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T.A.D Learning - Assurance

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RESPONDENT

@ Vy Nguyen Phuong Tuong

E-mail address

nptuongvy2002@gmail.com Phone number

937946273

ACA/CFAB Student ID 41017977

Access code tgzMyHDGi7 AS

SUMMARY

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RESULT

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Attempt
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TIMER

0 Total time
00:44:41 / 00:45:00
 Start time 14:12 Date 2023-07-02

End time 14:57

Q. 1 2/2P

Which three of the following would normally be included in the overall audit strategy?

The results of initial analytical procedures

Details of economic factors and industry conditions

Identification of specific audit risks

D Confirmation of management's responsibility for the financial statements

Score 2/2P

Q.2 2/2P

For each of the following statements, select whether they are true or false.

A negative assurance conclusion gives a limited level of assurance.

True

A statutory audit gives reasonable assurance that the financial statements give a true and
fair view.

True

D Reasonable assurance is absolute assurance of the correctness of the subject matter.

True

D A statutory audit gives reasonable assurance that the financial statements give a true
and fair view.

False

D A negative assurance conclusion gives a limited level of assurance.

False
 0 Reasonable assurance is absolute assurance of the correctness of the subject matter.

False

Score 2/2P

Q.3 2/2P

For each of the following statements about materiality, select whether they are true or false.

D Materiality should be considered when planning audit procedures and when evaluating
discovered misstatements.

False

D Materiality is always expressed as a proportion of profits.

True

0 Materiality should be considered when planning audit procedures and when evaluating
discovered misstatements.

True

D Materiality may depend on the size of the error in the context of its omission or
misstatement.

False

0 Materiality may depend on the size of the error in the context of its omission or
misstatement.

True

0 Materiality is always expressed as a proportion of profits.

False

Score 2/2P

Q.4 0/2P

The following statements describe possible limitations of the provision of assurance. For each
statement select whether it is a limitation or is not a limitation.

X 0 Sampling is part of the audit process.

Is not a limitation
 D Sampling is part of the audit process.

Is a limitation

X 0 The auditors may be auditing that particular client for the first time.

Is a limitation

-./ 0 The provision of assurance in itself can be a subjective process.

Is a limitation

D The provision of assurance in itself can be a subjective process.

Is not a limitation

D The auditors may be auditing that particular client for the first time.

Is not a limitation

Score 0/2P

Q.5 0/2P

Which three of the following relate to assertions about account balances at the period end?

X 0 Occurrence

□ Existence

0 Rights and obligations

0 Completeness

□ Cut-off

Score 0/2P

Q.6 2/2P

Which one of the following best describes professional scepticism?

Asking the client a number of times the same question to see if the answer is the same

-./ 0 Forming a critical assessment and bringing into question the reliability of audit evidence

Making management sign off all evidence provided to the auditor

 Disbelieving everything the client says

Score 2/2P

Q. 7 2/2P

Which three of the following describe aspects of the expectations gap with respect to the external
audit?

Users are not aware of the limitations of the audit process

□ Users do not appreciate that reasonable assurance is a low level of assurance

Users do not understand what the audit process involves

Users do not understand the meaning of the audit opinion

Score 2/2P

Q.8 2/2P

As part of their overall risk assessment an auditor has concluded that detection risk must be low.
For each of the following, select the appropriate consequence of this.

□ Materiality
Higher

□ Sample sizes
Smaller

Sample sizes

Bigger

Materiality

Lower

Score 2/2P

Q.9 0/2P

For each of the following statements concerning performance materiality, select whether they are
true or false.
 0 Performance materiality should always be higher than materiality for the financial
statements as a whole.

False

D Performance materiality should always be higher than materiality for the financial
statements as a whole.

True

D Performance materiality is intended to provide a margin of safety in relation to detected

misstatements.

False

D A lower level of performance materiality results in more audit work being performed.

False

0 A lower level of performance materiality results in more audit work being performed.

True

X 0 Performance materiality is intended to provide a margin of safety in relation to detected

misstatements.

True

Score 0/2P

Q.10 2/2P

Deteriora Ltd's quick ratio has fallen from 1.9:1 to 1.6:1. Which one of the following might help to
explain this decline?

The allowance for receivables has been reduced

Credit control has been poor

Inventory levels have fallen

0 The entity has purchased a property for cash

Score 2/2P
Q.11 0/2P

Which two of the following describe manifestations of the expectations gap?

X 0 Shareholders approving the appointment of the auditor at an annual general meeting

X 0 Users discovering that the directors refuse to cooperate in providing the auditor with the
evidence he requests

D Users relying on the audited financial statements as a fair valuation of the company

D Users blaming the auditors for a fraud discovered in a company subsequent to an audit

Score 0/2P

Q.12 0/2P

Which one of the following describes the assurance provided and conclusion given in a reasonable
assurance engagement?

High and positive

Absolute and negative

High and negative

X O Low and positive

Score 0/2P

Q.13 0/2P

Which two of the following are true of the auditor's objectives in relation to fraud, in line with ISA
(UK) 240, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements?

D The auditor must only obtain evidence regarding the risks of material misstatement due to
error.

X 0 The auditor performs the audit with the aim of deterring fraud.

v 0 The auditor must obtain evidence regarding the risks of material misstatement due to fraud.
 D The auditor must identify and assess the risks of material misstatement due to fraud.

Score 0/2P

Q.14 0/2P

With respect to the benefits of assurance engagements, for each of the following statements select
whether they are true or false.

D Assurance is an independent and professional activity that users value.

False

0 Assurance is an independent and professional activity that users value.

True

0 Assurance assignments may take many forms.

True

X 0 The principle objective of assurance is to detect and correct fraud.

