Auditing and Financial Statements Quiz
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Questions and Answers

What is one reason financial institutions require audited financial statements for loan assessments?

  • To verify employee qualifications.
  • To provide a basis for granting loans. (correct)
  • To evaluate management performance.
  • To assess the potential for business growth.

    • Audited financial statements are not used for determining the price of a business in mergers and acquisitions.

    False

    How do audited financial statements help in assessing tax?

    They provide a basis for the profit reported to tax authorities.

    Auditing helps to increase __________ of an organization by building public trust.

    <p>goodwill</p> Signup and view all the answers

    What is a benefit of audited financial statements concerning capital markets?

    <p>Access to capital markets.</p> Signup and view all the answers

    The primary objective of an audit is to guarantee the accuracy of financial statements.

    <p>False</p> Signup and view all the answers

    What is one limitation of auditing mentioned in the content?

    <p>Auditors use testing, which means not all items in the financial statements are verified.</p> Signup and view all the answers

    Match the following auditing benefits with their descriptions:

    <p>Access to capital market = Requirement for public companies to register Lower cost of capital = Reduced information risk and lower interest rates Improved controls = Suggestions for better operational efficiency Increased goodwill = Building public trust in the organization</p> Signup and view all the answers

    What is the primary reason for the regulation of audit and assurance services?

    <p>To protect the public interest</p> Signup and view all the answers

    Legal regulation refers to the guidelines set by professional bodies for auditors.

    <p>False</p> Signup and view all the answers

    What is one of the key legal requirements related to auditors in Nigeria?

    <p>Companies and Allied Matters Act, 2004 (CAMA)</p> Signup and view all the answers

    The __________ Act provides legal requirements for the regulation of auditors in Nigeria.

    <p>Companies and Allied Matters</p> Signup and view all the answers

    Match the following acts with their relevance to auditing:

    <p>CAMA = Regulates company audits ICAN Act 1965 = Governs the profession of accountants Banks and Other Financial Institutions Act 1991 = Regulates banking audits Insurance Act 2003 = Regulates insurance auditing</p> Signup and view all the answers

    Which of the following is NOT a characteristic of audit regulation?

    <p>Enhances marketing opportunities</p> Signup and view all the answers

    Ethical regulations for auditors are provided solely by national laws.

    <p>False</p> Signup and view all the answers

    Identify one of the objectives of an assurance engagement.

    <p>To provide a credible and impartial opinion on financial statements.</p> Signup and view all the answers

    What is the primary purpose of an assurance engagement?

    <p>To enhance confidence in the evaluation outcome</p> Signup and view all the answers

    Every audit is a form of an assurance engagement.

    <p>True</p> Signup and view all the answers

    What is one element of an assurance engagement?

    <p>Criteria</p> Signup and view all the answers

    The Companies and Allied Matters Act CAP C.20 LFN, 2004 primarily regulates __________ services.

    <p>audit and assurance</p> Signup and view all the answers

    What is one of the responsibilities regarding the auditor's appointment based on the Companies and Allied Matters Act?

    <p>Shareholders recommend the appointment</p> Signup and view all the answers

    Match the following provisions with their descriptions:

    <p>Appointment of the auditor = Recommended by shareholders Remuneration of the auditor = Determined by the shareholders Rights of the auditor = Access to necessary information Liability of auditors for negligence = Holding auditors accountable for failures</p> Signup and view all the answers

    The audit plan must document changes to the audit strategy.

    <p>True</p> Signup and view all the answers

    Why is audit planning important?

    <p>It ensures a successful audit.</p> Signup and view all the answers

    What is the primary purpose of audit planning?

    <p>To formulate the general strategy for an audit</p> Signup and view all the answers

    Audit planning is a discrete phase of the audit process.

    <p>False</p> Signup and view all the answers

    What does ISA 300 relate to in the context of an audit?

    <p>Planning an audit of a financial statement</p> Signup and view all the answers

    Audit planning helps to ensure that attention is devoted to __________ aspects of the audit.

    <p>critical</p> Signup and view all the answers

    Match the purpose of audit planning with its respective descriptions:

    <p>Establishing objectives = Sets the intended means for achieving audit goals Directing work = Facilitates the control over audit activities Identifying potential problems = Resolves issues promptly during the audit process Organizing the audit = Ensures efficient management of the audit engagement</p> Signup and view all the answers

    Which factor does NOT influence the nature and extent of planning activities?

    <p>Audit completion deadlines</p> Signup and view all the answers

    Adequate planning aims to identify and resolve potential problems on a timely basis.

