Lecture 1 – Chapter 1 all

Period and on the accounting records relating

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Unformatted text preview: mproving the efficiency and effectiveness of matters noticed during the audit d) Appropriate staffing levels Q 11. An independent auditor;s primary reporting responsibility is to the: a) Board of directors b) ASIC c) Creditors of the entity d) Members of the entity Q 12. ‘Perceived’ limited to audit reports are due to users thinking auditors are giving more assurance than they actually are. Perceived assurances, outlined by Porter, include: a) That auditors are guarantors of the accuracy of a company’s financial statements and or its solvency b) That auditors give early warning of company failure c) That auditors detect and report to shareholders any fraud and other illegal acts d) a,b and c Q 13. An independent audit provides a number of benefits to the company beause it: a) Assures the readers of financial statements that all fraud has been detected b) Confirms the accuracy of management’s financial representations c) Guarantees that financial information is true and fair d) Lends credibility to the financial statements Q 14. Who is responsible for the appointment of the auditor to a company? a) The managing director of the company b) The members of the company c) The audit committee of the company d) ASIC Q 15. What would be a valid reason for a company to remove its auditors? a) Evidence that the auditor did not perform a proper review of the compnay’s fixed assets b) A disagreement between the auditor and management—resulting in a very poor working relationship c) An increase in the audit fee charged for the year d) All of the above Q 16. Some highly specialized areas where auditors are required to form a professional judgment include: a) b) c) d) Valuation of intangible assets Environment- related accounting items Technology based accounting items All of the above Q 17. The main objectives of an appropriately estabilished and effective audit committee usually include assisting the board of directors in discharging its responsibility to exercise due care, diligence and skill in relation to the entity’s a) Entity’s reporting of financial information to users of financial statements b) Application of accounting policies c) Internal control system d) All of the above Q 18. Which of these is true? a) Representatio...
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