Chapter 1 [QUESTION 1] The relationship between audit and assurances services is best described by which of the following: A: The relationship will depend on the terms of the contract. B: The audit function is a subset of assurance services. C: Assurance services are a subset of the audit function. D: The audit function and assurance services are the same. [QUESTION 2] Which of the following would be suitable criteria for an assurance engagement? A: An indicative list of corporate governance practices prescribed by ASIC for providing assurance on corporate governance practices. B: An organisation's internal documents prescribing what constitutes satisfactory internal control for providing assurance on internal controls. C: Both an indicative list of corporate governance practices prescribed by ASIC for providing assurance on corporate governance practices, and an organisation's internal documents prescribing what constitutes satisfactory internal control for providing assurance on internal controls. D: Neither an indicative list of corporate governance practices prescribed by ASIC for providing assurance on corporate governance practices, nor an organisation's internal documents prescribing what constitutes satisfactory internal control for providing assurance on internal controls. [QUESTION 3] The ASOBAC definition of auditing refers to auditing as a 'systematic process of objectively obtaining and evaluating evidence regarding assertions ... '. What is meant by 'systematic process'? A: All audits involve evaluating evidence in the same manner. B: All audits involve obtaining the same evidence. C: All assertions are equally important for all audits. D: There should be a well-planned approach for conducting the audit. [QUESTION 4] Which of the following is not a fundamental principle underlying the objective of an audit? A: The auditor should represent their client in any matters identified by the financial regulator. B: The auditor should follow quality control procedures. C: The auditor should obtain sufficient appropriate evidence. D: The auditor should perform the audit with an attitude of professional scepticism. 1
[QUESTION 5] Below are a number of potential characteristics that information may possess: I: Comparability. II: Periodicity. III: Relevance. IV: Reliability. Which combination of these is identified in the financial reporting framework to enable the financial reporting system to meet the fundamental objectives of financial reporting? A: III and IV only. B: I, III and IV only. C: II, III and IV only. D: I, II, III and IV. [QUESTION 6] The accuracy of information included in footnotes that accompany the audited financial report of a company whose shares are traded on a stock exchange is the primary responsibility of: A: The independent auditor. B: The stock exchange officials. C: The Securities and Exchange Commission. D: The company's management. [QUESTION 7] Users of financial reports demand independent audits because: A: management relies on the auditor to improve the internal control. B: users expect auditors to correct management errors. C: management may not be objective in reporting. D: users demand assurance that fraud does not exist. [QUESTION 8] Which of the following best describes why an independent auditor is asked to express an opinion on a financial report? A: To