Test Bank for Modern Auditing and Assurance Services 6th Edition by Philomena Leung, Paul Coram, Chapter 1-18 | All Chapters

TEST BANK
Modern Auditing and Assurance Services 6th Edition
By Philomena Leung, Paul Coram,
LU
XE
LI
BR
AR
Y

, TABLE OF CONTENT

part 1 THE AUDITING AND ASSURANCE ENVIRONMENT
1 An overview of auditing
2 Governance and the auditor
3 Professional ethics, independence and audit quality
4 Other assurance engagements and quality standards
5 The auditor’s legal liability
part 2 AUDIT PLANNING
6 Overview of the audit of financial reports
LU
7 The auditor’s report
8 Client evaluation and planning the audit
9 Audit risk assessment
10 Materiality and audit evidence
XE
part 3 AUDIT TESTING METHODOLOGY
11 Tests of controls
12 Designing substantive procedures
13 Audit sampling
LI
part 4 AUDITING TRANSACTIONS AND BALANCES
14 Auditing sales and receivables
15 Auditing purchases, payables and payroll
BR
16 Auditing inventories and property, plant and equipment
17 Auditing cash and investments
part 5 COMPLETING THE AUDIT
18 Completing the audit
AR
Y

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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.
LU

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.
XE

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.
LI

c. To receive, process and store information given to the Commission
under the laws.
d. All of the above are objectives of the ASIC.
BR

The correct option is b.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
demanded.
AR

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.
Y

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.




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4. Which of these was not an Australian corporate collapse?
a. Harris Scarfe.
b. HIH Insurance Ltd.
c. One.Tel.
d. All were Australian corporate collapses.

The correct option is d.
Section 1.1 Auditing fundamentals
LU

5. ABC firm are the auditors of XYZ Company. The partner responsible for the
audit has recently spent a week working with XYZ as a paid consultant on
their internal control systems. The ethical principle that has been breached
XE

is:
a. auditor competence.
b. auditor rotation.
c. auditor independence.
d. auditor appointment.
LI

The correct option is c.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
BR

demanded.


6. Which of these is not a reform introduced by CLERP 9 in relation to Auditors
and annual general meetings (AGMs)?
AR

a. Shareholders can submit written questions to the auditor before the
AGM relating to the auditor’s report and the conduct of the audit.
b. The auditor must attend the AGM.
c. The auditor must address the AGM.
d. A reasonable opportunity must be allowed for members as a whole to
Y

ask questions of the auditor and for the auditor to respond.

The correct option is c.
Learning objective 1.1 ~ explain what an audit is, what it provides, and why it is
demanded.




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