TEST BANK FOR
MODERN AUDITING
AND ASSURANCE
SERVICES, 6TH
EDITION, PHILOMENA
LEUNG, PAUL CORAM,
BARRY J. COOPER,
PETER RICHARDSON
, Table of Contents
Part 1 THE AUDITING AND ASSURANCE ENVIRONMENT
2 1 An overview of auditing 4
2 Governance and the auditor 44
3 Professional ethics, independence and audit quality 94
4 Other assurance engagements and quality standards 162
5 The auditor’s legal liability 202
Part 2 AUDIT PLANNING 246
6 Overview of the audit of financial reports 248
7 The auditor’s report 280
8 Client evaluation and planning the audit 314
9 Audit risk assessment 366
10 Materiality and audit evidence 414 Part
3 AUDIT TESTING METHODOLOGY 452 11
Tests of controls 454
12 Designing substantive procedures 488
13 Audit sampling 526
Part 4 AUDITING TRANSACTIONS AND BALANCES
566 14 Auditing sales and receivables 568
15 Auditing purchases, payables and payroll 618
16 Auditing inventories and property, plant and equipment 664
17 Auditing cash and investments 708
Part 5 COMPLETING THE AUDIT 756
18 Completing the audit 758
, Chapter 1: An overview of auditing
Multiple-choice questions
1. The three major professional accounting bodies in Australia are:
a. ICAA, CPA and ASIC.
b. CPA Australia, IPA and AARF.
c. ATO, AUASB and ASIC.
d. ICAA, CPA Australia and IPA.
The correct option is d.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it
is demanded.
2. Which of these is not an objective of the ASIC?
a. To maintain, facilitate and improve the performance of companies.
b. To establish new institutional arrangements for standard setting.
c. To receive, process and store information given to the
Commission under the laws.
d. All of the above are objectives of the ASIC.
The correct option is b.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it
is demanded.
3. Which of the following is true regarding auditors and fraud?
a. Auditors are required to detect all fraud during an audit.
b. Auditors should actively investigate the possibility of fraud if
suspicious circumstances exist.
c. In the Kingston Cotton Mill case it was said that the audit role was
not primarily to detect fraud.
d. b. and c. are true.
The correct option is d.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it
is demanded.
MODERN AUDITING
AND ASSURANCE
SERVICES, 6TH
EDITION, PHILOMENA
LEUNG, PAUL CORAM,
BARRY J. COOPER,
PETER RICHARDSON
, Table of Contents
Part 1 THE AUDITING AND ASSURANCE ENVIRONMENT
2 1 An overview of auditing 4
2 Governance and the auditor 44
3 Professional ethics, independence and audit quality 94
4 Other assurance engagements and quality standards 162
5 The auditor’s legal liability 202
Part 2 AUDIT PLANNING 246
6 Overview of the audit of financial reports 248
7 The auditor’s report 280
8 Client evaluation and planning the audit 314
9 Audit risk assessment 366
10 Materiality and audit evidence 414 Part
3 AUDIT TESTING METHODOLOGY 452 11
Tests of controls 454
12 Designing substantive procedures 488
13 Audit sampling 526
Part 4 AUDITING TRANSACTIONS AND BALANCES
566 14 Auditing sales and receivables 568
15 Auditing purchases, payables and payroll 618
16 Auditing inventories and property, plant and equipment 664
17 Auditing cash and investments 708
Part 5 COMPLETING THE AUDIT 756
18 Completing the audit 758
, Chapter 1: An overview of auditing
Multiple-choice questions
1. The three major professional accounting bodies in Australia are:
a. ICAA, CPA and ASIC.
b. CPA Australia, IPA and AARF.
c. ATO, AUASB and ASIC.
d. ICAA, CPA Australia and IPA.
The correct option is d.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it
is demanded.
2. Which of these is not an objective of the ASIC?
a. To maintain, facilitate and improve the performance of companies.
b. To establish new institutional arrangements for standard setting.
c. To receive, process and store information given to the
Commission under the laws.
d. All of the above are objectives of the ASIC.
The correct option is b.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it
is demanded.
3. Which of the following is true regarding auditors and fraud?
a. Auditors are required to detect all fraud during an audit.
b. Auditors should actively investigate the possibility of fraud if
suspicious circumstances exist.
c. In the Kingston Cotton Mill case it was said that the audit role was
not primarily to detect fraud.
d. b. and c. are true.
The correct option is d.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it
is demanded.
