Online Access Free AA Exam Questions

Your firm has recently been appointed as auditor to Crate Ltd for the year ending 31 October 2012. This is the first year of audit for Crate Ltd as it fell below the statutory audit exemption limits for the year ended 31 October 2011, which was the company's first period of trading.
Which of the following is NOT a matter to be considered in respect of the opening balances of Crate Ltd?

• A.Assess whether financial statements need amendment
• B.Ensure disclosure of lack of audit in prior year in financial statements
• C.Check appropriateness of accounting policies or their consistent application from year to year
• D.Check opening balances correctly brought forward

Elody Gaindy was discussing about the contents of audit report produce on the audit of ABC Ltd with his friend Evie Christoffelsen. Evie informed Elody the matters on which auditors are required to report by exception such as:
Adequate accounting records of ABC Ltd have not been kept, or returns adequate for the audit have not been received from branches of ABC Ltd not visited by Elody Gaindy; or
The financial statements of ABC Ltd are not in agreement with the accounting records and returns; or
Certain disclosures of directors' remuneration of ABC Ltd specified by law are not made
Which of the following statements is not true about the audit report prepared by Elody Gaindy?

• A.More than three paragraphs in the report indicates there must be some type of qualification in the audit report.
• B.A three-paragraph report ordinarily indicates there are no exceptions in the audit.
• C.A one-paragraph report is generally used when the auditor is not independent.
• D.An unqualified opinion with modified wording has three paragraphs.

Allisons and Co is a firm of Chartered Accountants. It has a reputation for excellence in the banking and insurance industry and has been invited to accept engagements by various institutions. Recently it has been invited by Nationally plc, the leading building society in the UK.
Which of the following usages would be the BEST use of an engagement letter for Allisons and Co?

• A.Provides access to all books, accounts and vouchers required for audit purpose of Nationally plc.
• B.Endorsement of cooperation from other auditors of Nationally plc.
• C.Auditor will obtain sufficient appropriate audit evidence for the audit of Nationally plc.
• D.Confirmation of management representation letter of Nationally plc.

The following describes the processes which make up the sales system in operation at Shevhrol and Co.
Which of the following processes represents strength or weakness in the system?
(i)Orders are placed by telephone. When a call is received, the person receiving the order checks that the customer's credit status supports the order and that the customer's current balance is below the maximum level and then immediately inputs the order into the system.
(ii)The order automatically generates a message to the distribution centre which despatches the goods and to the accounts department, which immediately raises an invoice and sends it to the customer.
(iii)
Customer queries are dealt with by reception staff.

• A.All processes represent strengths
• B.(i) represents strength and (ii) and (iii) represent weaknesses
• C.(i) and (ii) represent strengths and (iii) represents weakness
• D.(ii) represents strength and (i) and (iii) represent weaknesses

Robert Sen is performing the audit of financial statement of Loko Plc., the objective is to express an opinion as to whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.
Which of the following statements is correct about the preliminary judgment about materiality of financial statements of Loko Plc?

• A.This is the mean average amount by which Robert Sen believes the statements of Loko Plc could be misstated and still not affect the decisions of reasonable users.
• B.This is the median average amount by which Robert Sen believes the statements of Loko Plc could be misstated and still not affect the decisions of reasonable users.
• C.This is the maximum amount by which Robert Sen believes the statements of Loko Plc could be misstated and still not affect the decisions of reasonable users.
• D.This is the minimum amount by which Robert Sen believes the statements of Loko Plc could be misstated and still not affect the decisions of reasonable users.