Section A – ALL 12 questions are compulsory and MUST be attempted
Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiple
choice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet.
1 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
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
2 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
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
C Undertaking a review of subsequent events to identify whether any adjustment or disclosure is required in the
D Reviewing the financial statements to ensure compliance with accounting standards and local legislation
3 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
4 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
A 1 only
B 2 only
C Both 1 and 2
D Neither 1 nor 2
5 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
6 Which of the following substantive procedures provides evidence over the COMPLETENESS of non-current
A Select a sample of assets included in the non-current asset register and physically verify them at the client
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
7 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
8 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
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