PROFESSIONAL PROGRAM – Page 11

AAA – L3 – SA – Q2.6 – Materiality Benchmarks

Accepted benchmark for materiality.

Question

Which of the following is an accepted benchmark for materiality?

A 1-2% of pre-tax profit

B 1-2% of operating profit

C 5-10% of revenue

D 1-2% of total assets

Answer

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Tags: Audit Planning, Financial Benchmarks, ICAG, Materiality
Level: Level 3

Topic: Planning

AAA – L3 – SA – Q2.5 – Audit Strategies

Identifying non-audit strategy.

Question

Which of the following is NOT an audit strategy?
A Substantive approach
B Directional testing approach
C Statement of financial position approach
D Business risk approach

Answer

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Tags: Audit Strategy, Business Risk, ICAG, Substantive Approach
Level: Level 3

Topic: The audit approach

AAA – L3 – SA – Q2.4 – ICAG Advertising Rules

Incorrect statement about ICAG advertising rules.

Question

Which of the following is NOT true about ICAG members advertising their services?

A They must not be misleading

B Advertisements require prior approval by ICAG

C Discounts should not be mentioned

D They must not make comparisons with competitors

Answer

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Tags: Advertising, ICAG Regulations, IESBA Code, Professional Ethics
Level: Level 3

Topic: Rules of Professional Conduct

AAA – L3 – SA – Q2.3 – Audit Committee Functions

Function of audit committee per 2020 Code.

Question

According to the Code of Corporate Governance for Listed Companies 2020, which ONE of the following is a function of the audit committee:

A To make recommendations to the Board with respect to the effectiveness of internal controls

B To review the risks facing the company

C To make recommendations on induction and training to the Board

D To recommend a remuneration policy for directors to the Board.

Answer

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Tags: Audit committee, Corporate Governance, ICAG, Internal controls
Level: Level 3

Topic: The regulatory environment

AAA – L3 – SA – Q2.2 – Confidential Information Disclosure

Permissible disclosure of client confidential information.

Question

In which of the following circumstances would it be permissible for an auditor to disclose confidential information about a client?

A To assist the firm with the audit of another client in the same industry

B To inform shareholders when disclosure is in the public interest

C To protect the interests of the shareholders

D To defend the firm against an official accusation of professional negligence.

Answer

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Tags: Confidentiality, Disclosure, ICAG, Professional Ethics
Level: Level 3

Topic: Rules of Professional Conduct

BCL – L1 – SA – Q38 – Contract Law

Validity of a contract caused by fraud or coercion.

Question

An agreement that is caused by fraud, misrepresentation & coercion is

A. Voidable

B. Partially Void

C. Valid

D. All of these

E. None of these

Answer

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Tags: Fraud, Misrepresentation, Voidable Contract
Level: Level 1

Topic: Contract Law

AAA – L3 – SA – Q2.1 – Agency Theory

Directors as agents in agency theory.

Question

In the context of agency theory, the directors of a company are the agents of:

A The auditors

B The audit committee

C The institutional shareholders

D All shareholders

Answer

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Tags: Agency Theory, Corporate Governance, Directors, ICAG, Shareholders
Level: Level 3

Topic: The regulatory environment

BCL – L1 – SA – Q37 – Sources of Law

Categories of public law.

Question

Public Law is divided into ____ categories?

A. Three

B. Four

C. Two

D. None of these

Answer

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Tags: Law Categories, Legal Classification, Public Law
Level: Level 1

Topic: Sources of Law

AAA – L3 – SA – Q1.10 – Audit Opinion

Audit opinion for disclosed zero-interest loan.

Question

If a client has a loan from another group company at zero rate of interest and discloses it in a note to the financial statements, what is the correct audit opinion?

A It depends whether the item is material

B Qualified opinion, ‘except for’

C Qualified opinion, ‘adverse’

D Unqualified

Answer

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Tags: Audit opinion, Financial Statement Disclosure, Going Concern, ICAG
Level: Level 3

Topic: Reporting

BCL – L1 – SA – Q36 – Agency

Role a minor can play in contracts.

Question

A minor can be an

A. Surety

B. Agent

C. Partner

D. All of these

E. None of these

Answer

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Tags: Agency, Contract Capacity, Minor, Partnership
Level: Level 1

Topic: Agency

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AAA – L3 – SA – Q2.6 – Materiality Benchmarks

Accepted benchmark for materiality.

AAA – L3 – SA – Q2.5 – Audit Strategies

Identifying non-audit strategy.

AAA – L3 – SA – Q2.4 – ICAG Advertising Rules

Incorrect statement about ICAG advertising rules.

AAA – L3 – SA – Q2.3 – Audit Committee Functions

Function of audit committee per 2020 Code.

AAA – L3 – SA – Q2.2 – Confidential Information Disclosure

Permissible disclosure of client confidential information.

BCL – L1 – SA – Q38 – Contract Law

Validity of a contract caused by fraud or coercion.

AAA – L3 – SA – Q2.1 – Agency Theory

Directors as agents in agency theory.

BCL – L1 – SA – Q37 – Sources of Law

Categories of public law.

AAA – L3 – SA – Q1.10 – Audit Opinion

Audit opinion for disclosed zero-interest loan.

BCL – L1 – SA – Q36 – Agency

Role a minor can play in contracts.

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Accepted benchmark for materiality.

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Identifying non-audit strategy.

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Incorrect statement about ICAG advertising rules.

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Function of audit committee per 2020 Code.

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Directors as agents in agency theory.

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