CPA AA Value Pack (Frequently Bought Together)

Audit documentation provides evidence that the audit complies with the ISAs. However, it is neither necessary nor practicable for the auditor to document every matter considered, or professional judgment made, in an audit. Further, it is unnecessary for the auditor to document separately (as in a checklist, for example) compliance with matters for which compliance isdemonstrated by documents included within the audit file. For example the existence of an adequately documented audit plan demonstrates that the auditor has planned the audit.
Which one of the following is not an objective of audit planning?

• A. To determine the scope of the engagement
• B. To assign work to members of the audit team
• C. To identify potential problems and resolve them on a timely basis
• D. To ensure appropriate attention is devoted to the important areas of the audit

ISA 570 states that when preparing accounts, management should make an explicit assessment of the entity's ability to continue as a going concern. Most accounting frameworks require management to do so.
When management are making the assessment, the following factors should be considered except

• A. The degree of uncertainty about the events or conditions being assessed increases significantly the further into the future the assessment is made.
• B. Judgements are made on the basis of the information available at the time.
• C. The auditor shall inquire of management as to its knowledge of events or conditions and related business risks beyond the period of assessment used by management that may cast significant doubt on the entity's ability to continue as a going concern.
• D. Lack of staff to ensure segregation of duties.

Hiltson Hotels is a global group of hotels. The parent company, Hiltson Holdings plc employs an internal audit function which carries out audits and investigations on the individual hotels in the group.
Which of the following could the internal audit function carry out and still operate effectively?

• A. Secondment to the finance department of the Edinburgh Hiltson
• B. Special investigation into the profits of the New York Hiltson where the group directors suspect a fraud may have been carried out
• C. Secondment to the accounts department of the Singapore Hiltson to cover the maternity leave of the financial controller
• D. Identification of risks at the proposed Nairobi Hiltson, which is due to open in nine months' time

The management of Tory Bank Ltd suspects that a bank loan officer frequently made loans to fictitious companies, disbursed loan proceed to his wife's accounts, and then the loan has been written-off as irrecoverable. Some significant facts about the loan officer include
A high standard of living, explained as the result of sound investments and not taking vacations
An expensive personal car obtained through business contacts
Gasoline and repair bills submitted for an assigned company car that is higher than company average (mileage logs were submitted on a quarterly basis)
Marked annoyance with questions from auditors
The most appropriate trend analysis to indicate this potential fraud is

• A. Automobile operating expenses by loan officer.
• B. Accumulation of unpaid vacation days.
• C. Loan default rates by loan officer.
• D. Total dollar volume of loans by loan officer.

Adam & Co is the external auditor of Green plc, a listed company. Adam & Co is going to start the audit of financial statement of year 2011-12.
If financial statements prepared in accordance with the requirements of a fair presentation framework do not achieve fair presentation, what will be the action by Adam & Co?

• A. Adam & Co shall discuss the matter with management of Green plc and shall determine whether it is necessary to rework the audit.
• B. Adam & Co shall discuss the matter with management of Green plc and shall determine whether it is necessary to modify the opinion in their report.
• C. Adam & Co shall discuss the matter with the audit committee and shall determine whether it is necessary to modify the opinion in their report.
• D. Adam & Co shall discuss the matter with the shareholders of Green plc and shall determine whether it is necessary to modify the opinion in their report.