Modern Auditing and Assurance Services, 6th Edition – Philomena Leung, Paul Coram, Barry J. Cooper & Peter Richardson – Complete Test Bank with Answers

TEST BANK FOR
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MODERN AUDITING ert




AND ASSURANCE
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SERVICES, 6TH
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EDITION, PHILOMENA
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LEUNG,PAULCORAM,
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BARRY J. COOPER,
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PETER RICHARDSON
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, Table of Contents ert ert




Part 1 THE AUDITING AND ASSURANCE ENVIRONMENT 2
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1 An overview of auditing 4
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2 Governance and the auditor 44 ert ert ert ert




3 Professional ethics, independence and audit quality 94 ert ert ert ert ert ert




4 Other assurance engagements and quality standards 162
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5 The auditor’s legal liability 202
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Part 2 AUDIT PLANNING 246
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6 Overview of the audit of financial reports 248 ert ert ert ert ert ert ert




7 The auditor’s report 280
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8 Client evaluation and planning the audit 314
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9 Audit risk assessment 366
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10 Materiality and audit evidence 414 ert ert ert ert




Part 3 AUDIT TESTING METHODOLOGY 452
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11 Tests of controls 454 ert ert ert




12 Designing substantive procedures 488 ert ert ert




13 Audit sampling 526 ert ert




Part 4 AUDITING TRANSACTIONS AND BALANCES 566
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14 Auditing sales and receivables 568 ert ert ert ert




15 Auditing purchases, payables and payroll 618 ert ert ert ert ert




16 Auditing inventories and property, plant and equipment 664 ert ert ert ert ert ert ert




17 Auditing cash and investments 708 ert ert ert ert




Part 5 COMPLETING THE AUDIT 756
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18 Completing the audit 758 ert ert ert

,Chapter 1: An overview of auditing
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1. The three major professional accounting bodies in Australia are:
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a. ICAA, CPA and ASIC. ert ert ert




b. CPAAustralia,IPAandAARF. ert ert ert ert




c. ATO,AUASB and ASIC. ert ert ert




d. ICAA, CPA Australia and IPA. ert ert ert ert




The correct option is d.
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Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
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demanded.
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2. Which of these is not an objective of the ASIC?
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a. Tomaintain, facilitate and improve the performance of companies.
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b. Toestablishnewinstitutionalarrangementsforstandardsetting.
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c. To receive, process and store information given to theCommission
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under the laws.
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d. All of the above are objectives of the ASIC.
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The correct option is b.
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Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
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demanded.
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3. Which of the following is true regarding auditors and fraud?
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a. Auditors are required to detect all fraud during an audit. ert ert ert ert ert ert ert ert ert




b. Auditors should actively investigate the possibility of fraud if suspicious ert ert ert ert ert ert ert ert ert




circumstances exist.
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c. In the Kingston Cotton Mill case it was said that the audit role was not
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primarily to detect fraud.
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d. b. and c. are true. ert ert ert ert




The correct option is d.
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Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
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demanded.
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, 4. Which of these was not an Australian corporate collapse?
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a. Harris Scarfe. ert




b. HIH Insurance Ltd. ert ert




c. One.Tel.
d. All were Australian corporate collapses.
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The correct option is d.
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Section 1.1 Auditing fundamentals
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5. ABC firm are the auditors of XYZ Company. The partner responsible for the
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audit has recently spent a week working with XYZ as a paid consultant on
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their internal control systems. The ethical principle that has been breached is:
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a. auditor competence. ert




b. auditor rotation. ert




c. auditor independence. ert




d. auditor appointment. ert




The correct option is c.
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Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
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demanded.
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6. Which of these is not a reform introduced by CLERP 9 in relation to Auditors
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and annual general meetings (AGMs)?
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a. Shareholders can submit written questions to the auditor before the ert ert ert ert ert ert ert ert ert




AGM relating to the auditor’s report and the conduct of the audit.
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b. The auditor must attend the AGM. ert ert ert ert ert




c. The auditor must address the AGM. ert ert ert ert ert




d. A reasonable opportunity must be allowed for members as a whole to
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ask questions of the auditor and for the auditor to respond.
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The correct option is c.
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Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
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demanded.
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