Deloitte Audit Business Challenge
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- 1.Which of the following is the most important reason for an auditor to gain an understanding of an audit client's system of internal control over financial reporting?
- A.
Understanding a client's system of internal control can help the auditor assess risk and identify areas where financial statement misstatements might be more likely.
- B.
Understanding a client's system of internal control can help the auditor make valuable recommendations to management at the end of the engagement.
- C.
Understanding a client's system of internal control can help the auditor seel consulting services to the client.
- D.
Understanding a client's system of internal control is not a required part of the audit process.
- 2.Which of the following statements best describes what is meant by unqualified audit opinion?
- A.
Issuance of an unqualified auditor's report indicates that in the auditor's opinion the client's financial statements are not fairly enough presented in accordance with agreed-upon criteria to qualify for a clean opinion.
- B.
Issuance of an unqualified auditor's report indicates that the auditor is not qualified to express an opinion that the client's financial statements are fairly presented in accordance with agreed-upon criteria.
- C.
Issuance of an unqualified auditor's report indicates that the auditor is expressing different opinions on each of the basic financial statements regarding whether the client's financial statements are fairly presented in accordance with agreed-upon criteria.
- D.
Issuance of a standard unqualified auditor's report indicates that in the audtior's opinion the client's financial statements are fairly presented in accordance with agreed-upon criteria, which no need for the inclusion of the qualifying phrases.
- 3.Which of the following is not a part of the role of internal auditors?
- A.
Assisting the external auditors.
- B.
Providing reports on the reliability of financial statments to investors and creditors.
- C.
Consulting activities.
- D.
Operational auditrs.
- 4.Risk of material misstatement refers to a combination of which two "client" components of the audit risk model?
- A.
Audit risk and inherent risk.
- B.
Audit risk and control risk
- C.
Inherent risk and control risk.
- D.
Control risk and detection risk.
- 5.When planning an audit, an auditor should
- A.
Consider whether the extent of substantive procedures may be reduced based on the results of the internal control questionnaire.
- B.
Determine planning materiality for audit purposes.
- C.
Conclude whether changes in compliance with prescribed internal controls justify reliance on them.
- D.
Prepare a preliminary draft of the management representation letter.
- 6.Which of the following best describes relationships among auditing, attest, and assurance services?
- A.
Arrest is a type of auditing service.
- B.
Auditing and attest services represent two distinctly different types of services.
- C.
Auditing is a type of assurance service.
- D.
Assurance is a type of attest service.
- 7.Which of the following statments relating to attest and assurance services is not correct?
- A.
Independence is an important attribute of assurance service providers
- B.
Assurance services can be performed to improve the quality or context of information for decision makers.
- C.
Financial statement auditing is a form of attest service but it is not an assurance service.
- D.
In performing an attest service, the CPA determines the correspondence of the subject matter (or an assertion about the subject matter) against criteria that are suitable and available to users.
- 8.For what primary purpose does the auditor obtain an understanding of the entity and its environment?
- A.
To determine the audit fee.
- B.
To decide which facts about the entity to include in the audit report.
- C.
To plan the audit and determine the scope of audit procedures to be performed.
- D.
To limit audit risk to an appropriately high level.
- 9.Akash works full time as a pilot and writes books on a part-time basis. Akash wrote a book and received royalty income amounting to RM42,000 in the year of assessment 2018. What is the amount of royalty income which is assessable to tax on Akash for the year of assessment 2018?
- A.
RM22,000
- B.
RM42,000
- C.
RM10,500
- D.
RM30,000
- 10.Which one do you like?
- A.
Option 1
- B.
Option 2
- C.
Option 3
- D.
Option 4
- 11.An engagement letter can be seen as the contract between the auditor and the client. As such it should contain the terms of the engagement such as: i) Inherent limitations of audit. ii)The form of the audit report. iii)The opinion of the auditor. iv)Any use of internal audit or external experts. v)Deadlines. Which of the above items would not appear in the engagement letter:
- A.
A. iii) only
- B.
B. i) only
- C.
C. i) and iv) only
- D.
D. i) & iii) only
- 12.Which of the following is NOT part of planning the Audit?
- A.
A. Ensure that the correct engagement team is chosen for the assignment.
- B.
B. Identify potential problems that may occur on the audit.
- C.
C. Carry out substantive testing on the balances in the financial statements.
- 13.Which of the following will appear in the audit strategy document: i) Documented evidence of the understanding of the entity. ii) Documented evidence of the understanding of the system within the entity. iii) The audit report. iv) The scope of the audit. v) A management representations letter.
