This test contains 50 multiple choice questions. Indicate the most appropriate response to each question on your computer marking sheet provided.
1) Which one of the following is not a cause of information risk?
A) complex foreign exchange transactions
B) implementing quality control within the public accounting firm C) unexpected increased competition within the industry
D) remunerating management with a bonus scheme linked to reported income
2) An internal auditor should ideally report to:
A) the external auditors.
B) the chief finance officer.
C) the audit committee.
D) the ASIC.
3) Which of the following can be regarded as being solely 'compliance' audits?
A) Determining if bank requirements for loan continuation have been met B) Auditor-General's examinations of the returns of taxpayers C) An internal auditor's review of his employer's non-current asset purchases D) Evaluating whether a computerised payroll system is operating effectively
4) Statements of Auditing Standards (ASAs) are issued by:
A) the Institute of Chartered Accountants in Australia.
B) the Australian Securities Exchange.
C) CPA Australia.
D) Australian Auditing and Assurance Standards Board.
5) Assessing that a company's policies effectively ensure the company's compliance with environmental standards and laws is:
A) an example of an assurance service.
B) an example of a business performance measurement service. C) part of the financial statement audit process.
D) part of the internal auditor's responsibilities.
6) An audit of financial statements is conducted to determine whether the:
A) auditee is following specific procedures or rules set down by a peer group authority. B) overall financial statements are stated in accordance with specified criteria. C) organisation is operating efficiently and effectively.
D) none of the above
7) A typical objective of a performance audit is for the auditor to:
A) report on the entity's relative success in attaining profit maximisation. B) determine whether the financial statements fairly present the entity's operations. C) evaluate the feasibility of attaining the entity's operational objectives. D) make recommendations for improving operational performance.
8) The agency view of the corporation emphasises:
A) Issues associated with the potential conflicts of interest of management (as the agents of the owners) in serving the interests of shareholders (as the owners of the corporation). B) A control-oriented approach to governance.
C) Mechanisms designed to curb managerial self-serving decisions and actions. D) All of the above.
9) The audit expectations gap refers to:
A) Differences between what clients expect to pay and what the auditor charges. B) Differences between the views of auditors and the expectations of other stakeholders regarding the appropriate roles and responsibilities of auditors, and their performance. C) Differences between the views of auditors and the expectations of other stakeholders regarding the appropriate roles and responsibilities of management, and the audit performance. D) All of the above.
10) The disadvantage of including general statements in a code of professional ethics is:
A) the difficulty of enforcing general ideals without minimum standards of ideal behaviour. B) there are usually too many to remember.
C) that they identify ideal conduct.
D) the emphasis on positive activities.
11) The regulatory mechanisms addressing corporate governance in Australia emphasise:
A) Accountability and transparency through required disclosures. B) Accountability and transparency through the auditor.
C) The Australian Securities Exchange's Corporate Governance Council Principles of Good Governance and Best Practice Recommendations. D) All of the above.
12) The provision of internal audit services to an auditee:
A) Creates a self-review threat to independence
B) Is prohibited by Corporations legislation
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