AA A Audit framework and regulation

What level of assurance does an audit of financial statements give?

• 1 No assurance
• 2 Absolute assurance
• 3 Reasonable assurance
• 4 Limited assurance

Who is responsible for preparing the financial statements?

• 1 The tax authority
• 2 The audit committee only
• 3 The external auditor
• 4 The directors

Which body issues the International Standards on Auditing?

• 1 The FBR
• 2 The IAASB
• 3 The IASB
• 4 The ISSB

What is the main role of an audit committee in relation to external audit?

• 1 To set the audit fee without discussion
• 2 To recommend the appointment of the auditor and help to protect the auditor's independence
• 3 To perform the audit
• 4 To prepare the financial statements

Which of these is a fundamental ethical principle in ACCA's Code of Ethics and Conduct?

• 1 Profitability
• 2 Loyalty to the client
• 3 Objectivity
• 4 Speed

An audit firm's team member holds shares in an audit client. Which threat does this create?

• 1 Intimidation
• 2 Self-interest
• 3 Advocacy
• 4 Familiarity

An audit firm prepares the financial statements of its audit client and then audits them. Which threat does this create?

• 1 Intimidation
• 2 Self-review
• 3 Familiarity
• 4 Advocacy

A long-serving audit partner has become close friends with the finance director of a client. Which threat does this create?

• 1 Advocacy
• 2 Familiarity
• 3 Self-review
• 4 Self-interest

Which of these is a safeguard against a familiarity threat?

• 1 Rotating the audit partner
• 2 Appointing the client's finance director to the audit team
• 3 Increasing the audit fee
• 4 Taking gifts from the client

Which statement about the limited assurance is correct?

• 1 It gives no conclusion
• 2 It gives a negative form of conclusion with a lower level of assurance
• 3 It is the same as an audit
• 4 It gives a positive opinion with high assurance