Which of the following statements is INCORRECT?

A: An auditor may serve on the board of directors of an audit client.

B: An auditor who is an immediate family member of the director of an audit client must not be assigned to the audit team.

C: Purchasing goods from an audit client on normal commercial terms does not create a threat to the auditors independenc

D: An auditor who was recently a director of an audit client must not be assigned to the audit team for that client.

An auditor may serve on the board of directors of an audit client.

What is meant by the expression ˜expectation gap?

A: The gap between how the directors of a company perform their duties and how the shareholders expect them to perform

B: The gap between how the directors of a company perform their duties and how the general public expects them to perform

C: The gap between the public perception of the role of company auditors and their statutory role and responsibilities

D: The gap between the auditors own perception of their duties and how they are set out in the Companies Act

The gap between the public perception of the role of company auditors and their statutory role and responsibilities

Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures?

A: Other audit clients

B: Previous years

C: Other companies in the same industry

D: Budget

Other audit clients

Which of the following is true about written representations?

A: They are the best source of audit evidence

B: They should be used only when there is a lack of other substantive audit evidence

C: They should be used only when there is other substantive audit evidence to complement it

D: Shareholders receive a copy of all material written representations

They should be used only when there is a lack of other substantive audit evidence

Which of the following does NOT belong in the auditors report?

A: Introductory paragraph specifying the pages to which the report relates and the accounting convention adopted

B: Basis of the opinion

C: Involvement of any specialist

D: Statement of responsibilities of directors and auditors

Involvement of any specialist

What is meant by negative assurance?

A: The auditor cannot give an opinion due to lack of evidence

B: The clients financial statements were found to be materially misstate

C: The auditor could not conduct any tests due to lack of controls.

D: The auditor did not find anything to indicate that a material misstatement exists.

The auditor did not find anything to indicate that a material misstatement exists.

For companies required to produce interim financial statements (IFI):

A: one audit firm should audit the IFI and a different firm should audit the financial statements for the year as a whol

B: one accountancy firm should review the IFI and a different firm should audit the financial statements for the year as a whol

C: the same firm should audit the IFI and the financial statements for the year as a whole

D: None of these

the same firm should audit the IFI and the financial statements for the year as a whole

Which of the following statements is correct?

A: When a company negotiates a ˜friendly takeover, it usually appoints a firm of accountants to carry out due diligence on the takeover target.

B: In an attestation engagement, the accountant is required to report on the quality of work performe

C: In a review engagement, evidence is gathered mainly by means of computation and inspection.

D: In an engagement to review financial statements, the amount of work required is the same as for an audit

When a company negotiates a ˜friendly takeover, it usually appoints a firm of accountants to carry out due diligence on the takeover target.

What sort of assurance is provided in a review engagement?

A: Positive assurance

B: Negative assurance

C: High level of assurance

D: No assurance

Negative assurance

Which one of the following is part of the auditors function?

A: Conducting the inventory count

B: Obtaining and evaluating audit evidence on the financial statements

C: Calculating the year-end accruals figure for inclusion in the accounts

D: Providing representations to management

Obtaining and evaluating audit evidence on the financial statements

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