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Question(s) / Instruction(s):


1) Many accounting firms have adopted policies known as improved business practices. Which of the

Following is not one of the above?

A) Developing more sophisticated use of technology

B) Increased professional indemnity insurance cover

C) Improved recruiting practices

D) More effective advertising


2) According to the professions ethical standards, an auditor would be considered independent in

Which one of the following instances?

A) An employee of the audit firm acts as the honorary treasurer for a charity that is an audit client.

B) The auditor is also a solicitor advising the client.

C) The client owes the auditor fees for the last two annual audits.

D) The auditor’s main bank account is held at a client financial institution.


3) Independence in auditing means:

A) Taking an unbiased viewpoint.

B) Not being financially dependent on the client.

C) Not being an advocate for the client.

D) Remaining aloof from the client.


4) Which one of the following policies and procedures is not required by ASA 220 Quality Control for

Audits of Historical Financial Information:

A) Acceptance and continuance of client relationships and specific engagements.

B) Remunerating the auditor fairly and responsibly.

C) Leadership responsibilities for quality on audits.

D) Ethical requirements (including independence).


5) Sub-section 290.176 of the Code of Ethics for Professional Accountants prohibits the provision of

Which one of the following to an audit client?

A) Other assurance services B) attestation services

C) Management consulting services

D) Independent valuation services


6) Which one of the following is not one of the five fundamental principles of professional conduct?

Set out in the Code of Ethics for Professional Accountants?

A) Integrity

B) Continuing education

C) Confidentiality

D) Objectivity


7) Audit quality means:

A) How competent the auditor is.

B) How well an audit detects and reports material misstatements and fraud in financial


C) How independent the auditor is.

D) How well an audit detects and reports material misstatements in financial statements.


8) The ASX Corporate Governance Principles do not include:

A) Maximizing the profits of shareholders.

B) Respecting the rights of shareholders.

C) Safeguarding integrity in financial reporting.

D) Remunerating fairly and responsibly.


9) The Code of Ethics for Professional Accountants is issued by the:

A) Corporations Act.

B) Australian Professional Ethics Standards Board.

C) Australian Accounting Standards Board.

D) Australian Stock Exchange.


10) If a public accounting firm is requested by a client of another audit firm to provide an opinion on

The application of an accounting principle, the public accounting firm should:

A) Inform ASIC.

B) Advise the existing auditor.

C) Refuse to give an opinion.

D) all of the above.


11) Society has attached a special meaning to the term ʹprofessionalʹ. A professional is:

A) A person who has attained tertiary qualifications as a prerequisite to joining the job market.

B) Any person who receives pay for services performed.

C) A person who has both on-the-job experience received under an experienced supervisor and

Specific education relevant to the trade

D) A person expected to conduct himself or herself at a higher level than most other members of



12) The material financial interests rule means that:

A) An auditor should be involved in the executive function of a client to maximize the benefits

Achieved from the engagement

B) A public accounting firm cannot accept an audit client if anyone in the practice has a material

Shareholding in the potential client

C) An auditor cannot be assigned to the audit of a bank with which that auditor has a home


D) An auditor cannot accept payment from the auditee.


13) In the Code of Ethics for Professional Accountants, the advantage of general statements of ideal

Conduct, as opposed to specific rules of behavior, is:

A) The tendency to define the rules as maximum rather than minimum standards.

B) The emphasis on positive activities.

C) The ability to enforce the ideals.

D) The enforceability of minimum behavior and performance standards.



14) APES 110 s. 290.206-7 suggests that a public accounting firm should consider and document the

Effect on independence when the total fees from an audit client exceed:

A) 15% of the gross fees of the practice.

 B) 10% of the gross fees of the practice.

C) 5% of the gross fees of the practice.

D) 20% of the gross fees of the practice.


15) Part B of the Code of Professional Ethics identifies specific guidance on professional conduct in the

Following areas:

A) Fees and other types of remuneration

 B) Gifts and hospitality

C) Professional appointments

D) All of the above


16) In determining independence with respect of any audit engagement, the ultimate decision as to

Whether independence has been achieved is made by the:

A) Audit committee.

B) Users.

C) Client.

D) Auditor.


17) The audit expectations gap can be attributed to:

A) Audit failure.

B) The limitation to the role of the independent audit.

C) Business failure.

D) All of the above.


18) Part B of the Code of Ethics identifies threats to independence from the following sources:

A) Self-interest, self-review and advocacy.

B) Familiarity and intimidation.

C) Both A and B.

D) The work environment.


19) The provision of internal audit services to an auditee:

A) Can impair the appearance of independence.

B) Is prohibited by professional statement F1.

C) Is best done by subcontracting staff from the public accounting firm to the auditee.

D) Should improve the efficiency of the financial statement audit.


20) Lowballing is the practice of:

A) Accepting commissions from an audit client.

B) Charging a fee contingent upon an outcome.

C) Opinion shopping.

D) Under quoting in the initial period in order to win a contract.


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