CA Auditing Standards 5

Question 1

Which standard requires the auditor to obtain written representations from management at the conclusion of the audit?

Accepted Answer

AU-C 580

Answer

AU-C 580 requires the auditor to obtain a management representation letter confirming certain matters disclosed or not disclosed in the financial statements.

Question 2

When the auditor concludes that a material weakness exists in ICFR for a public company, which type of opinion must be issued on internal control?

Accepted Answer

Adverse opinion

Answer

Under AS 2201, a material weakness requires the auditor to issue an adverse opinion on the effectiveness of ICFR.

Question 3

Which of the following best describes 'tolerable misstatement' in audit sampling?

Accepted Answer

The maximum monetary misstatement in an account that would still allow an unmodified opinion

Answer

Tolerable misstatement is the maximum error the auditor is willing to accept in an account balance while still concluding the balance is fairly stated.

Question 4

An auditor is required to perform 'dual-purpose tests' when:

Accepted Answer

A single test simultaneously provides evidence for both control testing and substantive purposes

Answer

Dual-purpose tests are procedures designed to test the operating effectiveness of a control and provide substantive evidence about a financial statement assertion at the same time.

Question 5

Which of the following situations would most likely require the auditor to add an emphasis-of-matter paragraph to an otherwise unmodified report?

Accepted Answer

Adoption of a new accounting principle that has a material effect on the financial statements

Answer

A material change in accounting principle requires an emphasis-of-matter paragraph to draw users' attention to the change, even when the auditor concurs.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Auditing Standards 5