271. Which of the following statements is correct concerning the required documentation in working papers of fraud risk assessment undertaken by the auditor?
A. All risk factors as mentioned in AAS4, should be considered and documented along with response to them.
B. Document the identification of fraud risk factors along with response to them.
C. Document material fraud, risk factors and response to them.
D. No documentation in required.
272. Which of the following is not a quality control consideration on accepting a new client?
A. Availability of audit assistants with necessary skill and competence.
B. Provision of other services to the client which may impair independence
C. Predecessor auditor’s advice as to whether audit fees were paid promptly
D. Review of audit work done by one partner by the other
273. The use of an audit engagement letter is the best method of assuring the auditor will have which of the following?
A. Auditor will obtain sufficient appropriate audit evidence.
B. Management representation letter
C. Access to all books, accounts and vouchers required for audit purpose
D. Cooperation from other auditors
274. An auditor who accepts an audit but does not possess the industry expertise of the business entity should
A. engage experts
B. obtain knowledge of matters that relate to the nature of entity’s business
C. inform management about it
D. take help of other auditors
275. The least important element in the evaluation of an audit firm’s system of quality control would relate to
A. assignment of audit assistants
B. The system of determining audit fees
C. consultation with experts
D. confidentiality of client’s information
276. The primary purpose of establishing quality control policies and procedures for deciding on client evaluation is to
A. ensure adherence to generally accepted auditing standards
B. acceptance or retention of clients whose management does not lack integrity
C. ensure audit fees is charged according to the type of audit work assigned
D. all of the above
277. Which of the following is the most appropriate potential reaction of the auditor to his assessment that the risk of material misstatement due to fraud is high in relation to existence of inventory?
A. Visit location on surprise basis to observe test counts
B. Request inventory count at a date close to yearend
C. Vouch goods sent on approval very carefully
D. Perform analytical procedures.
278. Which of the following is not likely to be a fraud risk factor relating to management’s characteristics
A. Tax evasion
B. Failure to correct known weakness in internal control system
C. Adoption of conservative accounting principles
D. High management turnover
279. Professional skepticism requires that the auditor assume that management is
A. reasonably honest
B. Neither honest nor dishonest
C. Not necessarily honest
D. Dishonest unless proved otherwise
280. The audit engagement letter, generally, should include a reference to each of the following except
A. limitations of auditing
B. responsibilities of management with respect to audit work
C. expectation of receiving a written management representation letter.
D. a description of the auditor’s method of sample selection.
IF YOU THINK ANY OF THE MCQ ABOVE IS WRONG.
PLEASE COMMENT WITH CORRECT ANSWER AND ITS DETAIL EXPLANATION IN COMMENT BOX.