Question 1

The assurance standards define three levels, or types, of engagements. State these three types of assurance engagements.

Accepted Answer

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Question 2

Which one of the following is NOT one of the objectives of the National Greenhouse and Energy Reporting Act 2007?
A) Meet Australia's international reporting obligations.
B) Inform government policy formulation and the Australian public.
C) Avoid duplication of similar reporting requirements in the States and Territories.
D) Penalise corporations with excess emissions.

Accepted Answer

The objectives of the National Greenhouse and Energy Reporting Act 2007 include meeting international reporting obligations, informing government policy formulation and the Australian public, and avoiding duplication of similar reporting requirements in the States and Territories. However, penalizing corporations with excess emissions is not listed as one of the objectives of the Act. Instead, the Act focuses on promoting transparency and accountability in greenhouse gas emissions and energy use reporting.

Question 3

Under Australia's National Greenhouse and Energy Reporting Act 2007, the regulator can order compliance audits in two ways. Identify and describe.

Accepted Answer

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Question 4

The Institute of Internal Auditors Practice Standards regarding Attributes include four categories of guidance that encompass both financial and operational auditing. List these categories of the Attribute standards.

Accepted Answer

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Question 5

Discuss the primary purpose of the auditor's evaluation of internal control in (1) an external audit of historical financial statements and (2) a performance audit

Accepted Answer

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Question 6

A factual conclusion with limited distribution results from:
A) agreed- upon procedures.
B) an examination.
C) a review.
D) a compilation report.

Accepted Answer

Agreed-upon procedures result in a factual conclusion with limited distribution because the procedures are tailored to the specific needs of the users who have agreed to them.

Question 7

When audit firms do an audit of historical financial statements, part of the audit usually consists of identifying operational problems and making recommendations that may benefit the audit client. The recommendations can be made orally but they are typically made by use of:
A) a client letter.
B) an engagement letter.
C) a management letter.
D) a letter of representation.

Accepted Answer

Operational problems and recommendations are typically communicated through a management letter, which is a separate letter addressed to the audit client's management. The client letter is typically used to communicate the results of the audit and any significant findings. The engagement letter outlines the scope and terms of the audit engagement. A letter of representation is a letter from management to the auditor confirming certain representations made during the audit process. Therefore, the best choice for this question is C – a management letter.

Question 8

Performance auditing is the review of an organisation for efficiency and effectiveness. Discuss what is meant by the terms (1) 'effectiveness' and (2) 'efficiency'.

Accepted Answer

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Question 9

A non- audit engagement in which the accountant undertakes to present, in the form of financial statements, information that is the representation of management, without undertaking to express any assurance on the statements is called a review engagement.

Accepted Answer

This description refers to a compilation engagement, not a review engagement. In a review engagement, the accountant performs inquiry and analytical procedures to provide a limited assurance that there are no material modifications that should be made to the financial statements.

Question 10

The report issued in assurance engagements may provide positive or negative assurance to the reader. Which one of the following types of engagements would provide positive assurance?
A) A review
B) An agreed- upon procedures engagement
C) An examination
D) A compilation

Accepted Answer

An examination provides positive assurance as the auditor expresses an opinion on the subject matter.

Question 11

Audits under the National Greenhouse and Energy Reporting Act 2007 would be considered audits.
A) performance
B) financial
C) compliance and performance
D) compliance

Accepted Answer

Audits under the National Greenhouse and Energy Reporting Act 2007 are primarily compliance audits, as they ensure that organizations are adhering to the reporting requirements set by the Act.

Question 12

What are the two primary differences between audit reports of specified components and those prepared as part of ordinary audits?

Accepted Answer

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Question 13

When the auditor is engaged to report on the internal control structure, the auditor forms an opinion about management's assertion regarding:
A) the completeness of internal control.
B) the effectiveness of internal control.
C) the efficiency of internal control.
D) the completeness of transactions.

Accepted Answer

When the auditor is engaged to report on the internal control structure, the auditor forms an opinion about the effectiveness of internal control. The auditor does not form an opinion on the completeness or efficiency of internal control, or the completeness of transactions. Management is responsible for asserting the completeness and efficiency of internal control, while completeness of transactions is generally covered in a separate audit engagement.

Question 14

Which one of the following is NOT one of the broad categories of performance audits?
A) Special assignment audits
B) Single Audit Act audits
C) Organisational audits
D) Functional audits

Accepted Answer

The Single Audit Act is a specific type of audit that focuses on organizations that receive federal funding. It is not one of the broad categories of performance audits. The other three choices are all broad categories of performance audits. Special assignment audits focus on specific topics or events, organizational audits evaluate the overall effectiveness of an organization's operations, and functional audits examine specific functions or programs within an organization.

