AAT Level 4 External Auditing (ETAU) Practice Test

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• To test NRV, which evidence is checked?
• Which measure directly supports staff awareness of policy?
• Which payroll control requires the payroll schedule to be compared to budget and HMRC return before BACS is authorised?
• Which option is NOT a method to gather audit evidence?
• Haphazard sampling is characterized by:
• What is the purpose of the audit strategy?
• Which option provides a direct example of an evidence-related limitation?
• A company qualifies as small if it meets two out of three thresholds. Which option correctly states these thresholds?
• Which phrasing best captures the concept of a disclaimer opinion due to limited evidence?
• Audit of trade receivables: which is a procedure?
• Agreement of the fixed asset register NBV to the NBV in financial statements enables what?
• Which of the following is not typically included in the audit plan?
• Which action is listed to monitor ongoing compliance with policy?
• What is one purpose of maintaining adequate accounting records?
• Which method is used to gather evidence by examining records or documents?
• Which item is a component of the internal control system?
• The auditor's opinion should relate to which statement?
• Audit of trade payables: which assertion is typically more of a concern?
• After the report has been issued, the auditor has a passive duty to consider subsequent events only if something comes to their attention.
• Which statement about the relationship between test of controls and substantive testing is true?
• Which P&L assertion ensures that recorded transactions actually occurred?
• What is the primary purpose of a walkthrough test?
• Who conducts an audit?
• Which item is NOT covered by the audit opinion?
• Receivables: if unusual items are found, what should the auditor do?
• What must a claimant prove to establish a breach of duty of care?
• Which item describes disciplinary procedures for non-compliance with policy?
• Which statement best describes a key conclusion from the auditor's overall review of financial statements?
• Which item is explicitly a response to non-compliance with policy?
• Which control requires assets to be barcoded and secured?
• Analytical procedures can be used for which purposes?
• Auditor has an active duty to search for material events up to which date?
• Which P&L assertion addresses whether transactions were recorded in the correct period?
• Which items are included in the content of the audit strategy?
• The information system in internal controls can be described as which of the following?
• Which procedure involves reviewing the aged receivables analysis to assess liquidity?
• For a Limited company, records must be kept for how long from accounting date?
• Who is responsible for determining whether the entity is a going concern?
• What are the steps for ascertaining reasonable assurance?
• Which of the following is a potential action that a supervisory body could take as a result of audit negligence?
• For non-current asset controls, which measure governs procurement by tender from approved suppliers?
• What is the exact wording used to describe the opinion when there is a limitation on scope?
• Adjusting events provide evidence of conditions that exist at year-end.
• If a material misstatement exists and the client does not adjust, the opinion should be which of the following?
• What does the schedule of unadjusted errors summarize?
• In fixed asset testing, which tracing direction is used to verify existence and completeness?
• If the auditor becomes aware of a material subsequent event and the financial statements are not amended, what may the auditor do?
• Which measure would best ensure policy awareness during staff training?
• Which statement best describes the duty to ensure sufficient information is obtained for the audit?
• Auditors have the right to attend and speak at shareholders' meetings on matters relating to audit.
• Which item is explicitly included in the client's inventory count instructions?
• Which of the following is included in pre-count considerations for inventory?
• Which is not an assertion for the balance sheet?
• Qualitative materiality example: a transaction between a director and the company will always be material and must be disclosed.
• Which method is described as testing inventory quantity through continuous records counting items periodically over the year?
• After the inventory count, which action helps ensure cut-off details are correct?
• Bank reconciliation window dressing refers to which practice?
• Inventory valuation is governed by which principle?
• For a company to qualify as small, which thresholds must be met at least two of the three?
• What is one of the responsibilities of a company regarding accounting records?
• Auditors can affect control risk by management changing internal controls.
• What is the preferred sampling method described?
• In sales controls, which step requires the invoice to be sequentially numbered and matched with both the order and the goods delivery note?
• Audit of revenue: which procedure tests completeness through analytical procedures?
• Which option is NOT a listed consequence or recommendation?
• Which control ensures the asset register is reconciled to physical assets and to the general ledger?
• Detection risk is the risk that auditors do not discover errors in financial statements.
• Which item would you implement to address a failure to comply with the policy?
• In inventory cut-off testing, what is the main objective?
• If a dormant company is also a bank or insurance company, what is the audit requirement?
• Which assertion is primarily concerned with whether all payroll costs are included in the period?
• Which question helps determine whether a client's system is in place?
• Auditors have the right to access at all times which of the following?
• Which of the following is a condition that indicates potential going concern issues?
• Attending the inventory count involves how many stages?
• Which procedure should an auditor perform to support the going concern assessment by examining management's current financial information?
• What is the required format when reporting deficiencies to governance?
• What best describes a written representation in an audit?
• The preliminary figure for materiality is a numerical size calculated at planning stage.
• Which statement best describes the nature of a test of control?
• In going concern testing, which procedure involves enquiries of directors, company bankers and solicitors?
• Under what condition may an auditor owe a duty of care to a third party?
• Audit risk is defined as the probability that auditors will give an incorrect opinion on financial statements.
• Inventory balance is calculated as which of the following?
• Aggregate errors are added together to determine whether, in aggregate, misstatements are material.
• For negligence to be proved against an auditor, which elements must be established?
• What is the definition of an audit?
• Which of the following is not a typical owed duty of care by auditors?
• Which statements are included in the audit opinion coverage?
