FAU - MCQ

Respondent: Hieronymo Chelsea

First name: Chelsea
Last name: Hieronymo
Start date: 2022-06-07 19:57
End date: 2022-06-07 20:45

Test passed
Total score: 72% (36/50)
Internal Controls - 83,3% (5/6)
Score:
Internal Audit - 100% (2/2)
Score:
Audit Planning - 33,3% (1/3)
Score:
Ethical Threats - 100% (2/2)
Score:
Audit Introduction - 83,3% (5/6)
Score:
FSs Assertions - 75% (3/4)
Score:
Payroll System - 100% (1/1)
Score:
CAATs - Score: 0% (0/1)
Non-current Asset - 0% (0/1)
Score:
Working Papers - 100% (1/1)
Score:
Trade Receivables - 0% (0/1)
Score:
Analytical Procedures 66,7% (2/3)
- Score:
Audit Regulations - 100% (1/1)
Score:
Audit Completion - 66,7% (4/6)
Score:
Audit Risk - Score: 100% (1/1)
Inventory Audit - 100% (4/4)
Score:
Audit Evidence - 66,7% (4/6)
Score:
Sampling - Score: 0% (0/1)

1
 FAU - MCQ

Question 1/50
Which of the following is a control over COMPLETENESS of input into a computerised accounting
system?
A. Range checks
B. Format or field checks
C. Check digit verification
D. Sequence checks
Score: 0/1p.

Question 2/50
Which of the following statements summarises the KEY difference between the external auditor and the
internal auditor of a limited liability company?
A. External auditors have to be professionally qualified accountants; internal auditors do not
B. External auditors consider risk when planning their audit work; internal auditors do not
C. External auditors are required to be independent of the company; internal auditors report to those
charged with the governance of the company
D. External auditors are concerned solely with reporting on the annual financial statements; internal auditors
are concerned solely with the review of the company’s accounting systems
Score: 1/1p.

Question 3/50
Which of the following actions should an auditor take during the final stages of an audit, when audit
procedures performed reveal that a company’s financial statements contain material and pervasive
misstatement?
(1) Irrespective of the evidence already obtained, carry out further procedures
to obtain additional evidence to support an opinion that there is material and
pervasive misstatement in the financial statements
(2) Inform management that unless the material and pervasive misstatement is
corrected, the auditor will be unable to express an unmodified audit opinion
(3) Prepare to issue an auditor’s report expressing a qualified audit opinion,
if management refuse to correct the material and pervasive misstatement
A. (1) only
B. (1) and (2)
C. (2) only
D. (3)
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 2

 FAU - MCQ

Question 4/50
Auditors have a professional duty of confidentiality under ACCA’s Code of Ethics and Conduct; voluntary
disclosure of information may be necessary in certain situations.
For which TWO of the following situations should an auditor make VOLUNTARY disclosure?
A. If an auditor knows or suspects his client is engaged in money laundering
B. Where disclosure is made to non-governmental bodies
C. Where it is in the public interest to disclose
D. If an auditor suspects his client has committed terrorist offences
Score: 1/1p.

Question 5/50
Are the following statements TRUE or FALSE?
Auditors must comply with the requirements of the International Standards on Auditing (ISAs) at all times
during the conduct of an audit. They must not depart from these requirements in any circumstances.
'Matching cash received from customers after the year end to trade receivable account balances at the year-end
date is a valid audit test to obtain assurance about the VALUATION of trade receivables as reported in a
company’s annual financial statements.'
A. FT
Possible answers:
FT;

Score: 1/1p.

Question 6/50
Which of the following are physical controls?
(1) Carrying out a monthly independent count of petty cash
(2) Review for exceptional hours claimed in the overtime hours report
(3) Segregation between the initiation and the authorisation of a purchase transaction
A. 1 only
B. 1 and 2
C. 2 and 3
D. 3 only
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 3

 FAU - MCQ

Question 7/50
Which of the following factors could be the reason for an INCREASE in reported gross profit in the
financial statements of a company?
(1) A reduction in carriage outward costs for the period under review
(2) A reduction in carriage inward costs for the period under review
(3) An increase in the amount of discount received from suppliers of components for
early payment of purchases invoices
A. (1) and (2) only
B. (2) only
C. (3) only
D. (1), (2) and (3)
Score: 1/1p.

