Which of the following audit procedures for obtaining audit evidence is correctly described?
A.Recalculation involves the auditor’s independent execution of procedures or controls which were originally performed as part of the entity’s internal control
B.Confirmation consists of seeking information of knowledgeable persons, within the company or outside the company
C.Reperformance consists of checking the mathematical accuracy of documents or records
D.Observation consists of looking at a procedure or process being performed by others
Auditors are required to undertake an overall review of the financial statements as the final step before they form. their audit opinion. As part of this process they undertake a number of procedures.
Which of the following procedures would an auditor NOT undertake as part of the overall review of the financial statements?
A.Reviewing the financial statements to ensure they are consistent with the auditor’s knowledge of the business and the results of their audit work
B.Performing analytical procedures on the financial statements to form an overall conclusion on the financial statements
C.Undertaking a review of subsequent events to identify whether any adjustment or disclosure is required in the financial statements
D.Reviewing the financial statements to ensure compliance with accounting standards and local legislation disclosure
Which of the following is NOT an inherent limitation of internal control systems?
A.Insufficient segregation of duties
B.Possibility that employees may collude together fraudulently
C.Possibility of human error in undertaking tasks
Which of the following statements, relating to International Standards on Auditing (ISAs), if any, is/are correct?
(1) International Standards on Auditing (ISAs) are issued by the International Accounting Standards Board (IASB) and provide guidance on the performance and conduct of an audit
(2) In the event that ISAs differ from local legislation in a specific country, auditors must comply with the requirements of the ISAs
C.Both 1 and 2
D.Neither 1 nor 2
Which TWO of the following statements regarding the use of analytical procedures during the PLANNING stage of the audit are correct?
(1) Analytical procedures are useful when forming an overall conclusion as to whether the financial statements are consistent with the auditor’s understanding of the company
(2) Analytical procedures can be used to obtain relevant and reliable audit evidence
(3) Analytical procedures can assist in identifying the risks of material misstatement
(4) Analytical procedures can assist in identifying unusual transactions and events
A.1 and 2
B.2 and 3
C.3 and 4
D.2 and 4
Which of the following substantive procedures provides evidence over the COMPLETENESS of non-current assets?
A.Select a sample of assets included in the non-current asset register and physically verify them at the client premises
B.Review the repairs and maintenance expense account to identify any items of a capital nature
C.For assets disposed of, agree the sale proceeds to supporting documentation and cash book
Which of the following is NOT a principle of the UK Corporate Governance Code?
A.There should be a rigorous and transparent procedure for the appointment of new directors to the board
B.The board should use the annual general meeting (AGM) to communicate with investors
C.The non-executive chairman should decide on the remuneration of all directors
D.All directors should receive induction training on joining the board
Which of the following is a substantive audit procedure for wages and salaries?
A.Inspect a sample of clock cards for evidence of authorisation by a responsible official
B.Recalculate a sample of payroll deductions such as employment taxes to confirm accuracy
C.Attempt to access and make changes to the payroll master file using the log on for a junior clerk
Which of the following statements, relating to the auditor’s responsibilities regarding subsequent events, if any, is/are correct?
(1) Auditors do not have a responsibility to perform. procedures to identify subsequent events after the date of the auditor’s report
(2) Where a material adjusting subsequent event is identified after the financial statements are issued, but prior to approval by the shareholders, the auditor should include a qualified opinion in their audit report if management refuses to adjust the financial statements for the event
C.Both 1 and 2
D.Neither 1 nor 2
Is the following statement true or false?
A significant change in the ownership of an existing audit client is a factor which makes it appropriate for the auditor to review the terms of engagement.