2008 summer - SUMMER SESSION 2007/2008 Examination for the...

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SUMMER SESSION 2007/2008 Examination for the BUSINESS SCHOOL WIDE OPTION FINAL YEAR 5B3030 AUDIT AND ASSURANCE Joint Unit Leaders/Authors: Neil Rodda and Barry Mounsey Tuesday 15 th April 2008 3: 30 pm to 6 : 30 pm Instructions to Candidates Answer two questions from Section A Answer two questions from Section B All questions carry equal marks Materials Provided Answer booklet.
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1 SECTION A - Answer TWO questions ONLY from this section 1. In modern society many areas of human activity require some form of verification process. The external financial statement audit is an example of this in connection to financial reporting. The need for external financial statement audits can be explained by various concepts including conflict of interest; consequence; remoteness and complexity. Theories that justify the demand for external auditing services include agency theory; information hypothesis and insurance hypothesis. Required Discuss the above statement. (25 marks) 2. The introduction of ISA 700 (UK and Ireland) The a uditor’s report on financial statements in 2004 and the APB Bulletin 2006/6 Auditor’s Reports on Financial Statements in the United Kingdom in 2006 (together with earlier Bulletins) has resulted in the further expansion of the information content of the external audit report. The audit report now contains considerably more information than it did twenty years ago. It is debatable, however, whether the current external audit report is regarded as useful to users of financial statements. Required a) Critically discuss the arguments for and against the proposition that users of financial statements may find audit reports useful and reach a conclusion. (12 marks) b) Explain the following terms extracted from an external audit report: (i) Auditing Practices Board (ii) Material misstatement (iii) True and fair view. (9 marks) c) Explain what is meant by an emphasis of matter and give an example of a situation where it would be used by an auditor. (4 marks) ( Total 25 marks)
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2 3. The accountancy profession has developed a ‘framework’ or ‘ principle based approach to dealing with ethical matters. The Code of Ethics for Professional Accountants (the Code) issued by The International Federation of Accountants (IFAC) establishes the ethical requirements for its member bodies. The Code sets out the fundamental principles and provides a conceptual
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This note was uploaded on 10/24/2010 for the course ACCOUNTING INFS2005 taught by Professor Steven during the Three '10 term at Australian National University.

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2008 summer - SUMMER SESSION 2007/2008 Examination for the...

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