Question 8/50
In which of the following circumstances should auditors ascertain and document the internal controls
relevant to the accounting system, when auditing the financial statements of a limited liability company?
A. In all circumstances
B. Only when the system is very complex
C. Only when they plan to rely on the system
D. Only when it is not feasible to carry out tests of controls
Score: 1/1p.

Question 9/50
Which of the following statements is TRUE with regard to an emphasis of matter paragraph included in a
modified auditor’s report?
A. The paragraph should be included before the Opinion paragraph
B. The paragraph may refer to a matter other than those presented or disclosed in the financial statements
that, in the auditor’s opinion is relevant to users’ understanding of the audit
C. The paragraph should ordinarily refer to the fact that the auditor’s opinion is modified in respect of the
subject matter
D. The inclusion of the paragraph should not affect the auditor’s opinion on the financial statements
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 4

 FAU - MCQ

Question 10/50
Which of the following are categories of control activities relevant to the determination of control risk, in
the context of the audit of the financial statements of a limited liability company?
(1) Segregation of duties
(2) Performance reviews
(3) Organisational objectives
(4) Authorisation
A. 1 only
B. 1, 2 and 4
C. 2 and 3 only
D. 2, 3 and 4
Score: 1/1p.

Question 11/50
Which of the following financial statement assertions, applies to motor expenses, as reported in the
company's financial statements?
(1) Existence
(2) Occurance
(3) Rights and obligations
A. 1 only
B. 1 and 2
C. 2 only
D. 2 and 3
Score: 1/1p.

Question 12/50
Which of the following are information processing controls?
(1) Reconciliation of suppliers’ statements
(2) Security tagging of items of plant
(3) Sequential numbering of sales invoices
A. 1 only
B. 1 and 3
C. 2 and 3
D. 3 only
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 5

 FAU - MCQ

Question 13/50
Which of the following statements, if any, is/are CORRECT?
(1) Internal auditors should report to the finance director as they understand internal
controls and are best placed to implement any recommendations in a timely manner
(2) Companies are not required to establish and maintain an internal audit function
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Score: 1/1p.

Question 14/50
On which of the following controls would an auditor of a manufacturing company’s financial statements
NOT place any reliance to obtain assurance that production employees were paid at the correct rate of
pay?
A. Appropriate and adequate segregation of duties over payroll processing
B. Appropriate and adequate controls over the access to and amendment of the wages master file
C. Appropriate and adequate controls over the authorisation of payroll procedures
D. Appropriate and adequate controls over the clocking-on and clocking-off procedures of production
personnel
Score: 1/1p.

Question 15/50
Which of the following action should an auditor take during the final stages of an audit, when audit
procedures performed reveal that a company's financial statements contain material and pervasive
misstatement?
(1) Irrespective of the evidence already obtained, carry out further procedures to
obtain additional evidence to support an opinion that there is material and
pervasive misstatement in the financial statements
(2) Inform management that unless the material and pervasive misstatement is corrected,
the auditor will be unable to express an unmodified audit opinion
(3) Prepare to issue an auditor's report expressing a qualified audit opinion,
if management refuse to correct the material and pervasive misstatement
A. 1 only
B. 1 and 2
C. 2 only
D. 3
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 6

 FAU - MCQ

Question 16/50
Which of the following should be facilitated by the standardisation of substantive procedure working
papers?
(1) Meeting of specified audit objectives
(2) Communicating with the staff of the audit client
(3) Delegation of audit work
(4) Review of audit work
A. 1 and 4 only
B. 1, 3 and 4
C. 2 and 3 only
D. 1, 2, 3 and 4
Score: 1/1p.

Question 17/50
Which of the following statements is FALSE with regard to audit planning?
A. It helps the auditors to devote appropriate attention to important areas of the financial statements
B. It helps the auditor to properly organise and manage the audit engagement, so that it is performed in an
effective manner
C. It provides assurance to the auditor that the risk of a material misstatement in the financial statements
will be reduced
D. It facilitates the direction and supervision of audit team members and the review of their work
Score: 1/1p.

Question 18/50
Which of the following management assertions are relevant to presentation and disclosure in the financial
statements?
(1) Accuracy and valuation
(2) Cut-off
(3) Existence
A. (1) only
B. (1) and (2)
C. (2) and (3)
Score: 1/1p.

