ca_exm_au2_2008-03文档.pdf

CGA-CANADA ADVANCED EXTERNAL AUDITING [AU2] EXAMINATION March 2008 Marks Time: 4 Hours 30 Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note: 1 1 /2 marks each a. A Canadian auditor believes that the circumstances surrounding a client’s litigation are adequately disclosed in the client’s financial statements. Which of the following opinions is the auditor most likely to issue when he or she has determined that the client will probably incur material future losses associated with the litigation in process? 1) An unqualified opinion modified by an explanatory paragraph 2) A qualified (GAAP) opinion 3) A qualified (scope) opinion 4) An unqualified opinion without modification b. Which of the following elements is least likely to represent a management attitude factor that increases the likelihood of a material financial reporting fraud? 1) There exist difficult-to-audit transactions. 2) There is an undue emphasis on meeting earnings targets. 3) Managers appear to take imprudent risks.