8. When considering whether to accept an audit engagement, it is important for the auditor to carry out the following:

1. evaluate the integrity of management
2. assess the competence of the audit team
3. identify special circumstances
4. evaluate independence and the ability to use due care

• 1, 2, and 3 only

  1, 2, and 3 only

• 1, 2, 3, and 4

  1, 2, 3, and 42,3,and 4 only

• 2,3,and 4 only

• 1,3 and 4 only

9. For clients where the level of fees must be monitored, what safeguard can the firm apply to reduce the threat to an acceptable level?

1. rotation of audit team members on an annual basis
2. discussion of the matter with the audit committee
3. asign an engagement quality control review partner

• 1, 2, and 3

  1, 2, and 3

• 2 and 3 only

  2 and 3 only

• 1 and 2 only

  1 and 2 only

• 1 and 3 only

10. This type of audit involves a much broader investigative techniques as well as interviewing suspects.

• forensic

  forensic

• external

  external

• statutory

  statutory

• internal

11.

Which of the following persons may act as an auditor for a company?

• the company's previous finance director, who left the company five years ago to join the audit firm

  the company's previous finance director, who left the company five years ago to join the audit firm

• an employee of the company being audited who holds a valid audit certificate

  an employee of the company being audited who holds a valid audit certificate

• the director of the company being audited who holds a valid audit certificate

  the director of the company being audited who holds a valid audit certificate

• the wife of the finance director who works for a reputable audit firm

12. Rogbear & Associates conducted an independent examination of the financial and other policies and procedures of Juneplum Company Limited to give an assurance that the company's operations are in keeping with internal and external regulations. What type of audit di Rogbear & Associates conducted?

• forensic

  forensic

• operational

  operational

• compliance

  compliance

• internal

13. Identify the incorrect statement regarding the impact of international auditing standards.

• establishes quality policies and procedires in the client's business

  establishes quality policies and procedires in the client's business

• they have universal appeal across several cultures

  they have universal appeal across several cultures

• facilitates the evaluation of line items in financial statements

  facilitates the evaluation of line items in financial statements

14. JP Auditor & Associates was contacted by a new client, Simmonds Co. Ltd, to conduct an audit. JP Auditor & Associates should consider the following matters before accepting the new engagement:

1. professional clearance
2. management integrity
3. money laundering
4. risks and resources

• 1, 2, 3, and 4

  1, 2, 3, and 4

• 1, 3 and 4 only

  1, 3 and 4 only

• 2, 3, and 4 only

  2, 3, and 4 only

• 1, 2 and 3 only

• they seek to enhance the quality of audit evidence

15. Which of the following are examples of the expectation gap?

1. the independent auditor's report confirms the financial statements are accurate
2. an unmodified opinion means that the company is a going concern
3. the auditor tests all transactions
4. the auditor can be sue for negligence if an inappropriate audit opinion is issued

• 2 and 3 only

  2 and 3 only

• 1 and 2 only

  1 and 2 only

• 1, 2, and 3 only

  1, 2, and 3 only

• 1, 2, and 4 only

16. One of the limitations of an external audit is that:

• deficiences in the internal controls can be highlighted

  deficiences in the internal controls can be highlighted

• higher quality information which is more reliable

  higher quality information which is more reliable

• enhances the credibility of financial statements

  enhances the credibility of financial statements

• audit evidence is more persuasive rather than conclusive

  audit evidence is more persuasive rather than conclusive