YMCA College of Continuing Education
Diploma in Accounting and Information Technology
Auditing
Assignment No. 1
The following multiple choice questions are extracted from chapters 1 to chapter 5. Choose the best
answer on the multiple choice question:
1.
Which is the secondary objective of an audit of financial statement?
A)
B)
C)
D)
2.
3.
Which are the correct major steps of auditing process?
(I)
(II)
(III)
(IV)
(V)
(VI)
Evaluate internal control
Client acceptance
Issue audit report
Conduct the testing of accounting transactions and balance
Plan the audit
Complete the audit
A)
C)
(I), (II), (III), (IV), (V) and (V)
(II), (I), (IV), (VI), (V) and (III)
(II), (V), (I), (IV), (VI) and (III)
(IV), (I), (V), ((VI), (II) and (III)
(II)
(III)
User can’t easily access the firsthand information about the organization which the user wants to
invest
Information provided the organization may have biases
There are many complex and abundant information provided by organization
A)
C)
(I) and (II)
(II) and (III)
B)
D)
(I) and (III)
All of them
B)
D)
External audit
Compliance audit
Statutory audit is also called
A)
C)
5.
B)
D)
Which are the reasons to raise the information risk?
(I)
4.
To develop the detailed and complete audit planning for auditing
To produce a report by the auditor of his opinion of the truth and fairness of the financial
statements
To detect errors and fraud that cause material misstatements in the financial statement
To follow the Statement of Professional Ethics
Internal audit
Operational audit
Which audit do you think to determine whether the procedures and regulations prescribed by
management are met?
A)
C)
Financial Statement audit
Compliance audit
B)
D)
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Operational audit
Cash Flow audit
6.
Which is NOT the procedure to remove the auditor before expiry of term of office?
A)
B)
C)
D)
7.
8.
Which are the means to appoint the auditor of company?
(I)
(II)
(III)
By shareholders at general meeting
By directors
By court
A)
C)
(I) and (II)
(II) and (III)
11.
Maintain the register of professional accountants
Encourage the updating of professional knowledge
Provide for the settlement of disputes within the accountancy profession
Conduct the seminars and workshops with other accountancy institutes
People must be at least 18 years old
People must pass the professional examination required by Ordinance
People must comply with the experience requirements
People must be a fit and proper of good characters
Which are the objectives of Hong Kong Standards on Auditing and Assurance?
(I)
(II)
(III)
Practitioner maintains the Practice Notes
Practitioner maintains a high professional standard of auditing and other assurance services
Practitioner can exercise their professional judgement
A)
C)
(I) and (II)
(II) and (III)
B)
D)
(I) and (III)
All of them
The ethical rules state that independence of the external audit firm is considered to be impaired if:
A)
B)
C)
D)
12.
(I) and (III)
All of them
Which is NOT qualification to become qualified auditor under Professional Accountants Ordinance?
A)
B)
C)
D)
10.
B)
D)
Which is NOT function and objective of HKICPA specified by Professional Accountants Ordinance?
A)
B)
C)
D)
9.
It requires ordinary resolution and special notice provided by company
Company requires the auditor to submit the written notice to Registrar of Companies with 21 days
Company sends a copy to the auditor proposed to be removed after receipt of notice
Company sends the special notice to Registrar of Companies within 14 days
the audit firm provides management advisory services to the client
a near relative of one of the partners is the beneficial owner of shares forming a material part of the
share capital of the client
the audit firm has served as the external auditor for many years
the audit partner purchases the client’s product at normal retail prices
A violation of the profession’s ethical standards would least likely have occurred when an auditor:
A)
B)
C)
D)
holds the position of company secretary with an audit client which is a public company.
is a member of the same golf club as the managing director
undertakes a management advisory engagement and decides on the most appropriate computer
system for a client.
refers life insurance assignments to the auditor’s spouse, who is a life insurance agent.
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13.
Which of the following impairs an auditor’s independence regarding the client?
A)
B)
C)
D)
14.
An auditor strives to achieve independence in appearance to
A)
B)
C)
D)
15.
18.
(I)
(II)
(III)
Quality of internal audit
Reliance of audit evidence from prior audits
Nature of business
A)
C)
(I) and (II)
(II) and (III)
B)
D)
(I) and (III)
All of them
According to HKSA 315, which is NOT example of business operation?
Key customers and suppliers
Employment
B)
D)
Related parties
Location of production facilities
To maintain a good relationship with the client, the auditor should
A)
B)
C)
D)
20.
Building up the characteristics of the audit engagement
Defining the scope of audit planning
Taking accounts for the significant factors that the auditor should focus on
Finding out the reporting objectives of the engagement
According to HKSA 300, what factors does the auditor use to develop the scope of an audit engagement?
A)
C)
19.
value of the service to the client.
degree of responsibility assumed by the auditor in undertaking the engagement
skills required to perform the service
attainment of specific findings
According to HKSA 300, the establishment of audit strategy does NOT involve
A)
B)
C)
D)
17.
maintain public confidence in the auditor
become independent in fact
comply with the Company Ordinance
maintain an unbiased mental attitude
In determining the fees for an attestation service, an auditor may take into account each of the following,
except the:
A)
B)
C)
D)
16.
The client has not paid fees related to the previous year’s audit.
The audit firm recommends a job descriptions and candidate specifications for the position of
financial controller of a client.
The audit firms trains client personnel during the implementation of a new computer system.
The audit firm also prepares the client tax returns
Keep a good working relationship with the members
Prepare the testimonials for the management
Maintain a high standard practice
Imply the ability to influence from the management
According to Appendix 1 of HKSA 315, which is an example of industry conditions used to assess the
risk?
A)
C)
Government policy
Employment term
B)
D)
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Seasonal activity
Capital investment activities
21.
22.
Which are the qualitative factors used to evaluate the materiality?
(I)
(II)
(III)
Negative market reaction
Increase in management compensation
Class of transactions
A)
C)
(I) and (II)
(II) and (III)
24.
Audit risk
Inherent risk
B)
D)
Control risk
Detection risk
B)
D)
(I) and (III)
All of them
Which are the examples of inherent risk?
(I)
(II)
(III)
Change of accounting estimates
Complex calculation
Change of government policies
A)
C)
(I) and (II)
(II) and (III)
Which of the following factors do you use to assess the likelihood of financial failure?
A)
C)
25.
(I) and (III)
All of them
Which risk do you think that the auditor can’t find out the material misstatements when carrying out the
audit procedures?
A)
C)
23.
B)
D)
Change of management
Distribution of financial statement
B)
D)
Business nature
Debt financing
Which is an example of detection risk?
A)
B)
C)
D)
Wide range of measurement uncertainty
Complex accounting principles
Inappropriate review of the audit work performed
Undue pressures from management
**** End Of Assignment ****
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