Professional Documents
Culture Documents
Instructions:
1.
2.
3.
Friday,
have marks
4.
Question 1
20 marks
We have discussed the requirements of professional ethics as set out for public accountants by
organizations such as the International Ethics Standards Board for Accountants and also the other
pronouncements (standards) to ensure quality in the completion of assurance engagements.
Required:
5marks
5marks
listtheindividualbasicprinciplesincludedinthecodeofethics.
foreachoftheprinciples,listedinpart(a),brieflyexplainwhatthe
principlerequiresoftheprofessionalaccountantorwhatis
involvedin
meetingtherequirementsofthatspecificprinciple.
5marks
(c)
listthecommonthreatstoindependence.
2marks
(d)
ifanauditorfindsasignificantproblemorconcerninmeetingthe
requirementsforanyoneormoreoftheethicalprinciplesrequired
indeterminingwhethertoacceptorcontinuean
engagement,whatoptions
doestheauditorhaveavailabletodealwithsuch
problems.
3marks
(e)
listthepronouncementsthatcontrolqualityofauditsandtheorderthat
theyareconsideredandapplied.
Question 2
(a)
(b)
5 marks
Auditors are required to complete certain preliminary (preplanning) engagement activities before
a current audit is started.
List these required activities.
Question 3
12 marks
Thereareanumberofdifferentopinionsthattheauditormayreportintheauditorsreportbased
upontheresultsoftheaudit.Thefirstoftheseistheunmodifiedorunqualifiedopinion.
We have discussed a number of different non standard (modified) auditors reports that are
discussed in CAS 705 among other places.
Required:
4marks
2marks
(a)
(b)
listthetypesofnonstandardauditorsreportsthatwehavediscussed
CAS705andtheprofessionalliteratureoutlinestwodistincttypesof
problemsthatresultinnonstandardauditorsreportswhatare
they?
6marks
(c)
materialityoftheproblemwilldeterminethetypeofthereportthatcan
reportedlistthreedifferentlevelsofmaterialityinreportingthat
discussedandforeachindicatethetypeofreportthatwillresult
wehave
Question 4
18 marks
Inplanninganaudit,auditorsinCanadamaycomputeintheplanningstagethreedifferenttypes
ofmateriality.
3marks
(a)
definematerialitywithinthecontextofacurrentCanadianauditofaset
offinancialstatements
3marks
(b)
whatarethethreedifferenttypesofmateriality(usingthecurrent
Canadianterminologywehavereviewed)?
4marks
(c)
astheauditprogresses,theauditorreviewsauditdifferencesdiscovered
andconsidersthosedifferenceswithreferencetoplanning
Whataretheoptionsavailabletotheauditorifitappears
differencesmayexceedplanningmateriality?
(d)
usingtheprioryearsfinancialstatementsforTestcothatfollowonpages
4and5,andtheguidelinessetoutbelow,computeplanning
for2010usingtheassumptionthatthecurrentauditnow
willhavesimilarfinancialstatementnumbersasperthe
completedfiscalyear.
materiality.
thataudit
8marks
materiality
beingplanned
mostrecently
Shareholders Equity - 3 to 5%
TESTCOINC.
BalanceSheet
(Unaudited)
December31,2009,withcomparativefiguresfor2008
2009
2008
Assets
Currentassets:
Cash
Accountsreceivable
Inventory,atcost
Prepaidexpensesanddeposits
100
520,000
184,000
6,200
710,300
Property,plantandequipment:
Property,plantandequipment
Lessaccumulatedamortization
9,100
201,000
165,000
4,000
379,100
197,000
39,000
158,000
146,000
6,000
140,000
868,300
$ 519,100
289,200
78,800
20,000
388,000
$ 407,000
6,000
413,000
100,000
6,000
374,300
380,300
3,000
103,100
106,100
868,300
$ 519,100
LiabilitiesandShareholders'Equity
Currentliabilities:
Accountspayable
Corporateincometaxespayable
Dividendspayable
Longtermdebt:
Longtermnotepayable
Shareholders'equity:
Sharecapital
Retainedearnings
TESTCOINC.
IncomeStatement
(Unaudited)
YearendedDecember31,2009,withcomparativefiguresfor2008
2009
2008
2,015,000
$1,250,000
Costofgoodssold
Grossprofit
1,290,000
725,000
885,000
365,000
Otherrevenue:
Interestincome
10,000
5,000
86,000
246,000
33,000
365,000
108,000
205,000
30,000
343,000
370,000
27,000
78,800
6,000
291,200
$ 21,000
Netsales
Expenses:
Sellingexpenses
Generalandadministrative
Amortizationexpense
Incomebeforeincometaxes
Incometaxes:
Current
Netincome
Question 5
20 marks
Select the one most appropriate answer for each multiple choice question. Only correct answers
are graded no marks are deducted for wrong answers. If more than one answer is recorded, that
question will not be graded. All parts are worth the same 2 marks.
The preferred submission of answers is a vertical listing of question numbers 1 to 10 and the
letter of the selected answer immediately to the right of each question number.
1. Which of the following statements is not true?
A)
B)
C)
D)
E)
2. Which of the following is an auditor of a non-public company allowed to do for that client?
A)
B)
C)
D)
E)
3.
4.
existence.
completeness.
compliance.
ownership.
valuation.
5.
6.
7.
C)
D)
9.
8.
objective judgment.
independent integrity.
professional skepticism.
impartial conservatism.
prayerful judgement.
10.