TRẮC NGHIỆM

1. Which one of the following BEST describes the concept of assurance?

Assurance refers to:
A. An assurance firm's high level of satisfaction as to the reliability of an assertion
being made by one party for the use of another party.
B. An assurance firm's satisfaction as to the reliability of an assertion being made
by one party for the use of another party.
C. A user's satisfaction as to the reliability of an assertion being made by another
party.
D. An assurance firm's limited level of satisfaction as to the reliability of an
assertion being made by one party for the use of another party.

2. The following is an extract from an independent accountant’s unmodified

report on a profit forecast:
“Based on our examination of the evidence supporting the assumptions,
nothing has come to our attention which causes us to believe that these
assumptions do not provide a reasonable basis for the forecast”.
Which ONE of the following BEST describes the type of assurance provided by
this statement?
A. Positive assurance expressed negatively
B. Negative assurance expressed positively
C. High level of assurance expressed negatively
D. Limited level of assurance expressed negatively

3. Which ONE of the following correctly describes the period for which client
identification documents must be kept under money laundering regulations?
A. For a minimum of five years and until five years have elapsed since the
relationship with the client has ceased
 B. For a minimum of seven years and until seven years have elapsed since the
relationship with the client has ceased
C. For a minimum of five years and until seven years have elapsed since the
relationship with the client has ceased
D. For a minimum of seven years and until five years have elapsed since the
relationship with the client has ceased

4. Which ONE of the following BEST describes professional scepticism?

The assurance provider should:
A. Not believe anything that management tells him
B. Not believe anything that management tells him, without obtaining supporting
evidence
C. Apply a questioning mind to the information and evidence be obtains
D. Always assume the worst outcome in cases of uncertainty

5. Select the MOST appropriate approach which should be used by the assurance
firm. The audit of a new client, recently started up, with few employees in its
accounting department
A. Tests of control only
B. Substantive procedures only
C. A mix of tests of control and substantive procedures.
D. None of the above

6. Which ONE of the following must be included in the engagement letter?

A. Providing constructive suggestions to management concerning improvements in
internal control
B. The reporting framework that is applicable for the financial statements being
prepared
 C. Details of client identification procedures to be performed in relation to Man
Laundering Regulations
D. A statement that, in accordance with the Companies Act 2006, the auditor's
liability cannot be restricted.

7. Which ONE of the following would increase inherent risk?

A. Sample sizes have been calculated incorrectly by the auditor and are too small
B. A significant number of balances are based on estimates
C. Audit staff are inexperienced
D. The organization has a high turnover of staff in the accounts department

8. Which ONE of the following describe manifestations of the expectations gap?

A. Users discovering that the directors refuse to cooperate in providing the auditor
with the evidence he requests
B. Shareholders approving the appointment of the auditor at an annual general
meeting
C. Users relying on the audited financial statements as a fair valuation of the
company valuation of the company
D. None of the above

9. Which ONE of the following statements BEST describes the evidence obtained
and the opinion given in a reasonable assurance engagement?
A. Sufficient appropriate evidence and a negatively worded opinion
B. Sufficient appropriate evidence and a positively worded opinion
C. A lower level of evidence and a negatively worded opinion
D. A lower level of evidence and a positively worded opinion

10. Audit risk can be split into three components, inherent risk, control risk and
detection risk. Select the type of risk illustrated.
 Senior management regularly override the system of controls.
A. Inherent B. Control
C. Detection D. None of the above

11. Which ONE of the following is normally designed to detect possible material
monetary errors in the figures in financial statements?
A. Test of control B. Walk-through test
C. Analytical procedure D. Observation of a procedure

12. Which ONE of the following are reasons why organizations need to have
effective systems of control?
To help the organisation in:
A. minimising business risks
B. maximising its profitability
C. managing its assets and liabilities
D. cutting down the time needed for the audit

13. Which ONE of the following statements correctly describes the principal
purpose of an external audit of a limited company?
A. To help in the preparation of the company's financial statements
B. To prevent fraud within the company
C. To examine and express an opinion on the company's financial statements
D. To help the directors in improving the company's financial reporting process

14. Which ONE of the following is a control objective relating to the revenue
system?
A. Credit notes are only issued for valid reasons
B. Sales invoices are checked to Goods Despatched Notes by accounts staff
 C. Customer accounts are scrutinised to determine whether credit limits have been
observed
D. Orders are made only from authorised suppliers

15. Bourne Ltd operates a number of control procedures in its sales system.
Assuming that all controls are operating effectively, which ONE of the
following control procedures is most likely to ensure that customers are
invoiced for goods received?
A. Use of pre-printed sequentially numbered sales order documentation
B. Matching of despatch records with sales invoices
C. Matching of despatch records with sales invoices
D. Requiring customers to sign for goods received

16. Which ONE of the following best describes the principal difference between
fraud and error?
A. Fraud may result in the financial statements being material misstated
B. Fraud is an intentional act whereas error is unintentional
C. A misstatement can be material whether it is caused by fraud or by error
D. Frand may be the result of negligence whereas error is unintentional

TỰ LUẬN
1. Clarel LLP, an assurance firm, has the following two clients among its client
portfolio. What type of risk are they? Are the risks high or low and give
reason(s) why?
A. Rose Ltd currently has no finance director.
- Rose Ltd’s inherent risk is high risk.
- Staff may not be supervised / Staff may not have the skills and knowledge to
apply accounting standard.
B. The company operates a profit-related pay scheme.
- Inherent risk is high risk
- Directors have incentive to overstate profit / record profit more than usual /
the accounts are fraud/error.

C. The business of the company is cash-based.

- Inherent risk is high risk
- Cash may be robbed by theft / Cash may be omission / mistake / wrong cash
accounting.

D. Tulip Ltd is planning to list on the local stock exchange within the next two
years.
- Tulip Ltd’s inherent risk is high risk
- Tulip Ltd may be motivated to show a better picture / a better future;
therefore, Tulip Ltd’s inherent risk is high.

E. Dhalia Ltd is currently facing financial difficulties and is seeking alternative

forms of finance.
- Dhalia Ltd’s inherent risk is high risk
- Because Dhalia Ltd is currently facing financial difficulties / difficult to
perform true and fair financial statement.
- Dhalia Ltd is seeking alternative forms of finance which may be wrong
form / wrong way.

F. Rose Ltd currently has no finance director.

- Rose Ltd’s inherent risk is high risk.
- Staff may not be supervised / Staff may not have the skills and knowledge to
apply accounting standard.
2. Base on the ISA (UK) 315, “Identifying and Assessing the Risks of Material
Misstatement Through Understanding of the Entity and Its Environment”. For
each of the following examples, select the component which it illustrates and
explain the reason why?
A. Review of actual performance against budget
- Control activities.
- Reviewing in order to control the accuracy of actual performance in line with
budget / Control the compliance of actual performance with the budget /
Adhere the actual performance with budget.

B. The entity's internal audit function

- Monitoring of control
- The function of internal audit is monitoring of control itself / the function of
internal audit is to monitor and to supervise the business operation.

C. The audit committer

- Control environment.
- The audit committee reviews the integrity of the financial statements of the
company and formal announcements relating to the company’s performance.

D. The process of preparing the financial statements

- Information system.
- The process of preparing the financial statements form part of the
information processing system.

E. Locking the inventory storeroom

- Control activities.
- Locking the inventory storeroom is a specific activity as it prevents the risk
of inventory loss and only specific staff or manager can open it.
F. Training programme for all staff
- Control environment.
- As managers would like to control the staff qualifications, staff insight and
expertise.