ca_exm_au1_2009-09 - CGA-CANADA EXTERNAL AUDITING [AU1]...

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EAU1S09 ©CGA-Canada, 2009 Page 1 of 7 CGA-CANADA EXTERNAL AUDITING [AU1] EXAMINATION September 2009 Marks Time: 3 Hours 30 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: 2 marks each a. Which of the following is true when using confirmations as an audit procedure? 1) Confirmation letters should be printed on the audit firm’s letterhead and returned directly to the auditor. 2) Confirmation letters should be mailed by the auditee. 3) Confirmation letters should be signed by an officer of the auditee. 4) Confirmation letters should be dated on the day they are supposed to be mailed. b. Which of the following items would most likely be found in an auditor’s permanent file papers? 1) Excerpts of shareholders’ and directors’ meetings 2) Staff assignments for the current audit 3) Preliminary analytical procedure notes 4) Representation letter c. Which of the following is true when a company changes audit firms? 1) The predecessor auditor must contact the new auditor to advise of any problems. 2) The audit report will have to be qualified as the new audit firm did not audit the previous year’s comparative numbers. 3) The audit files of the previous auditor belong to client. 4) The client’s consent will determine the amount of information provided to the new auditor by the previous auditor. d. Aiyeen is a CGA working on the external audit of Zhong Inc. Based on her analysis of the company’s past results and last year’s sales, Aiyeen estimates that the company will have warranty expense of $400,000 for the year. The company, however, has estimated only $350,000. Aiyeen knows that materiality for the audit is much larger than the difference in their estimates. The audit is not completed yet, so it is possible that other misstatements may be found. What should Aiyeen do in this case? 1) Advise the client that a qualified opinion will be required unless the client revises its estimate. 2) Record the $50,000 difference as an unadjusted item, and consider all unadjusted items together at the end of the audit. 3) Ignore the $50,000 as it is below materiality. 4) Ignore the $50,000 difference as it is only an estimate, and can be put in the notes to the financial statements. Continued. ..
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EAU1S09 ©CGA-Canada, 2009 Page 2 of 7 e. Which of the following would be considered a qualitative aspect of materiality? 1)
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This note was uploaded on 03/30/2012 for the course ACCOUNTING 1204 taught by Professor Chang during the Spring '11 term at Nanjing University.

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ca_exm_au1_2009-09 - CGA-CANADA EXTERNAL AUDITING [AU1]...

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