Mid-Term Mock 2 Test – Timed Examination
Module Code and Title: BUS354 Audit & Assurance
Audit代考 Duration and submission of exam: upload your completed exam paper to QMplus within one hour of downloading
Date of exam:
Duration and submission of exam: upload your completed exam paper to QMplus within one hour of downloading
Important: You must read the instructions on “Guidance on Take Home Examinations” before attempting this paper.
Students with Examination Access Arrangements (e.g. disabilities, specific learning differences such as dyslexia, mental health diagnoses) must attach a completed SpLD coversheet.
The exam is made up of 15 compulsory multiple choice questions. Please justify your answers to obtain full credit:
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Question 1 Audit代考
Which TWO of the following describe the roles of the responsible party in any assurance engagement?
A Setting the criteria of the assurance engagement
B Gathering evidence on the subject matter
C Issuing an opinion on the subject matter against the criteria set
D Preparing the subject matter
With respect to the benefits of assurance engagements, for each of the following statements, select True or False.
1 Assurance is an independent and professional activity that users value.
2 The principle objective of assurance is to detect and correct fraud.
3 Assurance assignments may take many forms.
Question 3 Audit代考
Andy & Co, an audit firm, have been asked by Budget Ltd to accept appointment as auditor.
Budget Ltd’s previous auditors were Matt & Co.
What would be the best course of action for Andy & Co if Budget Ltd refuse to give them permission to contact Matt & Co?
A Contact Matt & Co in writing anyway as we need to speak to the previous auditors before accepting the appointment.
B Telephone Matt & Co in order to obtain the information sought in the form of an off the record chat.
C Ask Budget Ltd again if they can contact Matt & Co .
D Make no communication with Matt & Co and consider declining the appointment.
As part of his analytical procedures on the financial statements of Nails Ltd, Peter has identified
that the current ratio has decreased from 2 to 1.5. All purchases of inventory are currently made for cash and all sales are credit sales.
Which TWO of the following could be a valid explanation for this decrease?
1 The company has increased its credit policy to customers from 30 to 50 days.
2 The company has shifted its reliance from long-term debit to short-term debit.
3 The company has decided to adopt a just in time inventory system (whereby the supplier will deliver direct to its stores, eliminating the need for a distribution centre).
4 The company has recently offered special discounts to customers to attract more sales.
Question 5 Audit代考
Which TWO of the following approaches could the auditor use when gathering audit evidence?
1 Tests of control only
2 Substantive procedures only
3 Both tests of control and substantive procedures
4 Analytical procedures only
For each of the following statements, decide whether they are true or false in respect of business risk.
1 Inherent and control risks are components of audit risk.
2 Auditors should provide suggestions for companies to overcome business risks.
3 Identifying business risks is part of the company’s risk assessment process.
Two types of procedures used in gathering evidence are tests of controls and substantive procedures.
For each of the following examples, decide which type of procedure is illustrated.
1 Carrying out analytical procedures on the income statement
2 Reviewing board minutes for evidence of authorisation of major additions to non-current assets
3 Reperforming the year-end bank reconciliation
Question 8 Audit代考
The following statements describe possible limitations of the provision of assurance.
For each statement, decide whether it is a limitation or is not a limitation.
1 Sampling is part of the audit process.
2 The provision of assurance in itself can be a subjective process.
3 The auditors may be auditing that particular client for the first time.
Which two of the following are limitations of the provision of assurance?
A Assurance work is carried out by people independent of the entity
B Sampling is used in assurance work
C Client systems have inherent limitations
D Unqualified staff may be used on assurance engagements
Which one of the following statements best describes the evidence obtained and the opinion given in a reasonable assurance engagement?
A Sufficient appropriate evidence and a negatively worded opinion
B Sufficient appropriate evidence and a positively worded opinion
C A lower level of evidence and a negatively worded opinion
D A lower level of evidence and a positively worded opinion
Question 11 Audit代考
Which three of the following are benefits of an assurance report on financial information?
An assurance report:
A enhances the credibility of the information being reported on
B reduces the risk of management bias in the information being reported on
C attests to the correctness of the information being reported on
D draws the attention of the user to deficiencies in the information being reported on
In the context of a statutory audit which three of the following are examples of the expectation gap?
The belief that:
A the auditor’s report certifies the financial statements as correct
B the auditor’s principal duty is to detect fraud
C the auditor is employed by the directors
D the auditor checks all transactions
Which two of the following are auditors always required to do on being invited to accept an audit engagement?
A Ensure they are professionally qualified to act
B Ensure they have adequate existing resources to carry out the audit
C Obtain references for key personnel within the entity to be audited
D Communicate with the predecessor auditors to discover any reasons they should not accept appointment
Question 14 Audit代考
For each of the following factors present at a prospective client, select whether that factor indicates that that client is high risk or low risk.
Company has prudent accounting policies
A High risk
B Low risk
Company carries out unusual transactions
C High risk
D Low risk
Company currently has no finance director
E High risk
F Low risk
Which three of the following are purposes of a letter of engagement?
A Setting out the form of any report to be issued
B Providing constructive suggestions to management concerning improvements in internal control
C Documenting and confirming acceptance of the appointment
D Narrowing the expectations gap
E Providing evidence on matters where other evidence is not expected to exi