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Quiz 3

Set D

Total Marks 10

1. Engagement letters include all of the following exce ta! " list of additional ser#ices that will $e ro#idedb) A list of adjusting journal entriesc! %nformation a$out the audit feed! "rrangements in#ol#ing the use of s ecialists

&. "n auditor o$tains knowledge a$out a new client's $usiness and its industr( toa! Make constructi#e suggestions concerning im ro#ements to the client's internal control s(stem

$! E#aluate the a ro riateness of audit e#idence o$tainedc) Understand the events and transactions that may have an effect on client’s financial

statementsd! "ll of the a$o#e

3. )hen the rior (ear's financial statements are audited $( another auditor* the new auditor can#erif( o ening $alances $(a) Examining the working papers of predecessor auditor

$! Examining the current (ear's working a ersc! o$taining fresh audit e#idenced! gi#ing lesser im ortance to o ening $alances and concentrating on current (ear's $alances

+. %f an auditor $elie#es the chance of financial failure is high and there is a corres onding increasein $usiness risk for the auditor* acce ta$le audit risk would likel(,

a) be reduced. $! $e increased.c! remain the same.d! $e calculated using a com uterized statistical ackage.

-. )hich of the following will /T $e a ma or influence on the continuance of a client auditorrelationshi 2a! ending legal issue $etween the client and the auditor

$! ast conflict o#er the audit feec) nternal control deficiencies of the clientd! Dou$ts a$out the integrit( of client's management

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4ou're the 5rou auditor of estl6 Silk ak 7imited and decide to use the work of another auditorwho is auditing their su$sidiar(* Maggie oodle. )hat matters would (ou consider in this regard28list an( + $ullet oints! & Marks

"nswer, 9eginning of age 1:+;;when the grou auditor decides to use;;..8fi#e oints aregi#en!.

)hat are the factors which must $e considered $efore determining what is ?Material'23 Marks

"nswer, Size of the item* ature of the item* @ircumstances of occurrence* @ost and $enefit ofauditing the item.

age &0&.

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