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AUDITING AND ASSURANCE: SPECIALIZED INDUSTRIES AUDIT OF

BANK SECTOR EXAMINATION REVIEWER
1. In order to not add complexity to bank reporting, disclosures must be the following except: a. more concise
b. easy-to-understand risk disclosures
c. increased levels of disclosure
d. no increased levels of disclosures

2. Statement 1: The issue is lack of risk information and not the manner in which it is delivered/ presented.
Statement 2: Auditors should work with the banking industry to assist in the design of example statements but this is
an area which the industry should own.
a. Both statements are true
b. Both statements are false
c. Only Statement 1 is true
d. Only statement 2 is true

3. Statement 1: Banks should enhance confidence in risk statements by obtaining public assurance from auditors.
Statement 2: ICAEW will not produce good practice guidance for reporting to
audit committees.
a. Statement 1 is incorrect
b. Statement 2 is correct
c. Both statements are correct
d. Statement 1 is correct

4. What is the task of ICAEW in bank reporting?

a. place greater emphasis on the ordering and presentation of information in annual reports as a whole
b. extend the scope of the audit and auditing standards or draft assurance standards to cover new risk reports
c. produce good practice guidance for reporting to audit committees
d. develop new risk reporting statements

5. When generating financial statements, management must make judgments, estimates, and assumptions that
affect the reported numbers in the financial statements.

a. Accounting Standard Setting

b. Critical Estimates and Judgments

c. Professional Judgment
d. None of these

6. Had addressed this problem by demanding that important accounting estimates and judgments be disclosed in
the accounts

a. Critical Estimates
b. Judgments
c. Accounting Standard Setting
d. None of these

7. Who is the primary source of information of the audit committees?a. The Auditor

b. The Customers
c. The Executive Management
d. The Accountant

8. They play an important role in the governance surrounding the finalization of critical judgments, estimates and
presentation affecting the accounts.

a. The Audit Committees

b. The Customers
c. The Executive Management
d. The Accountant

9. Statement 1: Financial reporting standards do not and are not intended to cover every eventuality nor how
informationis put together.
Statement 2: Compliance with financial reporting standards is only one part of providing a true and fair view.

Which is correct?
a. Statement 1 c. Both statements
b. Statement 2 d. Neither statements

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10. Statement 1: Directors are expected to consider the presentation of information in preparing financial statements
aswould auditors in providing an opinion on whether they provide a true and fair view.
Statement 2: There is a framework for directors presenting information in the front half of annual reports.
Which is correct?
a. Statement 1 c. Both statements
b. Statement 2 d. Neither statements

11. Statement 1: In bank reporting, annual reports are the only source of information to investors and other users
offinancial statements.

Statement 2: In bank reporting, the information presented during analyst presentations is not subject to any auditor
review, and while it may be provided to auditors, there is no obligation on the company to do this routinely
a. Statement 1 is true.
b. Statement 2 is true.
c. Both statements are true.
d. Both statements are false.

12. Statement 1: Good quality reporting from auditors to audit committees can add context and highlight gaps
inmanagement reporting.

Statement 2: Good practice is defined as using language that makes it clear whether individual estimates fall within an
acceptable range in the auditor's opinion, whether there is consistency with estimates made in prior years, and
whether the cumulative effect of, say, moving from aggressive to conservative ranges of estimates, or vice versa,
could have a significant impact.
a. Statement 1 is true.
b. Statement 2 is true.
c. Both statements are true.
d. Both statements are false.

13. Which of the following activities does not constitute audit supervision?

a. Preparing a preliminary audit program. Correct. This choice is a planning task.

b. Providing appropriate instructions to the auditors. Incorrect. This is a supervisory task.
c. Reviewing audit working papers. Incorrect. This is a supervisory task.
d. Seeing that audit objectives are achieved. Incorrect. This is a supervisory task.