• Which statements describe how a company can be considered dormant for audit purposes?
• During fixed asset testing, why is reviewing expense accounts for capital items performed?
• Which statement best describes the role of the audit strategy?
• What does 'fair' mean in accounting context?
• What is the primary purpose of the audit plan?
• Which entities are eligible to be exempt from an audit?
• According to the audit risk model, if inherent risk is HIGH and control risk is HIGH, detection risk must be LOW to yield audit risk LOW.
• Valuation of receivables: what confirms valuation if cash is received after the audit date?
• Which statement best describes a negative expression in an audit report?
• In the entity's risk assessment process, which element defines what you aim to prevent?
• Non-adjusting events are events which did not exist at year-end.
• Non-sampling risk arises from factors like inexperienced staff or time pressure.
• Which of the following are significant risks requiring special audit consideration?
• Which procedure is used to test going concern by assessing the reasonableness of cash flow forecast?
• What is the role of the Financial Reporting Council (FRC) in the UK?
• Which balance sheet assertion concerns whether assets and liabilities are recorded at proper values?
• What are the two types of CAAT?
• Materiality can be quantitative or qualitative.
• What percentage range is typically used for materiality based on profits?
• What does the internal control environment reflect within an organization?
• Substantive testing (test of detail) is used to:
• In the context of limitation on scope or inability to obtain sufficient appropriate evidence, which opinion might the auditor issue?
• In a walkthrough test, if the transaction path reveals a problem, what should the auditor do?
• Sampling risk is usually caused by sample size being too small.
• Which statement best describes a positive expression in an audit report issued after obtaining reasonable assurance?
• Which body sets International Standards on Auditing (ISAs)?
• Which limitation of internal controls involves employees overriding controls by management?
• What should the auditor issue if unadjusted errors are not material and the client does not adjust?
• In a modified audit report with an unmodified opinion, which element might be included to draw attention to a significant matter?
• Which type of evidence is generally considered more reliable than internal client documents?
• Which of the following statements about reporting deficiencies is true?
• Which two factors determine whether assurance is reasonable or limited?
• Audit of inventory is concerned with which assertions?
• An adverse opinion is issued when which condition is satisfied?
• For a Public Limited Company, records must be kept for how long from accounting date?
• In sales controls, which step ensures receipts are recorded by two people and banked promptly with bank reconciliation?
• Where should records be kept?
• To test cost, what should be traced?
• What does an unmodified audit report indicate about the financial statements?
• Which body adopts ISAs it considers applicable for the UK?
• Which item is listed as a consequence and recommendation related to staff policy?
• Block selection sampling refers to selecting:
• Which principle is NOT among the eight principles under the Data Protection Act 1998?
• In audit reporting, which action is a responsibility regarding material variations?
• Analytical procedures can be used as planning tools and as substantive tests.
• To whom should audit findings be reported?
• Materiality should be continually reassessed during the audit as new information comes to light.
• Which of the following is a control activity primarily concerned with ensuring numerical accuracy?
• The final audit report should be delivered to which primary stakeholder?
• Which of the following constitutes a matter that affects the true and fair opinion?
• Inherent risk is best described as the risk that arises due to the nature of the business or the way it operates.
• What must be provided as part of financial statements?
• Planning materiality is set higher, addressing errors at the financial statement level; performance materiality is set lower, addressing errors at the balance or transaction level.
• Which payroll control addresses procedures for starters and leavers?
• Which is NOT a type of fixed asset register testing?
• Which of the following describes a Limited Liability Partnership?
• Which of the following is described as a liability cap in managing liability?
• During testing of trade payables, if after-year-end payments to a supplier are not included on the year-end list, what does this most likely indicate?
• Interim count with follow-through of movements in and out to year end involves:
• What does the Bannerman paragraph refer to?
• Which scenario is given as an example of a limitation on scope that could lead to a disclaimer opinion?
• During the inventory count, which procedure is used to verify existence and completeness?
• To whom do auditors report deficiencies found in accounting and control systems?
• Which of the following is a common method for documenting systems and internal controls?
• Which of the following are duties of auditors?
• In sales controls, which step ensures that despatched goods are matched with the original order using a goods delivery note?
• Audit documentation should enable an experienced auditor with no knowledge of the client to understand the work performed.
• A modified audit report is appropriate in which scenario?
• When does the auditor require written representations?
• Analytical procedures in payroll audits are used because there is a relationship between the number of staff, pay rates, hours worked and payroll expense.
• Which statement about audit evidence quality is true?
• Receivables circularisation aims to test which aspects?
• Control risk is the risk that controls do not prevent or detect material misstatements.
• Directional testing is used to confirm which elements?
• An auditor's going concern responsibility includes which of the following?
• What is a typical wording for a material misstatement leading to a qualified opinion?
• Audit of revenue: which example illustrates accuracy checks?
• What is Limited assurance?
• Which method is NOT listed as a method of documenting systems and controls?
• Which statement is true about true statements in auditing context?
• Audit of cash and cash equivalents: bank letter should cover which items?
• What are assertions?
• Which item is listed as a consequence or recommendation for addressing scope limitations?
• What must a claimant show to prove loss caused?
• Which sampling method involves selecting the first item at random and then every nth item thereafter?
• The role of audit documentation includes which of the following?
• Which scenario is explicitly cited as an example of a limitation on scope?
• Auditors have the right to be given notice of meetings of the company's shareholders.
• Which principle requires that data not be transferred to other countries without adequate protection?