplicate numbers of payments or receipts.
C) scanning lists of suppliers.
D) all of the above.

Accepted Answer

All of the options (A, B, C) are activities that could be part of a forensic audit in an organization with an electronic environment. Investigating employee communications and activities, searching for anomalies in financial transactions, and reviewing supplier lists for irregularities are all common forensic audit tasks.

Question 7

According to a KPMG 2010 survey:
A) The number of instances of detected fraud has decreased but the dollar value of the typical fraud has increased
B) The number of instances of detected fraud has increased and the dollar value of the typical fraud has also increased
C) The number of instances of detected fraud has increased but the dollar value of the typical fraud has decreased
D) The number of instances of detected fraud has increased but no research findings are available about the dollar value of a typical fraud.

Accepted Answer

The question states that "the dollar value of the typical fraud has increased". Choice A is the only one that includes this information.

Question 8

During a review of a financial report, the auditor would be least likely to:
A) read the financial report and consider its conformance with generally accepted accounting principles.
B) obtain reports from other accountants who reviewed a portion of the total entity.
C) obtain written confirmation from management regarding loans to officers.
D) perform analytical procedures designed to identify relationships that appear to be unusual.

Accepted Answer

Auditors typically obtain written confirmations from management regarding loans to officers during an audit, not during a review, which is less comprehensive.

Question 9

The three-pronged approach developed by ISO 14000 to meet the needs of its stakeholders include:
A) standardised testing methods, environmental management system standards and a systematic approach to managing business processes.
B) standardised testing methods, technical reports and a systematic approach to managing business processes.
C) standardised testing methods, environmental management system standards and technical reports.
D) none of the above

Accepted Answer

The ISO 14000 series focuses on environmental management and includes standardized testing methods, environmental management system standards, and technical reports to help organizations minimize their environmental impact, comply with applicable laws, and continually improve in these areas.

Question 10

Which of these best describes an audit report on a compliance with contractual agreements?
A) a special purpose report.
B) an unaudited report.
C) a supplementary report.
D) a report on limited review of financial information.

Accepted Answer

An audit report on compliance with contractual agreements is considered a special purpose report because it is tailored to assess and report on the specific compliance aspects as per the terms of the contract, rather than the broader financial statements or operations of an entity.

Question 11

When an auditor performs a review of an interim financial report which of the following steps would not be part of the review?
A) testing of the computer controls.
B) inquiry of management.
C) review of ratios and trends.
D) reading the minutes of the shareholders' meetings.

Accepted Answer

Testing of the computer controls is more associated with an audit rather than a review of an interim financial report. A review primarily involves analytical procedures and inquiries of management.

Question 12

An assurance engagements as compared to a non-assurance engagement, requires
A) a positive not a negative opinion
B) the assurance practitioner to reduce the assurance risk to a level that is appropriate to the engagement
C) an opinion to be provided
D) all of the above are required

Accepted Answer

The answer of An assurance engagements as compared to a...

Question 13

The eight quality management principles outlined by ISO 9000 do not include:
A) factual approach to decision making.
B) leadership.
C) demonstrate conformance.
D) involvement of people.

Accepted Answer

The eight quality management principles outlined by ISO 9000 focus on aspects that contribute to the overall management and quality improvement of an organization. These include customer focus, leadership, involvement of people, process approach, system approach to management, continual improvement, factual approach to decision making, and mutually beneficial supplier relationships. "Demonstrate conformance" is not listed as one of these principles; instead, it is an outcome or requirement that organizations might aim to achieve through the application of these principles.

Question 14

In a continuous audit client information is released in a very short timeframe, and auditors' reports on that information follow the release almost immediately. One of the issues for auditors is:
A) there is enough time for the auditor to gather evidence.
B) the auditor cannot rely on normal audit procedures.
C) the auditor cannot use fully automated audit software.
D) the auditor cannot check the internal control system.

Accepted Answer

In a continuous audit environment, the rapid release of information means auditors may not be able to rely on traditional, time-consuming audit procedures. They must adapt to more immediate and continuous auditing techniques to evaluate the information as it is released.

Question 15

KPMG's fraud survey identified a number of factors which have given rise to the increase in electronic fraud. Which is one of these?
A) restricted access.
B) the ease with which funds can be moved around the world.
C) the replacement of traditional internal controls with efficient electronic systems controls.
D) the denial of a certain level of fraud in business.

