University of Tasmania

BFA 713

CHAPTER 05

1)Which of the following forms of advertising is permissible?

1. 2. Before accepting an engagement to audit a new client, an auditor is required to:

4. 2. In assessing whether to accept a client for an audit engagement, an auditor should consider the:
      1. entity’s business risk.
      2. auditor’s engagement risk.
      3. integrity of management.
      4. All the given answers are correct.
   3. A prospective client’s refusal to give permission to communicate with the previous auditor and review certain portions of the previous auditor’s working papers will bear directly on the auditor’s decision concerning the:
5. Enquiry of the previous auditor is:
6. When an auditor is approached to perform an audit for the first time, the auditor should make enquiries of the previous auditor. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining:
7. What is the responsibility of an auditor with respect to communicating with the previous auditor in connection with a prospective new audit client?
8. Which of the following items should an auditor obtain from the previous auditor prior to accepting an audit engagement?
9. Which of the following factors most likely would cause an auditor to not accept a new audit engagement?
10. Engagement letters include all of the following except:
11. The scope and nature of an auditor’s contractual obligation to a client ordinarily is established in the:
12. An audit firm’s quality control procedures pertaining to the acceptance of a prospective audit client would most likely include:
13. An auditor who finds that the client has committed an illegal act would be most likely to withdraw from the engagement when the:
14. Prior to the acceptance of an audit engagement with a client who has terminated the services of the previous auditor, the proposed auditor should:
15. Audit planning:
16. Audit planning assists the auditor to:
    1. identify and resolve potential problems on a timely basis.
    2. devote appropriate attention to important areas of the audit.
    3. perform the audit effectively and efficiently.
17. Which of the following situations would most likely require special audit planning by the auditor?
18. An auditor obtains knowledge about a new client’s business and its industry in order to:
19. An auditor searching for related-party transactions should obtain an understanding of each subsidiary’s relationship to the total entity because:
20. Which of the following procedures would not be used to obtain an understanding of the entity and its environment?
21. An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity should:
22. Which of the following actions is the most likely first step that an auditor will perform after accepting an initial audit engagement?
23. Which of the following items is not an important consideration in an auditor’s evaluation of an entity’s business risk?
24. An audit program should be designed for each individual audit and should include audit steps and procedures to:
25. Which of the following would be included in the audit strategy document?
26. Time budgets on audit engagements are not used for which of the following reasons?
27. Analytical procedures used in planning an audit should focus on identifying:
28. Which of the following procedures is not a typical analytical procedure?
29. Analytical procedures may be classified as being primarily:
30. Analytical procedures are:
31. The auditor generally gives most emphasis to ratio and trend analysis in the examination of:
32. An example of an analytical procedure is the comparison of:
33. Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive tests?
34. Analytical procedures that are required in all audits of financial reports are analytical procedures:
35. In applying analytical procedures, the identification of the relationships and types of data used, as well as conclusions reached when recorded amounts are compared to expectations, requires: