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CPA AA Dumps

Exam Code:
AA
Exam Name:
Audit & Insurance
Last Update: May 23, 2023
80 Questions
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Audit & Insurance Questions and Answers

Questions 1

Adam & Co is the external auditor of Green plc, a listed company. Adam & Co is going to start the audit of financial statement of year 2011-12.

If financial statements prepared in accordance with the requirements of a fair presentation framework do not achieve fair presentation, what will be the action by Adam & Co?

Options:

A.

Adam & Co shall discuss the matter with management of Green plc and shall determine whether it is necessary to modify the opinion in their report.

B.

Adam & Co shall discuss the matter with management of Green plc and shall determine whether it is necessary to rework the audit.

C.

Adam & Co shall discuss the matter with the shareholders of Green plc and shall determine whether it is necessary to modify the opinion in their report.

D.

Adam & Co shall discuss the matter with the audit committee and shall determine whether it is necessary to modify the opinion in their report.

Questions 2

Frederich Gastona has been invited by ECA Co to perform the audit of financial statements of 2012-13. When deciding whether to accept an auditing engagement, Frederich must judge his independence and objectivity. If Frederich’s audit firm lacks independence or objectivity, Frederich can’t accept the engagement.

What does “Independence” mean in the context of the above case?

Options:

A.

Remaining aloof from client ECA Co.

B.

Not being financially dependent on client ECA Co.

C.

Taking an unbiased viewpoint while conducting audit of ECA Co.

D.

Being an advocate for ECA Co in the law suit.

Questions 3

Cates plc is a large organisation with a complex accounting and information system. Critical to an understanding of the system are the reporting lines and relationships between different departments.

Which of the following represents inherent limitation of a system of internal controls in Cates plc?

Options:

A.

Lack of controls over the purchases system

B.

Lack of in-depth knowledge of the purposes of controls

C.

Lack of staff to ensure segregation of duties

D.

The possibility that staff members will collude in fraud

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