E3 Quality, ethics and the responsibilities of the auditor

Which of these is a component of a firm's system of quality management?

• 1 Setting the audit fee
• 2 Preparing the client's tax return
• 3 Choosing the client's directors
• 4 Monitoring and remediation

What does an engagement quality review do?

• 1 Gives an objective evaluation of significant judgements and conclusions before the report is issued
• 2 Collects the fee
• 3 Sets materiality only
• 4 Prepares the financial statements

In the conceptual framework approach to ethics, what is the correct order?

• 1 Address, ignore and report
• 2 Identify, evaluate and address threats
• 3 Report, identify and ignore
• 4 Evaluate, hide and accept

An auditor discovers a breach of the Code of Ethics. What should the auditor do first?

• 1 Ignore it
• 2 Change the working papers
• 3 Wait for the client to notice
• 4 End the activity that caused the breach and assess the consequences

Who is responsible for the prevention and detection of fraud?

• 1 The tax authority
• 2 The shareholders
• 3 The auditor alone
• 4 Management and those charged with governance

The auditor planned and performed the audit properly but did not detect a well-hidden fraud. What does this show?

• 1 The audit was invalid
• 2 The auditor is always liable
• 3 The financial statements were correct
• 4 The auditor will not necessarily have failed

Which statement about non-compliance with laws and regulations is correct?

• 1 The auditor is responsible for compliance
• 2 Management is responsible for compliance and the auditor considers non-compliance that affects the statements
• 3 It is never reported
• 4 It is not relevant to the audit

Which of these is a quality management procedure over engagement resources?

• 1 Avoiding review
• 2 Hiding deficiencies
• 3 Assigning staff with the right skills and enough time
• 4 Setting the client's fee