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Homework answers / question archive / University of Tasmania BFA 713 CHAPTER 02 1)Which of the following statements best explains why the auditing profession has found it essential to promulgate ethical standards and to establish means for ensuring their observance? Which of the following bodies is able to impose penalties on auditors who have failed to carry out their duties properly? 3

University of Tasmania BFA 713 CHAPTER 02 1)Which of the following statements best explains why the auditing profession has found it essential to promulgate ethical standards and to establish means for ensuring their observance? Which of the following bodies is able to impose penalties on auditors who have failed to carry out their duties properly? 3

Accounting

University of Tasmania

BFA 713

CHAPTER 02

1)Which of the following statements best explains why the auditing profession has found it essential to promulgate ethical standards and to establish means for ensuring their observance?

  1. Which of the following bodies is able to impose penalties on auditors who have failed to carry out their duties properly?

3. Which of the following bodies monitors the operation of the Auditing and Assurance Standards Board?

    1. Australian auditing standards (ASAs) issued by the Australian Auditing and Assurance Standards Board (AUASB) are intended to be applied to:
    2. Which of the following bodies monitors the operation of the Australian Accounting Standards Board? .
    3. To become a registered company auditor, a person must be:
      1. a fit and proper person.
      2. a member of one of the accounting bodies.
      3. ordinarily resident in Australia.
      4. All of the given answers are correct.
    4. The types of actions by members of accounting bodies that may result in disciplinary action being taken by the member’s accounting body include:
      1. if the member is found guilty of a fraud.
      2. if the member practises while bankrupt or insolvent.
      3. if the member continues practising despite being declared of unsound mind.
      4. All of the given answers are correct.
    5. Australian auditing standards (ASAs) issued by the Australian Auditing and Assurance Standards Board (AUASB) contain:
    6. An auditor of a company finds that there are rare and exceptional circumstances where they are unable to comply with a relevant requirement in an auditing standard. They are, however, able to perform appropriate alternative audit procedures. To whom do they have to report or document these circumstances?
    7. Who is responsible for assessing whether company auditors meet the required competency standards for registration?
    8. Which of the following statements is correct?
    9. Which of the following is not a standard-setting board or committee of the International Federation of Accountants (IFAC)?

 

    1. Membership of the International Auditing and Assurance Standards Board (IAASB) consists of:
      1. international audit firms.
      2. International Federation of Accountants (IFAC) member bodies.
      3. non-auditor representatives.
      4. All of the given answers are correct.
    2. Which of the following types of companies can only be used by an audit firm with the consent of the National Council of Chartered Accountants Australia and New Zealand?
    3. Which accounting body in Australia was established under Royal Charter?
    4. The largest accounting organisation in Australia is:
    5. Which of the following are elements of an audit firm’s quality control that should be considered in establishing its quality control policies and procedures?

Personnel management                Monitoring         Engagement performance

    1. The objective of quality control dictates that an audit firm should establish policies and procedures for professional development that provide reasonable assurance that all entry-level personnel:
    2. A firm of independent auditors must establish and follow explicit quality control policies and procedures because these standards:
    3. In pursuing its quality control objectives with respect to acceptance of a client, an audit firm is not likely to:
    4. The mandatory continuing professional education (CPE) requirement for members of Chartered Accountants Australia and New Zealand is:
    5. Within the context of quality control, the primary purpose of continuing professional development and training activities is to enable an audit firm to provide personnel with:
    6. An auditor who is approached by their accounting body to undergo a quality control audit must:
    7. The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to:
    8. In pursuing the audit firm’s quality control objectives, the firm may maintain records indicating which partners or employees of the firm were previously employed by the firm’s clients. Which quality control objective would this be most likely to satisfy?
    9. A basic objective of an audit firm is to provide professional services in conformance with professional standards. Reasonable assurance of achieving this basic objective is provided through:
    10. An auditor’s duty of care to a client would most likely be breached if the auditor failed to:
    11. Due professional care does not require:
    12. Common law requires that the auditor:
    13. When performing an audit, an auditor would most likely be considered negligent if they failed to:
    14. Big Ltd wished to acquire the ordinary shares of Small Pty Ltd and engaged Albert & Associates to audit the financial report of Small Pty Ltd. Albert & Associates failed to discover a significant liability when performing the audit. In a common law action against Albert & Associates, Big Ltd, at a minimum, must prove:
    15. The court found that Roberts & Associates had performed a negligent audit of Pinnacle Ltd, but the plaintiff did not receive damages because the court found insufficient proof of causation. Causation means that:
    16. The Pacific Acceptance case established that:
    17. To which of the following parties does the auditor owe a duty of care under contract?
      1. The company itself.
    18. The AWA case established that:
    19. Contributory negligence:
    20. Cases that have allowed the auditor to use the defence of contributory negligence include:
    21. ABC Ltd (ABC) engaged the accounting firm of Ace & King to perform its annual audit. Ace amp; King performed the audit in a competent, non- negligent manner and billed ABC for $30000, the agreed fee. Shortly after delivery of the audited financial report, Sam Lloyd, the assistant controller, disappeared, taking with him $40000 of ABC’s funds. It was then discovered that Sam had been engaged in a highly sophisticated, novel defalcation scheme during the past year. He had previously embezzled $50000 of ABC’s funds. ABC has refused to pay the auditor’s fee and is seeking to recover the $90000 that was stolen by Sam. Which of the following is correct?
    22. In the Caparo case, the court held that the auditor owes a duty of care to:
    23. An auditor can be sued for damages under which of the following Acts?
    24. Privity letters are issued by auditors to:

 

    1. Simpson & Associates issued an unmodified auditor’s opinion on the financial report of Ridge Ltd (Ridge). Simpson & Associates did not detect material misstatements in the financial report as a result of negligence in the performance of the audit. Based upon the financial report, Clark purchased shares in Ridge. Shortly afterwards, Ridge became insolvent, causing the price of the shares to decline drastically. Clark has commenced legal action against Simpson amp; Associates for damages. Simpson & Associates’ best defence to such an action would be that:
    2. A claim for a breach of duty of care might arise against an auditor if:
    3. Harry & Joseph rendered an unmodified auditor’s opinion on the financial report of a company that sold shares in a public offering. Based on a false statement in the financial report, Harry & Joseph is being sued by an investor who purchased shares in this public offering. Which of the following represents a viable defence?
    4. The CLERP 9 reforms now provide for limitation of auditor’s liability through:
      1. a statutory cap.
      2. proportionate liability.
      3. incorporation.
      4. All of the given answers are correct.

 

 

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