Question 19/50
Which of the following is NOT a principle of the UK Corporate Governance Code?
A. There should be a rigorous and transparent procedure for the appointment of new directors to the board
B. The board should use the annual general meeting (AGM) to communicate with investors
C. The non-executive chairman should decide on the remuneration of all directors
D. All directors should receive induction training on joining the board
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 7

 FAU - MCQ

Question 20/50
Which TWO of the following is TRUE with regard to the use of test data as a computer-assisted audit
technique?
A. It is used when carrying out tests of controls
B. It is used when carrying out substantive procedures
C. It may be used when carrying out tests of controls and substantive procedures
D. It may be processed simultaneously with or separately from the client’s normal processing runs
Score: 0/1p.

Question 21/50
Which of the following statements is CORRECT with regard to a trade receivables circularisation carried
out during the audit of the financial statements of a limited liability company?
A. A positive circularisation letter requires a response only if the addressee disputes the balance stated
B. The circularisation letters should be signed by the auditor
C. The circularisation is primarily a test for existence of receivables balances
D. Any responses should be sent directly to the company for forwarding to the auditor
Score: 0/1p.

Question 22/50
Application controls are manual or automated procedures that operate over accounting applications to ensure
that all transactions are complete and accurate
Which TWO of the following are application controls?
A. Password protection of programs
B. Batch controls
C. One for one checking
D. Regular back up of programs
Score: 1/1p.

Question 23/50
A company sells two products and there has been a significant decrease in its reported gross margin compared to
the previous year.
Which of the following reasons given by management to explain the increase, could be valid?
(1) A significant change in the sales mix volumes of the two products
(2) A change of the supplier from which it purchases its products
(3) Significant write-offs of impaired trade receivables balances
A. 1 only
B. 1 and 2
C. 2 only
D. 3
Score: 0/1p.

First name: Chelsea | Last name: Hieronymo 8

 FAU - MCQ

Question 24/50
An emphasis of matter paragraph is used in an audit report to draw attention to a matter affecting the financial
statements.
Which TWO of the following are correct in relation to an Emphasis of Matter Paragraph in the Auditor’s
Report?
A. It is used when there is a significant uncertainty
B. It constitutes a qualified audit opinion
C. The audit report is referred to as an unmodified report
D. The matter is deemed to be fundamental to the users understanding of the financial statements
Score: 1/1p.

Question 25/50
Which of the following statements are TRUE regarding written management representations received by
the auditors of a limited liability company audit client?
(1) They may include information provided to the directors by in-house lawyers of the
company about provisions for legal claims
(2) Their primary purpose is to provide sufficient, appropriate reliable audit evidence to
support the opinion expressed in the auditor’s report
(3) They may confirm that the selection and application of accounting policies are
appropriate
(4) They should confirm that all transactions have been recorded and are reflected in the
financial statements
A. (1), (3), (4)
B. (2), (3), (4)
C. (1), (3)
D. (2), (4)
Score: 1/1p.

Question 26/50
The auditor of Four Co, a manufacturing company, has noted an increase in total sales value but a decrease in
the company’s gross profit percentage for 2009 as compared to the previous year.
Which of the following is consistent with, and adequately explains, the decrease?
A. Sales commission payable to the company’s sales force increased in relation to sales values as compared
to 2008
B. Sales volumes have decreased as compared to 2008
C. During 2009, due to a scarcity of supply the company had to pay higher prices when purchasing
components
D. During 2009 a major component supplier withdrew the settlement discounts previously granted
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 9

 FAU - MCQ

Question 27/50
Which of the following audit procedures is a substantive procedure?
A. Reperforming a wages control account reconciliation already carried out by the client
B. Comparing the trade payables payment period with that for the previous year
C. Examining a sample of purchase orders for evidence of authorisation
D. Tracing the steps of sales transactions through the system into the accounting records
Score: 1/1p.

Question 28/50
Which of the following statements is NOT true, in the context of the planning of an audit?
A. Planning is a continual process
B. Planning often begins shortly after (or in connection with) the completion of the previous audit
C. Planning should be carried out solely by the audit engagement partner
D. Planning does include the consideration of the analytical procedures to be applied as risk assessment
procedures
Score: 0/1p.