- A.
A. iii) only
- B.
B. All of the above
- C.
C. i) ii) & iv) only
- D.
D. i) & iii) only
- 14.Which of the following should the auditor look at in order to understand the client: i) The industry. ii)Competition. iii)Technology. iv)Laws & Regulations. v)Stakeholders.
- A.
A. iii) only
- B.
B. All of the above
- C.
C. i) ii) & iv) only
- D.
D. i) & iii) only
- 15.You have asked by the senior auditor to seek out information that can be used in order to gain an understanding of the company you are about to audit. Which of the following would be a source of this information?
- A.
A. Government statistical records.
- B.
B. The company’s own annual report.
- C.
C. The foreign office information department
- 16.What of the following is not a benefit of carrying out a risk assessment prior to the audit?
- A.
A. To identify potential misstatements due to fraud or error.
- B.
B. To address the risk areas in the audit.
- C.
C. To reduce the risk of non-detection of a misstatement to zero.
- D.
D. To reduce the risk of issuing an inaccurate opinion.
- 17.In gaining an understanding of the entity to be audited, the auditor will document the information/accounting system in place. Which TWO of the following are methods they could employ to do this: 1. Making narrative notes on the system in place. 2. Use last years notes and assume they are correct. 3. Use the notes made from a similar business audited previously. 4. Conduct internal control questionnaires with staff in the entity.
- A.
A 1 and 4
- B.
B 3 and 4
- C.
C 1 and 2
- D.
D 2 and 3
- 18.In the purchases cycle within an entity the control objectives at the stage of placing a purchase order will be: i) To ensure that the item purchased is not already in stock. ii) To ensure that the stock count is accurate. iii) To ensure that the order is actually required. iv) To ensure that all orders are paid for.
- A.
A. All of the above.
- B.
B. i) iii) and iv) only.
- C.
C. i) only
- D.
D. i) and iii) only.
- 19.When XYZ Co. receives a purchase invoice it is checked by the accounts clerk for accuracy then authorised by the line manager who signs it to verify that it has been authorised. How can the auditor test the control over authorisation of invoices is being carried out?
- A.
A. Enquire with the accounts clerk to verify that they observe the line manager do this on a regular basis.
- B.
B. For a sample of the invoices, re-calculate the invoice amount to ensure it is arithmetically correct.
- C.
C. For a sample of invoices ensure that they have been signed by the line manager.
- D.
D. For a sample of the invoices verify that the supplier is one of those on the authorized suppliers list.
- 20.Much of the work in the audit involves assertions. Which of the following statements is correct relating to assertions:
- A.
A. The auditor makes the assertion and then tests it during the course of the audit.
- B.
B. Management make the assertions by inclusion of items in the financial statements and the auditor tests those assertions.
- C.
C. Management make formal assertions to the auditor in the form of a letter and those assertions are given to the shareholders.
- D.
D. The auditor may assume that the assertions made by management are correct if the Finance Director is a qualified accountant.
- 21.A company name is available if it is not – i. undesirable or unacceptable ii. identical to an existing company, corporation or business iii. identical to a name that is being reserved under this Act
- A.
A. I, II and III
- B.
B. I, II and IV
- C.
C. I, III and IV
- D.
D. All of the above
- 22.TehTime Sdn Bhd wish to change its company name to ChaLive Sdn Bhd. In order to do so, Gill Mi Sdn Bhd should resolve its name be changed by resolution and notify the registrar of the change of its name within fifteen days from the date of the special resolution was passed.
- A.
A. True
- B.
B. False
- 23.A company limited by shares having not more than _____ shareholders may be registered as a private company.
- A.
A. 30
- B.
B. 40
- C.
C. 50
- D.
D. 60
- 24.Which of the below are the following way of winding up a company: i. voluntary winding up where the members have passed a resolution to wind up the company ii. compulsory winding up where the court has ordered the company to be wound up iii. unwillingly winding up due to unforeseen circumstances
- A.
A. I and II
- B.
B. I and III
- C.
C. II and III
- D.
D. All of the above
- 25.A company must have at least one company secretary who is a citizen or a permanent resident of Malaysia. In addition, they must ordinarily reside in Malaysia by having their principal place of residence in Malaysia. A company may have more than one company secretary; but at least one of them must fulfil these requirements.
- A.
A. True
- B.
B. False
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