Accepted Answer

The ease with which funds can be moved around the world has been identified as a factor contributing to the increase in electronic fraud, as it facilitates the rapid transfer of illicit funds across borders.

Question 16

A negative opinion in a limited assurance engagement:
A) is not as strong an opinion as a positive opinion
B) normally is not based on detailed substantive or control testing
C) expresses the opinion that nothing has come to the attention of the practitioner to suggest that the outcome is not in compliance with the criteria
D) all of the above are true concerning negative opinions

Accepted Answer

In a limited assurance engagement, a negative opinion (also known as a review engagement) is indeed not as strong as a positive opinion (which is typically given in an audit), is generally not based on detailed testing of controls or substantive procedures, and expresses that nothing has come to the practitioner's attention that the financial statements are not in accordance with the applicable financial reporting framework. This makes all the provided statements true concerning negative opinions.

Question 17

Under the Framework for Assurance Engagements which of these is one of the types of assurance engagements?
A) absolute assurance.
B) reasonable assurance.
C) partial assurance.
D) all are types of assurance engagements

Accepted Answer

Reasonable assurance is a type of assurance engagement recognized under the Framework for Assurance Engagements, offering a high but not absolute level of assurance.

Question 18

It is incorrect that the Framework for Assurance Engagements:
A) is based on the International Framework issued by the IFAC
B) defines and describes the elements of an assurance engagement
C) shows the concepts of an assurance engagement
D) establishes standards

Accepted Answer

The Framework for Assurance Engagements, issued by the International Federation of Accountants (IFAC), provides a foundation for performing and promoting high-quality assurance engagements. It defines and describes the elements and objectives of an assurance engagement and explains important concepts related to such engagements. However, it does not establish standards; instead, it serves as a basis upon which assurance standards are developed.

Question 19

Which of these is not an assurance engagement?
A) a performance audit.
B) a consulting engagement to help an organisation meet its tax obligations.
C) a review of historical financial information.
D) all are assurance engagements

Accepted Answer

A consulting engagement to help an organisation meet its tax obligations is not considered an assurance engagement because it primarily involves providing advice and assistance rather than evaluating the reliability of information for its users.

Question 20

When an auditor reports on a financial report summarising its annual audited financial report, the auditor's report should:
A) not express an opinion on whether the report is presented in conformity with the comprehensive basis of accounting used.
B) disclose that the report is not intended to conform with generally accepted accounting principles.
C) disclaim an opinion on whether the report was examined in accordance with generally accepted auditing standards.
D) include an explanation of how the results of operations differ from the cash receipts and disbursements basis of accounting.

Accepted Answer

The auditor's report should disclose that the summary financial report is not intended to conform with generally accepted accounting principles (GAAP). This is because the summary financial report is a condensed version of the full financial report and may not include all the detailed information required by GAAP.

Quiz 4: Other Assurance Engagements and Quality Standards

The assurance engagement that the normal auditing standards (ASAs 100-799) apply to is:

The ISO 9000 series is concerned with:

The ISO 14000 series is concerned with:

Which of these possible engagements by a firm with their accountants is an assurance engagement?

A special purpose audit report is one that relates to:

A forensic audit in an organisation with an electronic environment may feature:

According to a KPMG 2010 survey:

During a review of a financial report, the auditor would be least likely to:

The three-pronged approach developed by ISO 14000 to meet the needs of its stakeholders include:

Which of these best describes an audit report on a compliance with contractual agreements?

When an auditor performs a review of an interim financial report which of the following steps would not be part of the review?

An assurance engagements as compared to a non-assurance engagement, requires

The eight quality management principles outlined by ISO 9000 do not include:

In a continuous audit client information is released in a very short timeframe, and auditors' reports on that information follow the release almost immediately. One of the issues for auditors is:

KPMG's fraud survey identified a number of factors which have given rise to the increase in electronic fraud. Which is one of these?

A negative opinion in a limited assurance engagement:

Under the Framework for Assurance Engagements which of these is one of the types of assurance engagements?

It is incorrect that the Framework for Assurance Engagements:

Which of these is not an assurance engagement?

When an auditor reports on a financial report summarising its annual audited financial report, the auditor's report should: