QUESTION 1 During the audit, auditors often change the preliminary judgement about materiality. For a financial statement audit for the financial year ended 30 June 2021, which of the following factors can explain why auditors revised materiality? A. The preliminary judgement about materiality is based on 8 months' financial information rather than the entire financial year's. OB. Two weeks after determining the preliminary judgement about materiality, the auditor found the client company was planning to borrow another $7 million from ANZ. O C. On 31 Aug 2021, the financial report, as well as the audit report, were released to shareholders. On 21 October 2021, the auditor found that a client was fined on 1 October 2021 by Queensland Government for land contamination. D. A and B O E. A, B and C QUESTION 2 Lapping is a type of fraud where an employee manipulates account receivable accounts to cover up the theft of cash. This is done by diverting a payment from one customer, and then hiding the theft by diverting cash from another customer to offset the receivable from the first customer. Which of the following internal controls can prevent lapping? O A. None of the internal controls listed can effectively prevent lapping. B. Adequate separation of duties between cash handling and recording. OC. The accounting information system automatically posts cash receipts to the accounts receivable master file and general ledger. O D. Cash payments need to be approved based on supporting documents, such as purchase orders and receiving reports. O E. Cash receipts are recorded daily. QUESTION 3 The auditor applies attribute sampling for a test of control procedure. The expected population deviation rate is 196, the allowable risk of over-reliance is 596, the allowable risk of under-reliance is 10%, the tolerable deviation rate is 10%. What is the sample size for the test? O A. 46 O B. 77 O C.38 O D. 116 O E. 93