Question 29/50
When auditing non-current assets, which of the following is a SUBSTANTIVE procedure?
A. Inspecting reconciliations of the non-current assets register to general ledger balances and confirming
that discrepancies have been resolved
B. Inspecting a sample of non-current asset purchase invoices and confirming that they have been properly
authorised
C. Inspecting a sample of vehicle registration documents and agreeing that they are in the entity’s name
D. Inspecting a sample of depreciation calculations for evidence of accuracy checks
Score: 0/1p.

Question 30/50
Which of the following documents should be inspected by an auditor, when carrying out a purchases
cut-off test at the period end?
(1) Purchase requisitions issued prior to the period end
(2) Goods received note issued prior to the period end
(3) Credit notes from suppliers received after the period end
A. 1 and 2
B. 2 only
C. 2 and 3
D. 3 only
Score: 0/1p.

First name: Chelsea | Last name: Hieronymo 10

 FAU - MCQ

Question 31/50
Which of the following items is NOT included in a standard bank confirmation letter (bank report), for a
limited liability company audit client?
A. Details of assets purchased with bank loans advanced during the period
B. Details of accounts closed during the reporting period
C. Details of the company’s assets held as security
D. Details of interest earned on deposits but not credited during the period
Score: 1/1p.

Question 32/50
Which of the following actions by an auditor is NOT an example of compliance with the fundamental
principle of professional competence and due care, as set out in ACCA's Code of Ethics and Conduct?
A. Applying knowledge which is relevant to the client's business, to identify the risk of material
misstatements
B. Designing and performing appropriate audit procedures
C. Being straightforward and honest when raising concerns about a position taken by a client
D. Applying relevant knowledge when critically assessing whether audit evidence is sufficient and
appropriate
Score: 1/1p.

Question 33/50
Which of the following about documenting the internal control system is FALSE?
A. The system must be documented in every audit
B. The purpose of documenting the system is to reduce substantive work
C. Narratives, flowcharts and questionnaires are methods used to document the system
D. After the system is documented the auditor may perform testing on it
Score: 1/1p.

Question 34/50
Which TWO of the following procedures are TESTS OF CONTROL an auditor should perform in testing
the inventory cycle of their client whilst attending the inventory count?
A. Observe whether the client’s staff are following the inventory count instructions
B. Review inventory present in the warehouse for evidence of damage or obsolescence
C. Obtain a sample of the last goods received notes and goods despatched notes and follow through to
ensure inclusion in the correct accounting period
D. Inspect and review management’s inventory count instructions
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 11

 FAU - MCQ

Question 35/50
Which of the following could result in reported material losses on disposal of plant and machinery?
(1) Depreciation rates are too high
(2) Depreciation rates are too low
(3) Disposal proceeds are overstated
A. 1 only
B. 1 and 3
C. 2 only
D. 2 and 3
Score: 0/1p.

Question 36/50
Which of the following is NOT a responsibility of the auditor?
A. To provide an opinion on the truth and fairness of the financial statements
B. To conduct an audit in accordance with International Standards on Auditing
C. To express an opinion on the company’s going concern status
D. To perform testing on subsequent events as part of their audit
Score: 1/1p.

Question 37/50
Which of the following activities should an auditor carry out when establishing the audit strategy for an
audit engagement?
(1) Identify the characteristics of the engagement that define its scope
(2) Ascertain the reporting objectives of the engagement
(3) Ascertain the nature, timing and extent of resources necessary to perform the
engagement
(4) Consider audit procedures that are required to be carried out so that the engagement
complies with International Standards on Auditing
A. 1, 2, 3
B. 1, 2, 4
C. 1, 3, 4
D. 2, 3, 4
Score: 0/1p.

First name: Chelsea | Last name: Hieronymo 12

 FAU - MCQ

Question 38/50
Which of the following statements, relating to the auditor’s reporting responsibilities for going concern, if
any, is/are CORRECT?
(1) Where management is unwilling to make their assessment of the company’s ability to
continue as a going concern, the auditor should include an emphasis of matter
paragraph in the audit report
(2) Where the use of the going concern assumption is inappropriate, the auditor should
include a qualified opinion in the audit report
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Score: 0/1p.

Question 39/50
Which TWO of the following should be included in an audit engagement letter?
A. Objective and scope of the audit
B. Results of previous audits
C. Management’s responsibilities
D. Need to maintain professional scepticism
Score: 1/1p.

