Q1. Your assurance firm is auditor of Happy Goods. The audit manager has just become engaged to the managing director's daughter, who he met through a mutual friend. The managing director owns 51% of the shares in Happy Goods. Which of the threat is not there in this case?
A.Intimidation threat
B. Familiarity threat
C. Self-interest threat
D. Advocacy threat
Correct Answer: D
Q2. Which of the following is not an argument for principles-based approach to corporate governance?
A.The same rules might not be suitable for every company
B. There are some aspects of corporate governance that cannot be regulated easily
C. Companies do not have the choice of ignoring the rules
D. The most suitable corporate governance practices can differ between companies
Correct Answer: C
Q3. The following are potential sources of evidence regarding the effectiveness of the division's total quality management program. Assume that, all comparisons are for similar time periods and duration and current items are compared with similar items before the implementation of the total quality management program. The least persuasive evidence would be a comparison of
A.Employee morale over the two time periods.
B. Scrap and rework costs over the two time periods.
C. Customer returns over the two time periods.
D. Manufacturing and distribution costs per unit over the two time periods.
Correct Answer: A
Q4. Which of the following is not a component of audit risk?
A.Inherent risk
B. Control risk
C. Defective risk
D. Detection risk
Correct Answer: C
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