    <p>True</p> Signup and view all the answers

    Why is planning considered a vital area of an audit?

    <p>It ensures proper coordination and timely completion of audit work.</p> Signup and view all the answers

    What is the primary objective of auditing in its current stage?

    <p>To attesting the fair representation of audited financial statements</p> Signup and view all the answers

    The techniques for carrying out audits have remained the same since the earliest days of auditing.

    <p>False</p> Signup and view all the answers

    Define auditing in one sentence.

    <p>Auditing is the systematic examination of financial statements and records to ensure their accuracy and compliance with applicable standards.</p> Signup and view all the answers

    The __________ audit focuses on ensuring that resources are used efficiently and effectively.

    <p>Value for money</p> Signup and view all the answers

    Match the types of audits with their definitions:

    <p>Value for money audit = Ensures resources are used efficiently Interim audit = Conducted between annual audits Internal audit = Evaluates the effectiveness of internal controls Management audit = Focuses on operational efficiency and performance</p> Signup and view all the answers

    Which of the following is NOT a type of audit mentioned?

    <p>Comprehensive audit</p> Signup and view all the answers

    The public's need for audits has decreased over time.

    <p>False</p> Signup and view all the answers

    What is one advantage of carrying out an audit of financial statements?

    <p>One advantage of carrying out an audit is that it enhances the reliability of financial statements.</p> Signup and view all the answers

    Under which condition is disclosure of confidential information allowed?

    <p>Disclosure is permitted by law and authorized by the client.</p> Signup and view all the answers

    Professional accountants have a duty to disclose any information even if it is not required by law.

    <p>False</p> Signup and view all the answers

    Name one circumstance where confidential information may be disclosed due to legal requirements.

    <p>Production of documents in legal proceedings.</p> Signup and view all the answers

    Professional accountants should act in a manner consistent with the good reputation of the _______.

    <p>profession</p> Signup and view all the answers

    Match the following reasons for disclosure with their descriptions:

    <p>(a) Permitted by law = Authorized by the client or the employer (b) Required by law = For legal proceedings and compliance (c) Professional duty = To protect professional interests (d) Public interest = When the public good is at stake</p> Signup and view all the answers

    What should be considered before disclosing confidential information?

    <p>The extent of relevant information known.</p> Signup and view all the answers

    Professional accountants may disclose information for personal gain if they are authorized by the client.

    <p>False</p> Signup and view all the answers

    What is expected from professional accountants in relation to technical standards?

    <p>To comply with relevant technical and professional standards.</p> Signup and view all the answers

    Study Notes

    Course Information

    • Course Title: Auditing I
    • Course Code: ACC210
    • Course Developers/Writers: Nwaobia, AppolosNwabuisi, Ph.D., FCA, ACTI; Umukoro, Olaolu, M.Sc.
    • Course Editor: Dr Abuh Adah
    • Head of Department: Dr (Mrs) Ofe Inua
    • Programme Coordinator: Anthony I. Ehiagwina

    Course Content

    • Course content covers required course outline
    • Course aims to equip students with necessary information for understanding auditing practice.
    • Course objectives include understanding the concept of auditing, listing and explaining advantages and importance of auditing, explaining types of audit, reasons for regulation and sources of regulation.
    • Discussing provisions of Companies and Allied Matters Act, 2004 regarding the appointment/re-appointment, qualification, duties, powers, remuneration, removal and report of the independent auditor.
    • Explaining the elements of an assurance engagement and its usefulness in the audit process.
    • Discussing types of audit programmes and advantages/disadvantages.
    • Discussing types of audit testing and their importance.

    Study Units

    • Introduction to Auditing
    • Regulation of Audit and Assurance Services/Assurance Engagements
    • Audit Planning and Strategy
    • Professional Ethics
    • Corporate Governance
    • Internal Control
    • Audit Programmes and Audit Testing
    • Internal Audit and Outsourcing
    • Verification of Assets and Liabilities
    • Audit Report

    Assignments

    • Self-assessment exercises for each unit
    • Tutor-Marked Assignments (TMAs)
    • 30 percent of the total score assigned to TMAs
    • Final examination for 70 percent of the total score.

    Summary

    • Adequate effort is crucial to attain maximum benefit from the course material.

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    Related Documents

    ACC210 Auditing 1 Course Guide PDF

    Description

    Test your knowledge on the importance of audited financial statements in loan assessments, tax assessment, and the regulation of audit services. This quiz covers benefits, limitations, and key legal requirements related to auditing and assurance.

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