au2 exam - cga
CGA-CANADA
ADVANCED EXTERNAL AUDITING [AU2] EXAMINATION
December 2012
Marks
30
Time: 4 Hours
Question 1
Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations.
Note:
11/2 marks each
a.
Which of the following statements regarding client business risk is correct?
1) The financial statement audit planning process is designed to address client business risk, not engagement risk.
2) The higher the client business risk, the less likely the auditor is to issue an unqualified opinion on the financial statements.
3) At a small organization, client business risk is always high because the owner-manager cannot keep track of all financial and accounting issues.
4) Client business risk is generally not affected by the nature and strength of the client’s internal controls. b. Which of the following actions is a requirement, in accordance with CAS 250, for auditors when they suspect non-compliance with laws and regulations?
1) Include an emphasis of matter paragraph in the auditor’s report describing suspected non-compliance 2) Modify the audit plan, assuming fraud exists in the financial statements
3) Obtain further information to evaluate the possible effect on the financial statements
4) Document the areas of non-compliance and discuss with the client’s legal counsel immediately
c.
The auditor’s report based on the results of the interim review of the financial statements prepared in accordance with Handbook section 7050 should be addressed to which of the following parties?
1)
2)
3)
4)
Management
Shareholders
Security regulators
Audit committee
d. Which of the following
ADVANCED EXTERNAL AUDITING [AU2] EXAMINATION
December 2012
Marks
30
Time: 4 Hours
Question 1
Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations.
Note:
11/2 marks each
a.
Which of the following statements regarding client business risk is correct?
1) The financial statement audit planning process is designed to address client business risk, not engagement risk.
2) The higher the client business risk, the less likely the auditor is to issue an unqualified opinion on the financial statements.
3) At a small organization, client business risk is always high because the owner-manager cannot keep track of all financial and accounting issues.
4) Client business risk is generally not affected by the nature and strength of the client’s internal controls. b. Which of the following actions is a requirement, in accordance with CAS 250, for auditors when they suspect non-compliance with laws and regulations?
1) Include an emphasis of matter paragraph in the auditor’s report describing suspected non-compliance 2) Modify the audit plan, assuming fraud exists in the financial statements
3) Obtain further information to evaluate the possible effect on the financial statements
4) Document the areas of non-compliance and discuss with the client’s legal counsel immediately
c.
The auditor’s report based on the results of the interim review of the financial statements prepared in accordance with Handbook section 7050 should be addressed to which of the following parties?
1)
2)
3)
4)
Management
Shareholders
Security regulators
Audit committee
d. Which of the following