Online Access Free AA Exam Questions

Julia is a member of a professional accountancy body who works in industry at KiwiCorp plc, a listed company. The company is experiencing difficulty meeting the expectations of the market, and Julia has been told by the board of directors that the company must meet
its optimistic profit targets at the year end. To achieve this target and for good corporate governance practice KiwiCorp is to set an active audit committee.
Which of the following statements about audit committee is NOT correct?

• A.Audit committees are considered to be good practice for all large companies
• B.At least 50% of the members of an audit committee must be non-executive directors
• C.Listed companies are required to have an audit committee
• D.Audit committees are an important aspect of a company's control environment

The auditor shall maintain an attitude of professional scepticism throughout the audit, recognising the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor's past experience of the honesty and integrity of management and those charged with governance.
Which of the following best describes professional scepticism?

• A.The auditor should apply a questioning mind to the information and evidence he obtains.
• B.The auditor should always assume the worst outcome in cases of uncertainty.
• C.The auditor should not believe anything that management tells him, without obtaining supporting evidence.
• D.The auditor should not believe anything that management tells him.

Management is legally required to prepare a shipping document for all movement of hazardous materials. The document must be filed with bills of lading. Management expects 100% compliance with the procedure.
Which of the following sampling approaches would be most appropriate?

• A.Judgment sampling
• B.Targeted sampling
• C.Attributes sampling
• D.Discovery sampling

During the audit planning for your client Shang Ltd for the year ending 30 April 2013, you read the following comment on the 'points forward for next year' schedule included in last year's audit working papers file:
'During the course of our audit we discovered that the company had incorrectly reclaimed input value added tax totalling $42,000. We have notified the client in writing of the need to repay this amount to tax authority as soon as possible. The financial statements have been adjusted to include this sum within current liabilities as 'amounts payable to Tax Authority'.
Included within income in the company's management accounts for the ten months ended 28 February 2013 is a credit entry for $42,000 described as 'VAT difference written off'.
Which one of the following actions is LEAST likely to be taken in respect of this matter?

• A.Avoid tipping off the client
• B.Report to nominated officer/money laundering officer within the firm
• C.Report to board of directors
• D.Consider resignation

When questions arise on the appropriateness of the going concern assumption, some of
the normal audit procedures carried out by the auditors may take on an additional significance. Auditors may also have to carry out additional procedures or to update information obtained earlier. The ISA lists various procedures which the auditors shall carry out in this context.
Which of the following is not included in the list of additional audit procedures that are to be carried out by the auditor?

• A.Confirm the existence, legality and enforceability of arrangements to provide or maintain financial support with related and third parties
• B.Assess the financial ability of such parties to provide additional funds
• C.Inquire of the entity's lawyer regarding litigation and claims
• D.Evaluate management's plans for future actions based on its going concern assessment