Accg5908

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THE UNIVERSITY OF NEW SOUTH WALES

School of Accounting
ACCT5908 – Auditing and Assurance Services

FINAL EXAMINATION
Session 1 - 2012
Student Name: Student Number: 1. 2. z

3.

Time allowed: 2 hours Number of questions: The exam is divided into two parts. PART A consists of 15 multiple choice questions worth 1 mark each, in total 15 marks. PART B is worth 40 marks and consists of four written answer questions. (Note that the questions are NOT of equal value) Total exam: 55 Marks (represents 55% of final assessment)

All questions are compulsory. Multiple choice questions are to be answered on the answer sheet. Written questions are to be answered in the spaces provided on this exam paper. THIS PAPER MAY NOT BE RETAINED BY THE CANDIDATE. ANSWERS MUST BE WRITTEN IN INK.

1

PART A
MULTIPLE CHOICE QUESTIONS (total of 15 marks)

This question contains fifteen (15) multiple choice questions each worth one (1) mark.  A separate answer sheet is provided.  Carefully read the instructions as provided.  Indicate the most correct response in the spaces provided.  Please ensure you fill in your Student Number and Student Name correctly on your answer sheet. No marks are deducted for an incorrect response.

1.

An auditor would place least reliance on substantive analytical procedures for the wages expense account if this account is: (a) (b) (c) (d) Material and the associated internal controls are weak. Not material and the associated internal controls are strong. Material and the associated internal controls are strong. Not material and the associated internal controls are weak.

2.

You are engaged as auditor for Teddy Limited and have been unable to attend the year end stocktake. The accounting records are sufficiently reliable to enable you to become satisfied as to the year end inventory balances, which are material. You are satisfied with the financial statements in all other respects. The appropriate audit opinion to issue is: (a) (b) (c) (d) Qualified. Unqualified. Disclaimer. Unqualified opinion with other matter paragraph.

3.

Your client’s financial report does not disclose certain long-term lease obligations. You have determined that the omitted disclosures are required by AASB117. The appropriate audit opinion is: (a) (b) (c) (d) Qualified. Unqualified. Disclaimer. Unqualified opinion with other matter paragraph.

2

4.

You have performed ratio analysis as a part of your planning analytical procedures. An unexplained decrease in the ratio of gross margin to sales indicates potential risk in relation to: (a) (b) (c) (d) Unrecorded purchases. Inventory purchases being accounted for as selling and general expenses. Fictitious sales. Unrecorded sales.

5.

In determining whether transactions have been recorded, the direction of the audit testing should be from the: (a) (b) (c) (d) General ledger balances. Adjusted trial balance. Original source documents. Authorised general journal entries.

6.

Your client’s 30 June 2012 accounts do not provide for future warranty expenses related to inventory sold in the 2011 - 2012 financial year, however, a footnote provides details of the estimated liability. The amount involved is material for this accounting period due to substantial sales of a faulty product. In this situation the auditor should: (a) (b) (c) (d) Express a qualified opinion. Express an unqualified opinion with emphasis of matter paragraph. Express a disclaimer of opinion. Express and unqualified opinion.

7.

An emphasis of matter paragraph: (a) (b) (c) (d) Is always positioned as part of the audit opinion to highlight it to readers. Emphasises important information not noted elsewhere in the financial report. Emphasises important information noted elsewhere in the financial report. Is a form of audit qualification.

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8.

On 2 July, 2012, Herman’s Paints received a notice from its primary suppliers that effective immediately all wholesale prices would...
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