Auditing
PART A
35 Multiple Choice Questions worth 1 mark each
(all questions to be answers)
1. ABC firm are the auditors of XYZ Company. The partner responsible for the audit has recently spent a week working with XYZ as a paid consultant on their internal control systems. The ethical principle that has been breached is: a. auditor independence. b. auditor appointment. c. auditor rotation. d. auditor competence.
2. The term audit expectation gap refers primarily to differences in expectations between: a. auditors and users of audited financial reports. b. auditors and their clients. c. CPA Australia/ICAA and the ASIC. d. auditors and the ASIC.
3. The oversight structure of financial reporting in Australia had many levels. CALDB is part of which level? a. regulation by the profession b. regulation by the firm. c. self or peer regulation. d. government regulation.
4. Investors shift financial responsibility for audited financial information to the auditor in order to lower the expected loss from litigation or related settlements. This describes which theory of auditing? a. explanatory. b. agency. c. information hypothesis. d. insurance hypothesis.
5. Which of these actions is most likely to remove the audit expectation gap? a. improving auditing standards b. educating of audit users about what are reasonable expectations c. improving auditor’s performance d. it will require a comprehensive approach combining all three of the above
6. Which body has a mission ‘to develop, in the public interest, high-quality auditing and assurance standards and related guidance to enhance the relevance, reliability and timeliness of information provided to users of audit and assurance services’? a. the IAASB. b. the AASB. c. the
35 Multiple Choice Questions worth 1 mark each
(all questions to be answers)
1. ABC firm are the auditors of XYZ Company. The partner responsible for the audit has recently spent a week working with XYZ as a paid consultant on their internal control systems. The ethical principle that has been breached is: a. auditor independence. b. auditor appointment. c. auditor rotation. d. auditor competence.
2. The term audit expectation gap refers primarily to differences in expectations between: a. auditors and users of audited financial reports. b. auditors and their clients. c. CPA Australia/ICAA and the ASIC. d. auditors and the ASIC.
3. The oversight structure of financial reporting in Australia had many levels. CALDB is part of which level? a. regulation by the profession b. regulation by the firm. c. self or peer regulation. d. government regulation.
4. Investors shift financial responsibility for audited financial information to the auditor in order to lower the expected loss from litigation or related settlements. This describes which theory of auditing? a. explanatory. b. agency. c. information hypothesis. d. insurance hypothesis.
5. Which of these actions is most likely to remove the audit expectation gap? a. improving auditing standards b. educating of audit users about what are reasonable expectations c. improving auditor’s performance d. it will require a comprehensive approach combining all three of the above
6. Which body has a mission ‘to develop, in the public interest, high-quality auditing and assurance standards and related guidance to enhance the relevance, reliability and timeliness of information provided to users of audit and assurance services’? a. the IAASB. b. the AASB. c. the