CA Auditing Principles & Procedures 2

Question 1

Which sampling method gives every item in a population an equal chance of being selected?

Accepted Answer

Simple random sampling

Answer

Simple random sampling ensures every item has an equal and independent probability of selection, eliminating bias.

Question 2

An auditor discovers that a client's bank reconciliation contains a fictitious deposit recorded two days before year-end that was reversed in January. This is most likely an indicator of:

Accepted Answer

Window dressing

Answer

Window dressing involves manipulating financial records near period-end to make the financial position appear better than it is.

Question 3

Under ISA 265, significant deficiencies in internal control must be communicated to:

Accepted Answer

Management and those charged with governance

Answer

ISA 265 requires significant deficiencies to be communicated in writing to both management and those charged with governance.

Question 4

The auditor's responsibility for detecting material misstatements due to fraud is addressed primarily by:

Accepted Answer

ISA 240

Answer

ISA 240 'The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements' is the primary standard addressing fraud detection.

Question 5

When performing substantive analytical procedures, an auditor should develop an independent expectation that is:

Accepted Answer

Precise enough to detect a material misstatement

Answer

The independent expectation must be sufficiently precise to detect a material misstatement if one exists, making the procedure effective.

(CA) Chartered Certified Accountant Practice Test

(CA) Chartered Certified Accountant Practice Test

CA Auditing Principles & Procedures 2