AUDIT AND ASSURANCE 2ND EDITION BY
LEUNGTEST BANK ET AL QUESTIONS
ISBN 9781394173440
AUDIT AND ASSURANCE 2ND EDITION BY LEUNG ET AL ISBN 9781394173440 COMPREHENSIVE
COMPLETE WITH VERIFIED SOLUTIONS GRADED A PLUS
AUDIT AND ASSURANCE 2ND EDITION TEST PAPER QUESTIONS SOLUTIONS ACCURATE ANSWERS
COMPREHENSIVE TEST BANK COMPLETE
QUESTIONS WITH VERIFIED SOLUTIONS
GRADED A+
⩥ What is audit?
Answer: Audit is the systematic process of obtaining, and then
objectively evaluating, the accounts or financial records of an
organisation.
⩥ What is reasonable assurance?
Answer: As per ISA 200: Reasonable assurance is a high level of
assurance. It is obtained when the auditor has obtained sufficient
appropriate audit evidence to reduce audit risk (that is, the risk that the
auditor expresses an inappropriate opinion when the financial statements
are materially misstated) to an acceptably low level.
⩥ Why can absolute assurance not be given?
Answer: There are inherent limitations of an audit which result in most
of the audit evidence on which the auditor draws conclusions and bases
the auditor's opinion being persuasive rather than conclusive.
Limitations are aspects such as...
,⩥ What is a positive opinion?
Answer: A positive opinion is where the auditors state that they have
found something to be the case. We can express a positive opinion when
we have reasonable assurance.
⩥ What is limited assurance?
Answer: Limited assurance is a lower (but still meaningful) level of
assurance that the risk of material misstatement has been reduced to an
acceptable level, enabling a conclusion to be expressed negatively
⩥ What is a negative opinion?
Answer: A negative opinion is where the auditors state that they have
seen nothing to indicate that something is not the case.
⩥ What two factors impact whether a limited or reasonable assurance
engagement is carried out?
Answer: The level of assurance sought by the users and/ or responsible
party (which would depend on the nature of the aspect being audited)
and any legal requirements that might exist.
⩥ Define 'true and fair'
Answer: The financial statements are free from material misstatement
and faithfully represent the financial performance and position of the
entity.
, ⩥ Name 3 things that auditors are NOT expected to do.
Answer: • correct financial statements that they consider to be misstated
• prevent fraud or error, or • detect all cases of fraud or error
⩥ What are the 5 CIPFA SoPP Ethical Principles?
Answer: Integrity, objectivity, professional competence and due care,
confidentiality and professional behaviour.
⩥ What are the 7 threats to ethical behaviour according to CIPFA SoPP?
(including one specific to the auditor)
Answer: Self-interest, intimidation, self-review, familiarity, advocacy,
political bias. Management threat to the auditor - auditor has taken
decisions on behalf of the management body.
⩥ Define an 'Independent non-executive director'.
Answer: An independent non-executive director is someone who not
only has no responsibility for running the company on a day-to-day but
has not done so in the recent past, nor have they been on the Board for a
very lengthy period.
⩥ What is an audit strategy likely to include?
Answer: According to ISA 300• the overall characteristics of the
engagement that define its scope • the reporting objectives of the
engagement • the factors that are significant in directing the engagement
team's efforts • the results of previously gained knowledge, whether
LEUNGTEST BANK ET AL QUESTIONS
ISBN 9781394173440
AUDIT AND ASSURANCE 2ND EDITION BY LEUNG ET AL ISBN 9781394173440 COMPREHENSIVE
COMPLETE WITH VERIFIED SOLUTIONS GRADED A PLUS
AUDIT AND ASSURANCE 2ND EDITION TEST PAPER QUESTIONS SOLUTIONS ACCURATE ANSWERS
COMPREHENSIVE TEST BANK COMPLETE
QUESTIONS WITH VERIFIED SOLUTIONS
GRADED A+
⩥ What is audit?
Answer: Audit is the systematic process of obtaining, and then
objectively evaluating, the accounts or financial records of an
organisation.
⩥ What is reasonable assurance?
Answer: As per ISA 200: Reasonable assurance is a high level of
assurance. It is obtained when the auditor has obtained sufficient
appropriate audit evidence to reduce audit risk (that is, the risk that the
auditor expresses an inappropriate opinion when the financial statements
are materially misstated) to an acceptably low level.
⩥ Why can absolute assurance not be given?
Answer: There are inherent limitations of an audit which result in most
of the audit evidence on which the auditor draws conclusions and bases
the auditor's opinion being persuasive rather than conclusive.
Limitations are aspects such as...
,⩥ What is a positive opinion?
Answer: A positive opinion is where the auditors state that they have
found something to be the case. We can express a positive opinion when
we have reasonable assurance.
⩥ What is limited assurance?
Answer: Limited assurance is a lower (but still meaningful) level of
assurance that the risk of material misstatement has been reduced to an
acceptable level, enabling a conclusion to be expressed negatively
⩥ What is a negative opinion?
Answer: A negative opinion is where the auditors state that they have
seen nothing to indicate that something is not the case.
⩥ What two factors impact whether a limited or reasonable assurance
engagement is carried out?
Answer: The level of assurance sought by the users and/ or responsible
party (which would depend on the nature of the aspect being audited)
and any legal requirements that might exist.
⩥ Define 'true and fair'
Answer: The financial statements are free from material misstatement
and faithfully represent the financial performance and position of the
entity.
, ⩥ Name 3 things that auditors are NOT expected to do.
Answer: • correct financial statements that they consider to be misstated
• prevent fraud or error, or • detect all cases of fraud or error
⩥ What are the 5 CIPFA SoPP Ethical Principles?
Answer: Integrity, objectivity, professional competence and due care,
confidentiality and professional behaviour.
⩥ What are the 7 threats to ethical behaviour according to CIPFA SoPP?
(including one specific to the auditor)
Answer: Self-interest, intimidation, self-review, familiarity, advocacy,
political bias. Management threat to the auditor - auditor has taken
decisions on behalf of the management body.
⩥ Define an 'Independent non-executive director'.
Answer: An independent non-executive director is someone who not
only has no responsibility for running the company on a day-to-day but
has not done so in the recent past, nor have they been on the Board for a
very lengthy period.
⩥ What is an audit strategy likely to include?
Answer: According to ISA 300• the overall characteristics of the
engagement that define its scope • the reporting objectives of the
engagement • the factors that are significant in directing the engagement
team's efforts • the results of previously gained knowledge, whether
