Multiple Choice questions
Have a go at these questions after the lesson. The answers are below as well but please have a go at them without looking at the answers.
Audit and Assurance
Which three of the following are key elements of a general assurance engagement?
A user
A subject matter
Suitable criteria
An assurance file
Which three of the following describe aspects of the expectations gap with respect to external audit?
Users do not understand the meaning of the audit opinion
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
Which two of the following are limitations of the provision of assurance?
Assurance work is carried out by people independent of the entity
Sampling is used in assurance work
Client systems have inherent limitations
Unqualified staff may be used on assurance engagements
In any assurance engagement there are three parties involved- the responsible party, the practitioner and the user. In respect of any given subject matter state which party:
determines the suitable criteria?
User
Practitioner
Responsible Party
Provides an opinion on whether the subject matter complies with the criteria?
User
Practitioner
Responsible party
Which one of the following statements best describes the evidence obtained and the opinion given in a reasonable assurance engagement?
Sufficient and appropriate evidence and a negatively worded opinion
Sufficient appropriate evidence and a positively worded opinion
A lower level of evidence and a negatively worded opinion
A lower level of evidence and a positively worded opinion
For each of the following statements, select whether they are true or false
A statutory audit gives reasonable assurance that the financial statements give a true and fair view
True
False
A negative assurance conclusion gives a limited level of assurance
True
False
Reasonable assurance is absolute assurance of the correctness of the subject matter
True
False
Jones LLP is the external auditor of Blue PLC, a listed company. The directors of Blue PLC 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, suitable criteria and which party is the responsible party.
Subject matter
Blue PLC’s corporate governance policies
The UK Corporate Governance Code
Suitable criteria
Blue PLC’s corporate governance policies
The UK corporate governance code
Responsible Party
Jones LLP
The directors of Blue PLC
For each of the following statements relating to the provisions of the Companies Act 2006, select whether they are true or false.
An individual or firm is eligible for appointment as a statutory auditor if the individual or firm is a member of a recognised supervisory body and is eligible for appointment under the rules of that body.
True
False
A person may not act as statutory auditor of a company if that person is an officer of employee of the company
True
False
Which one of the following best describes the concept of assurance?
Assurance refers to
An assurance firm’s high level of satisfaction as to the reliability of an assertion being made by one party for the use of another party
An assurance firm’s satisfaction as to the reliability of an assertion being made by one party for the use of another party
A user’s satisfaction as to the reliability of the assertion being made by another party
An assurance firm’s limited level of satisfaction as to the reliability of an assertion being made by one party for the use of another party?
Which three of the following are the benefits of an assurance report on financial information?
Enhances the credibility of the information being reported on
Reduces the risk of management bias in the information being reported on
Attests to the correctness of the information being reported on
Draws the attention of users to the deficiencies in the information being reported on
Ethics
Which three of the following are reasons why the accounting profession needs ethical codes?
Accountants have access to confidential information
Assurance providers claim to give an independent view
The financial community relies on accountants
The law requires it
ICAEW qualified auditors acting in the UK are subject to which two of the following?
IESBA Code of Ethics
ICAEW Code of Ethics
FRC’s Ethical Standard
The Code of Ethics set by the Government
Which three of the following are fundamental principles of the IESBA code?
Integrity
Objectivity
Independence
Confidentiality
Courtesy
For each of the following statements about professional ethics select whether they are true or false.
Prescriptive rules of ethical guidance are beneficial because they place the onus on the accountant to consider independence at every stage
True
False
A framework of ethical guidance allows principles to be applied to different situations and is therefore effective in a situation which is changing rapidly
A True
B False
A framework of ethical guidance prevents accountants interpreting legal requirements narrowly in order to circumvent them
A True
B False
Which three of the following bodies issue ethical guidance?
ICAEW
IESBA
IAASB
FRC
Which one of the following describes ethical guidance in the UK?
Ethical guidance provides a set of rules that must be followed in all circumstances
Ethical guidance is a framework containing a combination of rules and principles the application of which is dependent on the professional judgement of the assurance provider based on specific circumstances
Ethical guidance provides a set of principles which can be applied at the discretion of the assurance provider
Ethical guidance is a set of legal requirements
