Question - 1 (a) - When receiving incoming auditor's request for professional clearance, if the existing auditor sent out a response to the incoming auditor, without the reporting entity's permission. Which principles of ethics is violated by the existing auditor? (one answer only)

Integrity or Confidentiality?

Question - 1(b) Identify the threats (self-review, self-interest, familiarity, intimidation) that the audit team is facing in the following scenarios (one answer only)

(i) One of the directors of the client is the uncle of an audit team member

(ii) The sister of an audit team member invests in the debentures of the audit client

(iii) An audit team member was previously employed by the client in its accounting department

(iv) The audit firm provides both auditing and non-audit services to the same client

Question - 1(c) Which of the followings is not an accounting function?

a. Examine the reasonableness of accounting estimates

b.Selection of accounting policies

c.Preparation of financial statements

d.Recording, classifying and summarizing economic transactions

Question - 1(d) Generally, the auditor could be legally liable:

a. under contract law and under the tort of negligence to the reporting entity.

b.under the tort of negligence but not contract law to the reporting entity.

c.under contract law but not under the tort of negligence to third parties.

d. under contract law to the reporting entity and to third parties.

Then, which of the following statements describes the principal purpose of the external audit of a company?

a. To prevent and detect fraud in the company

b.To examine the F/S and express an opinion on the companys financial statements prepared by directors

c.To assist management in the maintenance of the companys accounting records

d.To assist management in the preparation of the companys financial statements