Question

executed 6) An contingiation established The primary purpose for establishing the code of A) Outline criteria for professional behavi o . honesty, dignity within the association B) Establish standards to follow for effective C) Provide a framework within which accounting polic e offeydded D) Outline criteria that can be utilized in conducting o n www 7) While assessing the risks of material misstatement is Wentify w i th could go wrong, consider the magnitude of risks, and A) Assess the risk of misstatements due to illegal acts B) Consider the complexity of the transactions involved C) Consider the likelihood that the risks could result in material misstatements D) Determine materiality levels 8) Which of the following procedures is not performed as a part of planning an audit engagement? A) Reviewing the working papers of the prior year. B) Developing an overall audit strategy. C) Verifying cutoff procedures. D) Designing an audit plan. 9) Which of the following is not a general obiective for the audit of asset accounts? A) Establishing existence of assets. B) Establishing proper valuation of assets. C) Establishing proper liabilities relating to assets. D) Establishing the completeness of assets. 10) To minimize the risk that the audit will not detect material misstatements in the financial statements, the auditor primarily relies on: A) Substantive procedures. B) Tests of controls. C) Internal control. D) Statistical analysis. 11) After obtaining an understanding of internal control and arriving at a preliminary assessed level of control risk, an auditor decided to perform tests of controls. The auditor most likely decided that: A) Additional evidence to support a reduction in the assessed level of control risk is not available. B) An increase in the assessed level of control risk is justified for certain financial statement assertions. C) There were many internal control deficiencies that would allow misstatements to enter the accounting system. D) It would be efficient to perform tests of controls that would result in a reduction in planned

Answer 1

6. A (Because Code of Ethics is for Professional Behaviour and not for accounting Practice, Policies or Interviews.)

7. C (Because after identifying risk and considering magnitude of risk, auditor is required to determine likelihood of material misstatement due to that risk, to consider it as material risk or not.)

8. C (Because Cutoff Procedures are performed during audit and not during PLANNING audit.)

9. D (Because Completeness of asset is not the objective to audit asset. Existence , Valuation and related liabilities are checked while auditing assets.)

10. A (Because Substantive Procedures reduces Detection Risk.)

11. C (Because Test of controls are performed if Internal control deficiencies are detected by auditor.)