Cga-Canada External Auditing [Au1] Examination June 2010
CGA-CANADA EXTERNAL AUDITING [AU1] EXAMINATION June 2010 Marks
30
Time: 3 Hours
Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note:
2 marks each
a.
What is the role of the Canadian Public Accountability Board? 1) 2) 3) 4) To develop auditing standards for the CICA Handbook To conduct inspections of accounting firms to assess their ability to protect the public interest To recommend audit firms to members of the general public To review audit reports before they are issued at the end of an external audit
b. Which of the following is true concerning external and internal auditors? 1) 2) 3) 4) c. Both types of auditors need to be independent to function effectively. Both may be employees of the company being audited. Both focus on the audit of financial statements. Only the external auditor has a duty of care.
Which of the following best describes an auditor’s engagement risk? 1) 2) 3) 4) Engagement risk is the risk that the auditor may be sued. The 3 components of engagement risk are inherent risk, control risk, and detection risk. Engagement risk is the risk that the auditor may not be paid for the audit engagement. Engagement risk cannot be controlled by the auditor, therefore the auditor must be very careful about which audit engagements to accept.
d. What is the purpose of the introductory paragraph of the standard audit report? 1) 2) 3) 4) To identify GAAS as the standard used by the auditor To make the reader aware that the auditor has examined the records only on a test basis To advise the reader that the auditor only provides reasonable assurance To identify the
30
Time: 3 Hours
Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note:
2 marks each
a.
What is the role of the Canadian Public Accountability Board? 1) 2) 3) 4) To develop auditing standards for the CICA Handbook To conduct inspections of accounting firms to assess their ability to protect the public interest To recommend audit firms to members of the general public To review audit reports before they are issued at the end of an external audit
b. Which of the following is true concerning external and internal auditors? 1) 2) 3) 4) c. Both types of auditors need to be independent to function effectively. Both may be employees of the company being audited. Both focus on the audit of financial statements. Only the external auditor has a duty of care.
Which of the following best describes an auditor’s engagement risk? 1) 2) 3) 4) Engagement risk is the risk that the auditor may be sued. The 3 components of engagement risk are inherent risk, control risk, and detection risk. Engagement risk is the risk that the auditor may not be paid for the audit engagement. Engagement risk cannot be controlled by the auditor, therefore the auditor must be very careful about which audit engagements to accept.
d. What is the purpose of the introductory paragraph of the standard audit report? 1) 2) 3) 4) To identify GAAS as the standard used by the auditor To make the reader aware that the auditor has examined the records only on a test basis To advise the reader that the auditor only provides reasonable assurance To identify the