ACCA F8 - Audit and Assurance Revision Kit 2016

3 NAB & Co have decided that they would like to accept nomination as Mickey’s auditors and Mickey’s existing
auditors have agreed to resign rather than be removed from office. The audit manager in charge of the
tender has set out a list of procedures that the firm must undertake before Mickey can be approved as an
audit client.
(1) Ensure that the existing auditor’s resignation has been properly conducted
(2) Communicate with Mickey’s existing auditors
(3) Submit an engagement letter to Mickey’s management
(4) Perform client screening procedures, including an assessment of Mickey’s risk profile
Which of the following summarises the correct order in which the above procedures should be
undertaken?
A 1, 3, 2, 4
B 4, 3, 2, 1
C 1, 4, 2, 3
D 2, 4, 1, 3
4 Before NAB & Co can accept appointment as Mickey’s auditors they must determine whether the
preconditions for an audit are met and obtain management’s agreement that it acknowledges and
understands its responsibilities.
Which of the following is not included in the agreement obtained by the auditor?
A
B
C
D
Management’s responsibility for preparing the financial statements
Management’s responsibility for internal control to enable the preparation of financial statements
which are free from material misstatement
Management’s responsibility to provide the auditor with all information relevant to the preparation of
the financial statements
Management’s responsibility to prevent and detect fraud
5 Once NAB & Co has accepted appointment as Mickey’s auditor they must draw up an engagement letter.
Which of the following must be included in the audit engagement letter?
A
B
C
D
Arrangements concerning the use of experts such as inventory counters
Obligations to make audit working papers available to other parties
Expected form and content of any reports
Basis on which fees are computed
186 Mock exam 1: questions