Why do auditors concentrate their efforts on material items in accounts?

A. Because they are easier to audit
B. Because it reduces the audit time
C. Because the risk to the accounts of their being incorrectly stated is greater
D. Because the directors have asked for it

Which of the following is NOT the responsibility of a company’s directors?

A. Reporting to the shareholders on the accuracy of the accounts
B. Establishment of internal controls
C. Keeping proper accounting records
D. Supplying information and explanations to the auditor

When an auditor is proposed for removal from office, which one of the following is he NOT permitted to do?

A. Circulate representations to members
B. Apply to the court to have the proposal removed
C. Speak at the AGM/EGM where the removal is proposed
D. Receive notification of the AGM/EGM where the removal is proposed

Which one of the following is NOT a duty of the auditor?

A. Duty to report to the company’s bankers
B. Duty to report to the members
C. Duty to sign the audit report
D. Duty to report on any violation of law

Assuming that it is not the first appointment of the auditor, who is responsible for the appointment of the auditor?

A. The shareholders in a general meeting
B. The managing director
C. The board of directors in a board meeting
D. The audit committee

The independent auditor’s primary responsibility is to______________?

A. the directors
B. the company’s creditors (payables)
C. the company’s bank
D. the shareholders

How long is the auditor’s term of office?

A. Until the audit is complete
B. Until the financial statements are complete
C. Until the next AGM (Annual General Meeting)
D. Until the directors remove them

Which of the following is correct in relation to materiality?

A. A matter is material only if it changes the audit report
B. A matter is material if the auditor and the directors both decide that further work needs to be done in the area under question
C. A matter is material only if it affects directors’ emoluments
D. A matter is material if its omission or misstatement would reasonably influence the decisions of an addressee of the auditors’ report

Which one of the following is NOT considered to be part of planning?

A. Background i.e. industry
B. Previous year’s audit i.e. any qualifications in the report
C. Considering the work to be done by the client staff e.g. internal audit
D. Considering whether the financial statements show a true and fair view

Audit risk is composed of 3 factors. Which of the following is NOT one of those factors?

A. Compliance risk
B. Detection risk
C. Control risk
D. Inherent risk