Lecture 1 – Chapter 1 all

Above q 22 even if there were no statutory

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Unformatted text preview: re no statutory requirement for an audit, some people suggest that selfinterest would still impel management to engage auditors to audit the financial statements. What theory of auditing is this predominantly based on? a) b) c) d) Information hypothesis Agency theory Insurance hypothesis Non of the above—if there were no statutory requirements, there would be no audits Q 23. The term ‘audit expectation gap’ refers to the differences in services provided by independent auditors and the expectations of the: a) b) c) d) Government Entity’s audit committee Users of audited financial statements Australian Securities and Investment Commission Q 24. Which of these is not among the explanatory theories of auditing? a) Agency theory b) Information hypothesis c) Regulatory hypothesis d) Insurance hypothesis Q 25. The true statement is: a) b) c) d) A false negative is where an audit report is qualified but it should not have been A false negative is where an audit report is unqualified but should have been qualified A false positive is where an audit report is unqualified when it should not have been None of the above it true Chapter 4 Q 1. Reports on components of a financial report can include opinions on: a) b) c) d) A single financial statement, e.g. balance sheet Accounts receivable It is not possible to ask auditor to express an opinion on only one component of a financial report All of the above Q 2. ISO 9000’s management principles do not specifically include: a) b) c) d) Continual improvement Environment management Involvement of people system approach to management System approach to management Q 3. A forensic audit involving the electronic environment may feature: a) Examining employee e-mails and addresses, log-on times and messages b) Searching for duplicate numbers on payments or receipts c) Scanning lists of suppliers, customers, and inventory movements d) All of the above Q 4. The incorrect statement in relation to ASA 810 and the audit of summary financial statements is: a) The auditor is expressing an opinion that the statements are free from material error b) An auditor should not express an opinion on a summary financial statement unless he or she expressed an opinion on the financial report on which the summary is based c) A statement should be included that indicates that, for better understanding the summary report should be read in conjunction with the audited financial report and the related auditor’s report d) Non of the above is incorrect Q 5. The statement that is correct concerning reviews of an interim financial report is: a) A review is designed to obtain reasonable assurance that an interim financial report is free from material misstatement b) A company cannot appoint a new auditor to carry out a review but must use the existing auditor c) A review does not provide an opinion as to whether an interim reports gives a true and fair view d) All of the statements are correct Q 6. It is correct that a review of an int...
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