The auditor of Net plc carried out an external confirmation of receivables at the year end to confirm the accuracy of total trade receivables in the balance sheet at that date. Two of the replies to the confirmations disagreed the balance.
For each of these two disagreements, select whether the disagreement would be considered as a misstatement or would not be considered as a misstatement for the purposes of evaluating the accuracy of total trade receivables in the balance sheet at the year end.
(i)Word Ltd disagreed the balance because they had made a payment two days before the year end. The auditor has confirmed that the cheque cleared the bank two days after the year end.
(ii)Red Ltd disagreed the balance because their records did not contain invoice number SI 00942. This invoice and associated goods were despatched by Net plc on the last day of the year. The auditor has verified that the despatch note and cut-off with inventory are correct.

• A. (i) would not be considered as misstatement and (ii) would be considered as misstatement
• B. Both (i) and (ii) would not be considered as misstatement
• C. (i) would be considered as misstatement and (ii) would not be considered as misstatement
• D. Both (i) and (ii) would be considered as misstatement

Julia is a member of a professional accountancy body who works in industry at KiwiCorp plc, a listed company. The company is experiencing difficulty meeting the expectations of the market, and Julia has been told by the board of directors that the company must meet
its optimistic profit targets at the year end. To achieve this target and for good corporate governance practice KiwiCorp is to set an active audit committee.
Which of the following statements about audit committee is NOT correct?

• A. Listed companies are required to have an audit committee
• B. At least 50% of the members of an audit committee must be non-executive directors
• C. Audit committees are an important aspect of a company's control environment
• D. Audit committees are considered to be good practice for all large companies

Rehan & Co has been appointed as an external auditor of Limba Plc for the financial year 2011-12. Rehan & Co has identified some problems in the financial statements and now at the final stage of writing the report on the audit.
In which of the following case, Rehan & Co may issue an adverse opinion?

• A. Some parts of the financial statements of Limba Plc are materially misstated or misleading.
• B. Some parts of the financial statements of Limba Plc found misleading or misstated on the performed investigation but Rehan & Co is not sure about their pervasiveness.
• C. The audit firm, Rehan & Co, is not independent from the management of Limba Plc.
• D. The overall financial statements of Limba Plc are as materially misstated or misleading as a whole that they do not present fairly the financial position or results of operations and cash flows in conformity with IFRS.

Assurance providers obtain evidence using procedures set out in ISA 500.
Identify which type of audit procedures is / are correctly paired with each tests carried out by an auditor.
TestsAudit procedures (i)The assurance provider writes to a sample of customers asking them to inform him of the balance they owe theInspection company at the year end (ii)The assurance provider looks at a share certificate to confirm that the company has an investment in Company AObservation (iii)The assurance provider attends the inventory count and ensures that it is being carried out in accordance withConfirmation the issued instructions

• A. All are correct
• B. (i) and (ii) only
• C. (ii) and (iii) only
• D. All are incorrect