True

D Assurance assignments may take many forms.

False

D The principle objective of assurance is to detect and correct fraud.

False

Score 0/2P

Q.15 2/2P

Jones LLP is the external auditor of Blue pie, a listed company. The directors of Blue pie have
requested that Jones LLP carry out a review engagement assessing the effectiveness of its
corporate governance policies against the UK Corporate Governance Code.

For the above review engagement, select which part of the engagement description constitutes the
subject matter, which describes the suitable criteria and which party is the responsible party.

D The suitable criteria

Blue pie's corporate governance policies

 □ The responsible party
Jones LLP

The suitable criteria

The UK Corporate Governance Code

The subject matter

Blue pie's corporate governance policies

□ The subject matter

The UK Corporate Governance Code

The responsible party

The directors of Blue pie

Score 2/2P

Q.16 2/2P

Audit risk can be split into three components: inherent risk, control risk and detection risk. For each
of the following examples, select the type of risk illustrated.

D The organisation has a high turnover of staff in the accounts department.

Inherent

D The organisation has a high turnover of staff in the accounts department.

Detection

The organisation has a high turnover of staff in the accounts department.

Control

The auditor will be using samples in testing.

Detection

D The auditor will be using samples in testing.

Inherent

D The auditor will be using samples in testing.

Control
Score 2/2P

Q.17 0/2P

Horus LLP, an assurance firm, has the following two clients among its client portfolio. For each client,
select whether inherent risk is higher or lower.

X 0 Osiris Ltd is planning to list on the local stock exchange within the next year.

Lower risk

D Set Ltd has made one third of its finance department redundant as part of an efficiency
drive.

Lower risk

0 Set Ltd has made one third of its finance department redundant as part of an efficiency
drive.

Higher risk

D Osiris Ltd is planning to list on the local stock exchange within the next year.

Higher risk

Score 0/2P

Q.18 0/2P

Which two of the following describe the roles of the responsible party in any assurance
engagement?

D Preparing the subject matter

D Issuing an opinion on the subject matter against the criteria set

X 0 Gathering evidence on the subject matter

0 Setting the criteria of the assurance engagement

Score 0/2P

Q.19 0/2P

Audit risk can be split into three components: inherent risk, control risk and detection risk. For each
of the following examples, select the type of risk illustrated.
 D The organisation is seeking to raise finance for a new venture.

Detection

D The organisation has a number of estimates in its financial statements.

Detection

0 The organisation is seeking to raise finance for a new venture.

Inherent

X 0 The organisation has a number of estimates in its financial statements.

Control

0 The organisation has a number of estimates in its financial statements.

Inherent

D The organisation is seeking to raise finance for a new venture.

Control

Score 0/2P

Q.20 2/2P

For each of the following statements, select whether they are true or false in respect of the concept
of materiality.

0 Materiality depends only on the monetary amount of an item.

False

D Materiality is a matter of professional judgement.

False

0 Materiality may depend on either the nature of an item or its monetary amount.

True

0 Materiality is a matter of professional judgement.

True

D Materiality may depend on either the nature of an item or its monetary amount.

False

D Materiality depends only on the monetary amount of an item.

 True

Score 2/2P

Q. 21 0/2P

Which three of the following are objectives of audit planning?

0 To identify potential problems and resolve them on a timely basis

D To ensure appropriate attention is devoted to the important areas of the audit

0 To assign work to members of the audit team

X 0 To determine the scope of the engagement

Score 0/2P

Q.22 0/2P

The following are ways in which the assurance provider might be able to 'close' the expectations
gap. For each, select whether it is true or false.

D By including a caveat in the assurance report:

True

D By issuing an engagement letter setting out the work to be carried out and its limitations:

False

X 0 By including a caveat in the assurance report:

False

0 By reducing the audit fee:

False

0 By issuing an engagement letter setting out the work to be carried out and its limitations:

True

D By reducing the audit fee:

True

Score 0/2P
Q.23 2/2P

In any assurance engagement there are three parties involved: the responsible party, the
practitioner and the user.
For each of the following select which party:

-./ prepares the subject matter?

Responsible party

D prepares the subject matter?

User

..,/ gathers evidence on the subject matter?

Practitioner

D gathers evidence on the subject matter?

User

D gathers evidence on the subject matter?

Responsible party

D prepares the subject matter?

Practitioner

Score 2/2P

Q.24 2/2P

With regards to substantive procedures, select whether the following statements are true or false.

D Substantive procedures are carried out as part of the overall review of the financial
statements.

False

..,/ Substantive procedures are made up of tests of detail only.

False

D Substantive procedures are made up of tests of detail only.

 True

0 The auditor must always carry out substantive procedures on material items.

True

D The auditor must always carry out substantive procedures on material items.

False

0 Substantive procedures are carried out as part of the overall review of the financial
statements.

True

Score 2/2P

Q.25 0/2P

For each of the following situations, select the most appropriate approach which should be used by
the assurance firm.

D The audit of a new client, recently started up, with few employees in its accounting
department

Tests of control only

D The audit of a long-standing client with a sophisticated IT system and an internal audit
department

Substantive procedures only

X 0 The audit of a long-standing client with a sophisticated IT system and an internal

audit department

Tests of control only

X 0 The audit of a new client, recently started up, with few employees in its accounting
department

A mix of tests of control and substantive procedures

D The audit of a long-standing client with a sophisticated IT system and an internal audit
department

A mix of tests of control and substantive procedures

 D The audit of a new client, recently started up, with few employees in its accounting
department

Substantive procedures only

Score 0/2P