14. The scope of work in developing and maintaining a quality assurance and improvement program (QAIP)
includeswhich of the following processes?
I. Supervision
II. Internal assessment
III. Ongoing monitoring
IV. External assessment
a. I only c. I and II
b. I, II, and III d. I, II, III, and IV

15. A continuous audit is specially needed for

A. Any trading concern

B. Smaller concern
C. Banking Companies
D. Any manufacturing companies

16. That companies must comply with many laws and regulations including company law, tax law and
environmentalprotection regulations require what category of internal control objectives?

A. Compliance

B. Financial reporting

C. Government reporting

D. Effective operations

17. The FSA has the ability to use ______ and ______ to strengthen its supervisory processes through skilled
persons'reports.
a.) auditors' skills and leadership
b.) auditors' skills and knowledge
c.) supervisors' skills and knowledge

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d.) supervisors' skills and leadership

18. Issues ______ than micro risk and accounting issues must be discussed
A. Higher C. Either
B. Lower D. Neither
19. The ________ disclosure is not required to be brought under the scope of audit.

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A. Pillar 1
B. Pillar 2
C. Pillar 3
D. Pillar 4

20. The FSA (financial services act) to be prepared by a ’skilled’ is paid for by the firm.
A. Regulated Firm
B. Legal Firm
C. All Firms
D. Accredited Firms

21. The types of work that external experts might undertake could be carried out directly by

A. Management
B. Supervisors
C. Assistant Manager

D. D. Board of Trustees

22. I. Supervisors should make better use of the section 166 reporting tool to support its supervisory objectives
andperiodically require auditor reports on key regulatory returns.
II. Auditors should dialogue with the regulator about the types of work that auditors could do efficiently, including
tasks that could be done in addition to statutory audit work.
a.) Both statements are true
b.) Both statements are false
c.) Only statement 1 is true
d.) Only statement 2 is false

23. It could provide more information about how they use private assurance reports to enhance their governance and
riskmanagement.
A. Bank
B. Government
C. Auditor
D. None of these
24. It can enhance risk management and control the environment.
A. Bank
B. Assurance Services
C. Audit committees
D. None of these
25. They play an important role in the governance surrounding the finalization of critical judgments, estimates
andpresentation affecting the accounts.
A. Accountant
B. Audit Committees
C. Manager
D. None of these
26. They are the one who explain the nature of services and the form of reporting they would be willing to provide.
A. Investor
B. Creditors
C. Auditors
D. None of these
27. The stakeholder engagement highlighted the fact that the audit process is highly valued by investors and banks,
andseen as essential in providing discipline to directors in their presentation of information.
a. Audit reports
b. Bank reporting
c. Annual reports

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d. Source of information
28. Banks could help to explain the critical role that their auditors perform. There are three benefits in providing
thisinformation all of which would enhance confidence in bank reporting. Which is correct?
a. it may enrich the quality of information in annual reports about key risks, uncertainties and areas of judgment
b. it could provide better information about how auditors are discharging their responsibilities
c. it could demonstrate how auditors and other external parties are strengthening risk management processes
throughadditional assurance services.
d. d. All answers are correct
29. Its goal is to ensure that all organizational processes are in line with the strategic goal and give the value that
internaland external customers demand by testing and proving that they are being carried out efficiently.
a. Audit Process
b. Private Organizations
c. Public Employee
d. None of these

30. In the summary of Proposals of audit reporting the Auditors should

A. better explain how audits improve the quality of financial information
B. develop a framework for an enhanced opinion on the front section of annual reports
C. provide greater assurance outside the audit report
D. All of these
31. In the Summary Proposals of Audit Reporting the Bank directors should
A. provide more information about discussions with auditors; and
B. develop guidance for public assurance on bank risk statements, should demand exist.
C. disclose how external assurance has supported their governance and risk management processes
D. A and C

