Question Tag: Audit Standards

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AAA – May 2017 – L3 – Q5 – Audit Reporting

Explain the IAASB Clarity Project's objective and describe new requirements in various revised ISAs.

Question

You are an Audit Manager of Lobito James & Co., a firm of Chartered Accountants. You are aware of some significant changes and new requirements in the Revised ISAs as a result of the IAASB Clarity Project issued in October 2008 that are expected to impact the following audit procedures:

(a) Communicating with those charged with governance (ISA 260).
(b) Materiality in planning and performing an audit (ISA 320).
(c) Audit considerations relating to an entity using a service organisation (ISA 402).
(d) Evaluation of misstatements identified during an audit (ISA 450).
(e) External confirmation (ISA 505).
(f) Auditing accounting estimates, including fair value, accounting estimates and related disclosures (ISA 540).
(g) Related parties (ISA 550).

You are required to:

i. Explain the objective of the IAASB Clarity Project. (1 Mark)

ii. Explain TWO new requirements in each of the revised ISAs listed above. (14 Marks)

Answer

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Tags: Audit Requirements, Audit Standards, Auditing Procedures, IAASB Clarity Project, ISAs
Level: Level 3

Topic: Audit Reporting

AAA – Nov 2013 – L3 – AII – Q12 – Ethical Issues in Auditing

Describe the tendency of an auditor not to believe management assertions without supporting evidence.

Question

The tendency of an auditor not to believe management assertions unless they provide evidence to support the assertions is described as professional……………………..

Answer

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Tags: Audit Standards, Ethics, Skepticism
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2013

AAA – Nov 2013 – L3 – AII – Q10 – Audit Reporting.

Determine the error acceptable in a population confirming the sample result aligns with audit objectives.

Question

The maximum error in the population that the auditor can accept as being consistent with the conclusion that sample result confirms achievement of the audit objective is known as……………..error.

Answer

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Tags: Audit Objective, Audit Standards, Population Error, Sampling
Level: Level 3

Topic: Audit Reporting
Series: NOV 2013

AAA – Nov 2013 – L3 – AII – Q6 – Public Sector Audits

Explores the alternate terminology for balance sheets of parastatals.

Question

The balance sheet of parastatals is also referred to as a statement of………….and…………….

Answer

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Tags: Audit Standards, Balance Sheet, Financial Statements, Public Sector, Terminology
Level: Level 3

Topic: Public sector audit
Series: NOV 2013

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

Question

Yakubu Chukwu & Co was sued by one of its clients who alleged that the firm failed to satisfy the auditing standards in identifying substandard and obsolete inventory while attending end-of-year stock take. Which of the following is the firm’s best defence?
A. It is quite impossible to expect the firm to identify substandard and obsolete inventory due to the special nature of the inventory
B. Yakubu Chukwu & Co has to prove that its audit has been carried out with reasonable skill, care, and diligence
C. Auditing standards are not legislated, therefore, the client has no right to sue the firm
D. The contributory negligence of the client
E. Identification of substandard and obsolete stock requires an expert opinion

Answer

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Tags: Audit Standards, Auditor Liability, Defence, Obsolete Inventory
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

Question

Factors that contribute to the weaknesses of local auditing standards include the following EXCEPT:
A. Standard setters being subject to political pressures
B. Having inadequate resources
C. Being insufficiently timed in response to market needs
D. Loss of investment by stakeholders
E. Having sources of fund which raise questions about their independence

Answer

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Tags: Audit Standards, Independence, Local Auditing Standards, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

Question

The audited financial statements of every company must be filed with the ……………………

Answer

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Tags: Audit Standards, Corporate Governance, Filing Requirements, Financial Statements, Regulatory Compliance
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q19 – Quality Control in Audit Firms

Identifying the primary objective of conducting an audit review.

Question

Which of the following is the most appropriate objective of audit review?

A. Frauds and errors do not occur in an audit engagement
B. The audit is completed early for the report to be used
C. The audit is performed with the highest standard of quality
D. To ensure that appropriate bill is sent to the client
E. No dispute arises between the firm and the client

Answer

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Tags: Audit Objectives, Audit Review, Audit Standards, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

Question

According to ISA 320, the auditor is expected to treat information as IMMATERIAL if:

A. Its omission could influence the economic decision of users based on the financial statement
B. Its misstatement could alter the decision of stakeholders based on the financial statements
C. Its omission is within the audit objective
D. Its misstatement will make an audit objective to be defeated
E. Its omission threatens the going concern of the organisation

Answer

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Tags: Audit Standards, Financial Statements, Immaterial Information, ISA 320, Materiality
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2011 – L3 – SA – Q15 – Quality Control in Audit Firms

Identifies an action that does not contribute to quality control in audits by professional bodies.

