Question 1

An outcome of the Ramsay Report (2002) was the taking up of a recommendation for the Australian Stock Exchange (now ASX) to take responsibility for corporate governance recommendations.

Accepted Answer

A) True 
 B)False

Question 2

Understanding the US situation is important as all companies incorporated or listed outside of the US need to comply with the requirements of the Sarbanes-Oxley Act 2002.

Accepted Answer

A) True 
 B)False

Question 3

The CLERP 9 Act requires the lead engagement or review audit partners participating in audits to rotate off the engagement every five years.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following should be communicated by the auditor to the audit committee?

Accepted Answer

A)   all deficiencies in internal control
B)   all audit adjustments
C)   all accounting policies
D)   all significant accounting and audit issuesE) A) and B)
F) C) and D)

Question 5

The lead engagement and review partner must rotate every:

Accepted Answer

A)   two years
B)   three years
C)   four years
D)   five yearsE) C) and D)
F) A) and D)

Question 6

Standards on Review Engagements (ASREs) apply when an auditor is developing and communicating an opinion on interim financial information.

Accepted Answer

A) True 
 B)False

Question 7

The purpose of the planning meeting includes developing an understanding of:

Accepted Answer

A)   materiality
B)   the scope of the audit services to be performed
C)   management's preparedness
D)   all of these choicesE) B) and D)
F) B) and C)

Question 8

The auditing standards require the auditor to gather:

Accepted Answer

A)   accounting records
B)   official correspondence
C)   bank reconciliations
D)   sufficient, appropriate evidenceE) B) and D)
F) None of the above

Question 9

The Board of Directors carry out the following specific activities except:

Accepted Answer

A)   declaring dividends
B)   selecting management
C)   managing and reviewing operations
D)   approving major changes, e.g. mergersE) C) and D)
F) B) and C)

Question 10

The AUASB is under the strategic direction of:

Accepted Answer

A)   FRC
B)   ASX
C)   ASIC
D)   GAAPE) None of the above
F) A) and C)

Question 11

Shareholders require accountability from management for:

Accepted Answer

A)   financial performance
B)   financial transparency
C)   quality of internal controls
D)   all of these choicesE) C) and D)
F) B) and D)

Question 12

One purpose of the planning meeting is to assist the auditor to develop an understanding of key accounting issues and assumptions that affect the preparation of the financial statements.

Accepted Answer

A) True 
 B)False

Question 13

The CLERP 9 Act was enacted, in part, to address fundamental problems in corporate governance.

Accepted Answer

A) True 
 B)False

Question 14

The following are the categories of framework pronouncements adopted by the AUASB except:

Accepted Answer

A)   auditing standards (ASAs) 
B)   generally accepted accounting principles (GAAP) 
C)   Standards on Review Engagements (ASREs) 
D)   Standards on Quality Control (ASQ
C)  E) All of the above
F) A) and D)

Question 15

Following the Ramsay Report (2002)  which of the following was recommended for the responsibility for corporate governance recommendations?

Accepted Answer

A)   ASIC
B)   CPA
C)   ASX
D)   IASBE) A) and B)
F) A) and C)

Question 16

Specific activities performed by regulatory agencies such as ASIC include the following except:

Accepted Answer

A)   review of filings
B)   conducting quality review inspections of audit firms
C)   auditing the financial statements to express an opinion
D)   monitoring trading activitiesE) A) and C)
F) All of the above

Question 17

The concept of materiality is pervasive and guides the nature and extent of auditing the financial report.

Accepted Answer

A) True 
 B)False

Question 18

A company with good governance will have an independent board and audit committee members who take their roles seriously and have sufficient time and resources to perform their work.

Accepted Answer

A) True 
 B)False

Question 19

The auditing standards are set by various regulators to provide assurance to the public that:

Accepted Answer

A)   audits are conducted in a professional manner
B)   misstatements are prevented
C)   financial results are clearly communicated
D)   all of these choicesE) All of the above
F) None of the above

Question 20

Owners want assurances that the representations made by management and the board are accurate and objectively verifiable.

Accepted Answer

A) True 
 B)False

Exam 2: Corporate Governance and Audits

One purpose of the planning meeting is to assist the auditor to develop an understanding of key accounting issues and assumptions that affect the preparation of the financial statements.

Correct AnswerverifiedShow Answer

The Board of Directors carry out the following specific activities except:

Correct AnswerverifiedShow Answer

The AUASB is under the strategic direction of:

Correct AnswerverifiedShow Answer

The purpose of the planning meeting includes developing an understanding of:

Correct AnswerverifiedShow Answer

The auditing standards require the auditor to gather:

Correct AnswerverifiedShow Answer

An outcome of the Ramsay Report (2002) was the taking up of a recommendation for the Australian Stock Exchange (now ASX) to take responsibility for corporate governance recommendations.

Correct AnswerverifiedShow Answer

A company with good governance will have an independent board and audit committee members who take their roles seriously and have sufficient time and resources to perform their work.

Correct AnswerverifiedShow Answer

Understanding the US situation is important as all companies incorporated or listed outside of the US need to comply with the requirements of the Sarbanes-Oxley Act 2002.

Correct AnswerverifiedShow Answer

Shareholders require accountability from management for:

Correct AnswerverifiedShow Answer

The concept of materiality is pervasive and guides the nature and extent of auditing the financial report.

Correct AnswerverifiedShow Answer

The auditing standards are set by various regulators to provide assurance to the public that:

Correct AnswerverifiedShow Answer

The CLERP 9 Act was enacted, in part, to address fundamental problems in corporate governance.

Correct AnswerverifiedShow Answer

Specific activities performed by regulatory agencies such as ASIC include the following except:

Correct AnswerverifiedShow Answer

Following the Ramsay Report (2002) which of the following was recommended for the responsibility for corporate governance recommendations?

Correct AnswerverifiedShow Answer

The following are the categories of framework pronouncements adopted by the AUASB except:

Correct AnswerverifiedShow Answer

Standards on Review Engagements (ASREs) apply when an auditor is developing and communicating an opinion on interim financial information.

Correct AnswerverifiedShow Answer

The CLERP 9 Act requires the lead engagement or review audit partners participating in audits to rotate off the engagement every five years.

Correct AnswerverifiedShow Answer

Owners want assurances that the representations made by management and the board are accurate and objectively verifiable.

Correct AnswerverifiedShow Answer

Which of the following should be communicated by the auditor to the audit committee?

Correct AnswerverifiedShow Answer

The lead engagement and review partner must rotate every:

Correct AnswerverifiedShow Answer

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