32. They play an important role in the governance surrounding the finalization of critical judgments, estimates
andpresentation affecting the accounts.
A. Accountant
B. Audit Committees
C. Manager
D. None of these
33. They should explain better to investors and banks how the assurance framework can beused to provide additional
comfort on risk disclosures, or other areas of the front half of annual reports where demand for assurance
services exists.
A. Auditors
B. Stakeholders
C. Investors
D. All of these
34. They have the responsibility to provide information to investors.
a. Auditors
b. Shareholders
c. Directors
d. Accountants
35. When the auditor is an employee of the organization being audited, the audit is classified as a/an ____ quality
audit.
A. Internal
B. external
C. Compliance
D. D. Both A & B
36. ____ have the responsibility to provide information to investors. If management does not provide information, this
mayaffect the quality of evidence available to auditors.
A. Directors
B. Auditors

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C. Management
D. Investors
37. It report on whether there are any inconsistencies between the information in the front section of annual reports
andthe financial statements.
A. Directors
B. Auditors
C. Management

D. Investors

38. It might offer more information on how they use private assurance reports, whether given by the auditor or
anotherthird party, to improve their governance and risk management.
A. Control Environment
B. Risk management
C. Banks
D. Audit Committees
39. The ______________ and the auditor have different focuses but there are areas of common interest in the
riskassessments.
a. Manager b. President c. Supervisor d. Treasurer
40. Financial statements are,
A. New guidance and protocols
B. provided by directors
C. provided by investors
D. Regular dialogue between the regulator and auditors

41. The supervisor’s job is to:

A.check a bank’s soundness that it is operating within the regulatory rules
B.to consider the overall risks to the banking and financial system
C.to discharge any consumer protection responsibilities, they are given.
D.All of the Above
42. Auditors should, EXCEPT:
a. be proactive in setting up regular meetings with supervisors
b. be open in dialogue with supervisors
c. work with the FSA, the Financial Reporting Council and auditors to develop guidance and protocols over
auditorsupervisor dialogue
d. raise concerns at a higher level within the regulator if they consider the level of engagement from supervisors is
inadequate
43. If supervisors have any serious concerns over the openness of auditors of individual banks or more generally,
theyshould be prepared to raise those concerns at:
a. a more senior level within the audit firm
b. with the bank itself
c. with audit regulators
d. All of the above

44. Which statement is not true?

a. when the supervisor has not requested a meeting for some time, auditors could request a meeting.
b. The responsibility for setting up meetings between auditors and supervisors has generally been thought of as
aresponsibility of supervisors.
c. The supervisors have a power to request meetings and the auditors have a duty to engage.
d. Auditors could not request meetings with supervisors to help them discharge their responsibilities as auditors.

45. Both supervisors and auditors share the responsibility for _________________.

A. Good relationship

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B. Good dialogue
C. Satisfaction
D. Both a and b
46. What makes banking industry specialized?
a. they are likely either to have specific financial reporting standards applicable to them
b. they have distinct accounting policies which have been developed to account for specialized transactions
andbalances which are based on the normally-applied financial reporting standards.
c. A or B
d. none of these
47. The audit report is viewed as a/an
a. an opinion on whether the directors have presented the information fairly
b. viewed as providing useful information
c. statement of compliance with accounting standards
d. Both A and C
48. The audit process involves validating the information in the?
a. Income statement
b. cash flow statement
c. Balance sheet.
d. Note to the accounts
e. All of the above
49. Policymakers were,
A. more guarded in making specific recommendations but provided useful input and reflections
B. stressing that these should not necessarily be taken as official policy decisions
C. expressing caution about what we should report on their views
D. All of the Above

50. The auditor’s role is:

a. to pass on certain communications or letters to bank auditors
b. to provide an opinion to shareholders on the information provided by the bank in its financial statements
c. to inform an auditor that they were about to take significant action against a bank
d. work with the FSA, the Financial Reporting Council and auditors to develop guidance and protocols over
auditorsupervisor dialogue

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