Quality Control and Engagement Standards- Test 6

Which of the following is not correct?

Y & Co., Chartered Accountants have come across in the course of audit of a company that certain machinery had been imported for production of new product. Although the Auditors have applied the concept of materiality for the financial statements as a whole, they now want to re-evaluate the materiality concept for this transaction involving foreign exchange.

The auditor should summarise their audit plan by preparing an audit planning memorandum to:

The joint auditors are required to issue common audit report, however, where the joint auditors are in disagreement with regard to the opinion or any matters to be covered by the audit report, they shall express their opinion in a separate audit report. In such cases, separate audit report issued by the joint auditor shall make reference to the audit report issued by other joint auditors under the heading

ABC & Co. and DEF & Co. Chartered Accountant firms were appointed as joint auditors of Good Health Care Ltd. for 2017-18. An investigation was conducted under Companies Act 2013 during March 2019 and observed gross understatement of Revenue. The revenue aspects were looked after by DEF & Co, but there was no documentation for the division of work between the joint auditors.

The auditor must obtain an understanding of the controls of the service organisation used by the auditee from one or more of the following procedures except:

The difference between a Type 1 and Type 2 internal control report is that the Type 2 report and not a Type 1 report includes:

If the Type 1 or Type 2 report excludes the controls at a subservice organisation, and the services provided by the subservice organisation are relevant to the audit of the user entity’s financial statements, the user auditor is required

Misstatements or omissions are material if they could reasonably be expected to influence_________ taken on the basis of the financial statements.

Misstatements may result from:

As per SA 500 “Audit Evidence” considerations when evaluating the appropriateness of the management’s expert work as audit evidence for the relevant assertions may include:

SA 500 defines the term audit evidence as information used by the auditor in arriving at the conclusions on which the auditor’s opinion is based. The term information as used in definition of audit evidence comprises of:

Which of the following statement is false?

Which of the following presumptions is correct about the reliability of audit evidence?

Sufficiency of evidence is:

Inquiries of management and personnel include discussion of all the following except:

SA 501 “Audit Evidence-Specific Considerations for Selected Items” requires the auditor to design and perform audit procedures in order to identify litigation and claims involving the entity which may give rise to a risk of material misstatement. Such procedures may include:

As per SA 501, auditor is required to obtain sufficient and appropriate audit evidences as to:

When inventory under the custody and control of a third party is material to the financial statements, the auditor shall obtain sufficient appropriate audit evidence regarding the existence and condition of that inventory by

As per SA 505 “External Confirmations”, if management refuses the auditor to send a confirmation request, the auditor shall:

A request that the conforming party respond directly to the auditor indicating whether the conforming party agrees or disagrees with the information in the request, or providing the requested information is known as:

While designing external conformation request, which of the following factors need to be considered

A per SA 505, if management refuses to allow the auditor to send a confirmation request, the auditor:

Initial Audit Engagement is an engagement in which prior period financial statements are:

If the predecessor auditor’s opinion regarding the prior period’s financial statements included a modification to the auditor’s opinion that remains relevant and material to the current period’s financial statements, the auditor shall modify the auditor’s opinion on the current period’s financial statements in accordance with

Which of the following is true?

A basic premise of using analytical procedures is that:

Trend analysis is:

Expectations are developed by identifying plausible relationships that are reasonably expected to exist based on the auditor’s understanding of the client and of the industry. These relationships may be determined by comparisons with the following sources:

Analytical procedures compare one result to another. These comparisons may be with all the following except: