Question 1

The types of actions by members of accounting bodies that may result in disciplinary action being taken by the member's accounting body include:

Accepted Answer

All of the given answers are correct. Any of the actions mentioned can result in disciplinary action being taken by the member's accounting body. Frauds, practising while bankrupt or insolvent, and practising despite being declared of unsound mind are all serious ethical violations that can result in the loss of the member's licence and criminal charges being filed against them.

Question 2

Which accounting body in Australia was established under Royal Charter?

Accepted Answer

Chartered Accountants Australia and New Zealand was established under Royal Charter in 1928, making it the oldest accounting body in Australia. The other options were not established under Royal Charter.

Question 3

Which of the following bodies monitors the operation of the Auditing and Assurance Standards Board?

Accepted Answer

The Financial Reporting Council (FRC) is responsible for overseeing the effectiveness of the Auditing and Assurance Standards Board (AUASB) in Australia, including its processes for setting auditing and assurance standards.

Question 4

Australian auditing standards (ASAs) issued by the Australian Auditing and Assurance Standards Board (AUASB) contain:

Accepted Answer

Australian auditing standards (ASAs) include the effective date of the standard, which indicates when the standard is to be applied.

Question 5

Which of the following bodies monitors the operation of the Australian Accounting Standards Board?

Accepted Answer

The Financial Reporting Council is responsible for monitoring the operation of the Australian Accounting Standards Board. The Australian Securities Exchange is a stock exchange and does not have jurisdiction over accounting standards. The Australian Securities and Investments Commission oversees the conduct of companies and financial markets to protect consumers and does not specifically monitor the Accounting Standards Board. The Auditing and Assurance Standards Board has a different focus on auditing and assurance standards, rather than accounting standards.

Question 6

The largest accounting organisation in Australia is:

Accepted Answer

CPA Australia has the largest membership base among the accounting organizations in Australia, with more than 164,000 members across the globe. Chartered Accountants Australia and New Zealand has around 120,000 members, while the Institute of Public Accountants has around 35,000 members. The International Federation of Accountants is a global association of accounting bodies and does not have a specific membership base in Australia.

Question 7

Which of the following types of companies can only be used by an audit firm with the consent of the National Council of Chartered Accountants Australia and New Zealand?

Accepted Answer

Practice companies are the only type of company that require permission from the National Council of Chartered Accountants Australia and New Zealand to be used by an audit firm. Nominee and service companies do not have such restrictions.

Question 8

Which of the following statements is correct?

Accepted Answer

The Australian Securities and Investments Commission is a member of the International Forum of Independent Audit Regulators.

Answer: B
 International auditing standards are mandatory for all auditors. However, countries may have their own additional requirements on top of the international standards.

Answer: C
 The Financial Reporting Council is a member of the International Federation of Accountants.

Answer: D
 Membership of the International Auditing and Assurance Standards Board is not restricted to members of the Forum of Firms. However, members of the Board are required to have qualifications or experience in the field of auditing or related areas.

Question 9

In pursuing its quality control objectives with respect to acceptance of a client, an audit firm is not likely to:

Accepted Answer

Reviewing the personnel practices of the proposed client is not typically a part of the audit firm's quality control procedures in accepting a client. The focus is more on understanding the client's business, financial stability, and integrity, which can be assessed through enquiries of legal advisers, reviewing financial reports, and making enquiries of previous auditors.

Question 10

Which of the following bodies is able to impose penalties on auditors who have failed to carry out their duties properly?

Accepted Answer

The Companies Auditors and Liquidators Disciplinary Board (CALDB) is responsible for disciplining auditors and liquidators who fail to perform their duties properly.

Question 11

Membership of the International Auditing and Assurance Standards Board (IAASB) consists of:

Accepted Answer

The International Auditing and Assurance Standards Board (IAASB) membership includes representatives from international audit firms, IFAC member bodies, and non-auditor representatives to ensure a wide range of perspectives in setting auditing standards.

Question 12

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?

Accepted Answer

The auditor must document any instances where they cannot comply with an auditing standard and have used alternative procedures in the audit working papers. This ensures a clear record of the auditor's actions and rationale, maintaining the audit's integrity and transparency.

Question 13

Australian auditing standards (ASAs) issued by the Australian Auditing and Assurance Standards Board (AUASB) are intended to be applied to:

Accepted Answer

The answer of Australian auditing standards (ASAs) issued by the...

Question 14

A firm of independent auditors must establish and follow explicit quality control policies and procedures because these standards:

Accepted Answer

Quality control policies and procedures are necessary to ensure that the entire firm conforms to auditing standards and provide reasonable assurance to clients and stakeholders that the audit is performed with the highest level of quality. While liability insurers may require certain policies and procedures, they are not the primary reason for establishing and following them. Formal filing of records is not necessarily a requirement, but rather documenting and periodically reviewing the policies and procedures is necessary. The Australian Securities and Investments Commission may require specific policies and procedures for audits of certain entities, but this is not a universal requirement.

Question 15

To become a registered company auditor, a person must be:

Accepted Answer

All of the given answers are correct. To become a registered company auditor in Australia, a person must meet all of the requirements including being a fit and proper person, a member of one of the accounting bodies, and ordinarily resident in Australia. Therefore, choice D is the correct answer.

Question 16

Which of the following are elements of an audit firm's quality control that should be considered in establishing its quality control policies and procedures? Personnel management
Monitoring
Engagement performance

Accepted Answer

The elements of an audit firm's quality control that should be considered in establishing its quality control policies and procedures include Personnel Management, Monitoring, and Engagement Performance. These elements are essential to ensure that the firm consistently applies appropriate standards and maintains the quality of its audit work.

Question 17

The objective of quality control dictates that an audit firm should establish policies and procedures for professional development that provide reasonable assurance that all entry-level personnel:

Accepted Answer

The objective of quality control is to ensure that the audit firm establishes policies and procedures for professional development that provide reasonable assurance that all entry-level personnel have the knowledge required to fulfil the responsibilities assigned. This includes providing appropriate training and development opportunities to ensure that personnel have the necessary skills and knowledge to perform their work effectively. Standardized working papers, advancing within the organization, and developing specialties in specific areas of assurance services are important considerations, but they are not the primary objective of quality control.

Question 18

Which of the following statements best explains why the auditing profession has found it essential to promulgate ethical standards and to establish means for ensuring their observance?

Accepted Answer

Ethical standards that stress a responsibility to the public, clients and colleagues are essential for establishing and maintaining the trust and integrity of the profession. This helps to ensure that auditors act in the best interest of all stakeholders and not just for their own gain. It also helps to prevent misconduct and unethical behavior by holding auditors accountable for their actions.

Question 19

Which of the following is not a standard-setting board or committee of the International Federation of Accountants (IFAC)?

Accepted Answer

The International Accounting Standards Board (IASB) is not a standard-setting board or committee of the International Federation of Accountants (IFAC). It is an independent organization responsible for developing and publishing International Financial Reporting Standards (IFRS) for use by companies in preparing their financial statements.

Question 20

Who is responsible for assessing whether company auditors meet the required competency standards for registration?

Accepted Answer

The Australian Securities and Investments Commission (ASIC) is responsible for assessing whether company auditors meet the required competency standards for registration.

Quiz 2: Audit Regulation, Structure of the Profession and Auditors Liability