Question 40/50
Which of the following factors should have the effect of INCREASING a sample size for a test of details?
(1) An increase in the use of other substantive procedures directed at the same assertion
(2) An increase in the amount of misstatement the auditor expects to find in the population
(3) An increase in the level of tolerable misstatement
A. (1) only
B. (2) only
C. (2) and (3)
D. (3) only
Score: 0/1p.

Question 41/50
Which of the following statement is NOT true of a letter of engagement?
A. If there is a significant change in the ownership of an entity then a new letter of engagement will be
necessary
B. It is a contract between the auditor and shareholders of the client
C. It is drafted by the auditor and send for management to sign before the commencement of any audit work
D. It is an example of working paper in the permanent audit file
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 13

 FAU - MCQ

Question 42/50
Which of the following financial statement assertions should an auditor use when checking ‘account
balances at the period end’ in a set of financial statements?
A. Classification and understandability
B. Cut-off
C. Existence
D. Occurrence
Score: 0/1p.

Question 43/50
Which of the following is the key characteristic of a ‘systems-based audit’?
A. The auditor ascertains and records the client’s accounting system
B. The auditor makes use of computer assisted audit techniques
C. The client has a computer-based accounting system
D. The auditor seeks to rely on internal controls
Score: 1/1p.

Question 44/50
What is the principal purpose of the engagement letter in respect of a limited liability company audit
assignment?
A. To set out the proposed timetable for the audit
B. To define the extent of the auditors’ responsibilities
C. To define the extent of the directors’ responsibilities
D. To set the audit fee for the current year
Score: 0/1p.

Question 45/50
Which of the following is the PRIMARY purpose of the auditor's attendance at an inventory count?
A. To obtain assurance about the independence and quality of the inventory count team
B. To obtain assurance about the existence and ownership of inventory
C. To obtain assurance about the existence and presentation of inventory
D. To obtain assurance about the existence and condition of inventory
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 14

 FAU - MCQ

Question 46/50
The audit of Giggs Co’s financial statements for the year ended 31 October 2014 has been completed; the audit
report and the financial statements have been signed but not yet issued. The finance director of Giggs Co has just
informed the audit team that he has received notification that a material receivable balance has become
irrecoverable and Giggs Co will not receive any of the amounts owing.
What actions, if any, should the auditor now take to satisfy their responsibilities under ISA 560
Subsequent Events?
A. No actions required as the audit report and financial statements have already been signed
B. Request management to adjust the financial statements, verify the adjustment and provide a new audit
report
C. Request management to make disclosure of this event in the financial statements
D. Request that management adjust for this event in the following year’s financial statements as it occurred
in year ending 31 October 2015
Score: 0/1p.

Question 47/50
Which of the following audit procedures is a test primarily for UNDERSTATEMENT of reported
inventory at the year end?
A. Inspect the inventory count sheets and confirm that inventories held but owned by third parties are not
included in the inventory count
B. Compare the quantities recorded on inventory count sheets to actual physical quantities and investigate
differences
C. Inspect the sequence of the pre-numbered inventory count sheets used to record the inventory count and
investigate omissions
D. Compare the cost of inventory items with sales prices on post year-end invoices to confirm net realisable
value
Score: 1/1p.

Question 48/50
Which of the following procedures carried out by an auditor is a test primarily for valuation of inventory?
(1) Checking certification of inventory held by third parties to authenticate inventory records
(2) Checking correct treatment of slow-moving and obsolete items
(3) Checking actual quantities of inventory to those recorded by count team members
A. (1) and (2)
B. (2) only
C. (2) and (3)
D. (3) only
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 15

 FAU - MCQ

Question 49/50
Which of the following controls would provide the most positive assurance as to the completeness of the
sales figure recorded in the financial statements of a manufacturing company?
A. Segregation of sales between the preparation of goods despatched notes and the preparation of the sales
invoices
B. The issue of pre-numbered sales invoices for every sales transaction and internal checking for
completion of processing
C. The use of a pre-numbered goods despatched note for every sales transaction and internal checking for
completeness of processing
D. Authorisation of all sales invoices by the sales manager prior to processing
Score: 1/1p.

Question 50/50
Which of the following statements about an audit engagement letter is TRUE?
A. It is addressed to the company’s shareholders
B. It should refer to the audit resources to be used on the audit
C. It is only sent to new clients
D. It should refer to the applicable financial reporting framework
Score: 1/1p.

First name: Chelsea | Last name: Hieronymo 16