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AA – Audit & Insurance

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Showing 4–6 of 10 questions

Question 4

When preparing audit documentation, the auditor of a smaller entity may find it helpful and efficient to record various aspects of the audit together in a single document, with cross-references to supporting working papers as appropriate. Examples of matters that may be documented together in the audit of a smaller entity include the understanding of the entity and its internal control, the overall audit strategy and audit plan, materiality, assessed risks, significant matters noted during the audit, and conclusions reached.

Which one of the following would not be included in the overall audit strategy?

Select an option, then click Submit answer.

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    Details of economic factors and industry conditions
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    The results of initial analytical procedures
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    Confirmation of management’s responsibility for the financial statements
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    Identification of specific audit risks

Question 5

Elody Gaindy was discussing about the contents of audit report produce on the audit of ABC Ltd with his friend Evie Christoffelsen. Evie informed Elody the matters on which auditors are required to report by exception such as:

• Adequate accounting records of ABC Ltd have not been kept, or returns adequate for the audit have not been received from branches of ABC Ltd not visited by Elody Gaindy; or

• The financial statements of ABC Ltd are not in agreement with the accounting records and returns; or

• Certain disclosures of directors’ remuneration of ABC Ltd specified by law are not made

Which of the following statements is not true about the audit report prepared by Elody Gaindy?

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    A one-paragraph report is generally used when the auditor is not independent.
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    A three-paragraph report ordinarily indicates there are no exceptions in the audit.
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    More than three paragraphs in the report indicates there must be some type of qualification in the audit report.
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    An unqualified opinion with modified wording has three paragraphs.
Question 6

After completing an internal control review of the accounts payable department partially, the auditor suspects that some type of fraud has occurred. To ascertain whether the fraud is present, the best sampling approach would be to use

Select an option, then click Submit answer.

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    Simple random sampling to select a sample of vouchers processed by the department during the past year.
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    Monetary unit sampling to select a sample of vouchers processed by the department during the past year.
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    Discovery sampling to select a sample of vouchers processed by the department during the past year.
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    Judgmental sampling to select a sample of vouchers processed by clerks identified by the department manager as acting suspiciously.