Question

5. Which of the following is the most accurate definition of the concept of materiality? A. Information is material if it is greater than 5 to 10% of profit before tax B. Information is material if it is greater than 1 to 2% of total assets C. Information is material if is within a range of figures calculated by the auditor using figures from the draft financial statements at the planning stage Information is material if its misstatement or omission could influence the ec of users of the financial statements D. onomic decisions to 6. Which of the following situations is likely to represent a threat to objectivity for the external auditor? A. B. The engagement partner of a hotel company audit, accepts the use of hotel rooms free of C. A member of the audit team accepts the gift of a tin of biscuits when he attends the D. The engagement partner accepts a bottle of whiskey as a Christmas present each year from an The audit team eats in the clients subsidised canteen during the audit charge on a regular basis for weekend trips with her husband count of a biscuit manufacturer client nde inventory audit client 7. To behave with courtesy and consideration to all they come in contact during the course of performing their work' is the definition of which of the following fundamental principles of professional ethics: A. Confidentiality B. Objectivity C. Professional Behaviour D. Integrity 8. Which of the following statements is NOT true? A. Both internal and external auditors owe a duty of confidentiality to the company they are auditing Both internal and external auditors evaluate the internal control system of a company Both internal and external auditors are accountable to management Both internal and external auditor C. D. s should be competent to perform their work 9. Which of the following is NOT an appropriate reason to outsource the internal audit function? A more independent internal audit would allow the external auditor to reduce their testing and therefore the audit cost. A. B. It is expensive to maintain an internal audit function and to recruit staff C. The entity might only need internal audit on a short term basis at certain times of the year D. The internal audit procedures required could be done in a small amount of time so full time employees might not be justified

Answer 1

5. The correct answer is D

Any information is material when it affects the decisions of the users of that information. It is not dependent as a percentage of the total assets or profot before tax.

6.The correct answer is B

In this case the engagement partner os in regular use of free services from its client on each weekend which is more likely to affect his objectivity.

7. The correct answer is C

8. The correct answer is B

Only the internal auditor is responsible for evaluating the internal controls of the client.

First 4 questions have been answered as per answering guidelines. Thanks!!