Question

Quality control in audit is maintained by professional accountancy bodies through all the following EXCEPT:

A. Publishing of auditing standards
B. Publishing of accounting standards
C. Encouraging members to be computer literate
D. Publishing code of conduct for members
E. Establishment of public practice sector

Answer

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Tags: Audit Standards, Professional Conduct, Public Practice, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2011

AAA – May 2017 – L3 – Q5 – Audit Reporting

Explain the IAASB Clarity Project's objective and describe new requirements in various revised ISAs.

Question

You are required to:

i. Explain the objective of the IAASB Clarity Project. (1 Mark)

ii. Explain TWO new requirements in each of the revised ISAs listed above. (14 Marks)

Answer

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Tags: Audit Requirements, Audit Standards, Auditing Procedures, IAASB Clarity Project, ISAs
Level: Level 3

Topic: Audit Reporting

AAA – Nov 2013 – L3 – AII – Q12 – Ethical Issues in Auditing

Describe the tendency of an auditor not to believe management assertions without supporting evidence.

Question

The tendency of an auditor not to believe management assertions unless they provide evidence to support the assertions is described as professional……………………..

Answer

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Tags: Audit Standards, Ethics, Skepticism
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2013

AAA – Nov 2013 – L3 – AII – Q10 – Audit Reporting.

Determine the error acceptable in a population confirming the sample result aligns with audit objectives.

Question

Answer

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Tags: Audit Objective, Audit Standards, Population Error, Sampling
Level: Level 3

Topic: Audit Reporting
Series: NOV 2013

AAA – Nov 2013 – L3 – AII – Q6 – Public Sector Audits

Explores the alternate terminology for balance sheets of parastatals.

Question

The balance sheet of parastatals is also referred to as a statement of………….and…………….

Answer

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Tags: Audit Standards, Balance Sheet, Financial Statements, Public Sector, Terminology
Level: Level 3

Topic: Public sector audit
Series: NOV 2013

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

Question

Answer

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Tags: Audit Standards, Auditor Liability, Defence, Obsolete Inventory
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

Question

Answer

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Tags: Audit Standards, Independence, Local Auditing Standards, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

Question

The audited financial statements of every company must be filed with the ……………………

Answer

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Tags: Audit Standards, Corporate Governance, Filing Requirements, Financial Statements, Regulatory Compliance
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q19 – Quality Control in Audit Firms

Identifying the primary objective of conducting an audit review.

Question

Which of the following is the most appropriate objective of audit review?

Answer

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Tags: Audit Objectives, Audit Review, Audit Standards, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

Question

According to ISA 320, the auditor is expected to treat information as IMMATERIAL if:

Answer

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Tags: Audit Standards, Financial Statements, Immaterial Information, ISA 320, Materiality
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2011 – L3 – SA – Q15 – Quality Control in Audit Firms

Identifies an action that does not contribute to quality control in audits by professional bodies.

Question

Quality control in audit is maintained by professional accountancy bodies through all the following EXCEPT:

A. Publishing of auditing standards
B. Publishing of accounting standards
C. Encouraging members to be computer literate
D. Publishing code of conduct for members
E. Establishment of public practice sector

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Standards, Professional Conduct, Public Practice, Quality control
Level: Level 3

Topic: Quality Control in Audit Firms
Series: NOV 2011

Question Tag: Audit Standards

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AAA – May 2017 – L3 – Q5 – Audit Reporting

Explain the IAASB Clarity Project's objective and describe new requirements in various revised ISAs.

You are required to:

AAA – Nov 2013 – L3 – AII – Q12 – Ethical Issues in Auditing

Describe the tendency of an auditor not to believe management assertions without supporting evidence.

AAA – Nov 2013 – L3 – AII – Q10 – Audit Reporting.

Determine the error acceptable in a population confirming the sample result aligns with audit objectives.

AAA – Nov 2013 – L3 – AII – Q6 – Public Sector Audits

Explores the alternate terminology for balance sheets of parastatals.

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

AAA – Nov 2012 – L3 – SA – Q19 – Quality Control in Audit Firms

Identifying the primary objective of conducting an audit review.

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

AAA – Nov 2011 – L3 – SA – Q15 – Quality Control in Audit Firms

Identifies an action that does not contribute to quality control in audits by professional bodies.

AAA – May 2017 – L3 – Q5 – Audit Reporting

Explain the IAASB Clarity Project's objective and describe new requirements in various revised ISAs.

You are required to:

AAA – Nov 2013 – L3 – AII – Q12 – Ethical Issues in Auditing

Describe the tendency of an auditor not to believe management assertions without supporting evidence.

AAA – Nov 2013 – L3 – AII – Q10 – Audit Reporting.

Determine the error acceptable in a population confirming the sample result aligns with audit objectives.

AAA – Nov 2013 – L3 – AII – Q6 – Public Sector Audits

Explores the alternate terminology for balance sheets of parastatals.

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

AAA – Nov 2012 – L3 – SA – Q19 – Quality Control in Audit Firms

Identifying the primary objective of conducting an audit review.

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

AAA – Nov 2011 – L3 – SA – Q15 – Quality Control in Audit Firms

Identifies an action that does not contribute to quality control in audits by professional bodies.

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