Question 15

Reporting under the National Greenhouse and Energy Reporting Act 2007 is optional for Australian companies.

Accepted Answer

Reporting under the National Greenhouse and Energy Reporting Act 2007 is mandatory for corporations, defined as any entity that meets certain financial, operational or control criteria.

Question 16

Which of the following is NOT one of the major differences between financial and performance auditing?
A) The financial audit is distributed to many readers, whereas the performance audit report goes to a few managers.
B) Financial audits are limited to matters that directly affect the financial statements, whereas performance audits cover any aspect of efficiency and effectiveness.
C) Financial audits deal with the information in the financial statements, whereas performance audits are concerned with the information in the ledgers.
D) The financial audit is oriented to the past, whereas a performance audit concerns performance for the future.

Accepted Answer

This statement is not an accurate difference between financial and performance auditing. Financial audits are concerned with the information in financial statements while performance audits are concerned with the evaluation of efficiency and effectiveness in operations, programs and activities, not specifically information in ledgers.

Question 17

The Commonwealth Auditor- General is appointed by:
A) the Prime Minister.
B) the Governor General.
C) the Queen.
D) the federal government.

Accepted Answer

The Commonwealth Auditor-General is appointed by the Governor-General on the recommendation of the Prime Minister, as per the Auditor-General Act 1997 in Australia.

Question 18

Describe how the amount of evidence collected varies between an examination, a review and agreed- upon procedures.

Accepted Answer

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Question 19

When making a review of interim financial information, the auditor's work consists primarily of:
A) confirming and verifying account balances at the interim date.
B) studying and evaluating limited amounts of documentation supporting the interim financial information.
C) scanning and reviewing client- prepared, internal financial statements.
D) making inquiries and performing analytical procedures concerning significant accounting matters.

Accepted Answer

When making a review of interim financial information, the auditor's work consists primarily of making inquiries and performing analytical procedures concerning significant accounting matters. This is because the scope of a review engagement is limited compared to an audit engagement, and therefore, a review does not require the same level of testing as an audit. The auditor's primary objective is to determine whether any material modifications should be made to the interim financial information in order for it to be in accordance with the applicable financial reporting framework.

Question 20

Discuss each of the three broad categories (types) of performance audits.

Accepted Answer

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Quiz 19: Other Auditing and Assurance Engagements

The assurance standards define three levels, or types, of engagements. State these three types of assurance engagements.

Which one of the following is NOT one of the objectives of the National Greenhouse and Energy Reporting Act 2007?

Under Australia's National Greenhouse and Energy Reporting Act 2007, the regulator can order compliance audits in two ways. Identify and describe.

The Institute of Internal Auditors Practice Standards regarding Attributes include four categories of guidance that encompass both financial and operational auditing. List these categories of the Attribute standards.

Discuss the primary purpose of the auditor's evaluation of internal control in (1) an external audit of historical financial statements and (2) a performance audit

A factual conclusion with limited distribution results from:

When audit firms do an audit of historical financial statements, part of the audit usually consists of identifying operational problems and making recommendations that may benefit the audit client. The recommendations can be made orally but they are typically made by use of:

Performance auditing is the review of an organisation for efficiency and effectiveness. Discuss what is meant by the terms (1) 'effectiveness' and (2) 'efficiency'.

A non- audit engagement in which the accountant undertakes to present, in the form of financial statements, information that is the representation of management, without undertaking to express any assurance on the statements is called a review engagement.

The report issued in assurance engagements may provide positive or negative assurance to the reader. Which one of the following types of engagements would provide positive assurance?

Audits under the National Greenhouse and Energy Reporting Act 2007 would be considered audits.

What are the two primary differences between audit reports of specified components and those prepared as part of ordinary audits?

When the auditor is engaged to report on the internal control structure, the auditor forms an opinion about management's assertion regarding:

Which one of the following is NOT one of the broad categories of performance audits?

Reporting under the National Greenhouse and Energy Reporting Act 2007 is optional for Australian companies.

Which of the following is NOT one of the major differences between financial and performance auditing?

The Commonwealth Auditor- General is appointed by:

Describe how the amount of evidence collected varies between an examination, a review and agreed- upon procedures.

When making a review of interim financial information, the auditor's work consists primarily of:

Discuss each of the three broad categories (types) of performance audits.