I. Ethics, Professional Responsibilities and General Principles (15–25%)

Question 1

How is the lack of objectivity from management considered a significant deficiency or a material weakness that an auditor would need to communicate to the audit committee?

Answer 1

The control environment is one of the five framework components of the COSO internal control - integrated framework. And the tone at the top is a component on how the organization relates to internal control. So if there is a lack of objectivity from management, that could be a significant deficiency or a material weakness when it comes to the organization’s F/S

Question 2

What is the difference between anchoring bias and availability bias?

Answer 2

Anchoring bias - one relies too heavily on the first piece of information they receive when making decisions
Availability bias - place an undue amount of emphasis on events that are easily recalled while ignoring possibilities that are difficult to imagine

Question 3

In the context of quality control, what is the primary purpose of the engagement performance?

Answer 3

To ensure that the engagements are adequately supervised.

Question 4

What are the maximum number of days in which a non-issuer auditor should complete the assembly of the final audit file following the report release date

Answer 4

60 days.
Issue should have it assembled within 14 days after the report release date

Question 5

What is confirmation bias?

Answer 5

The tendency to put on too much weight on evidence that confirms one’s beliefs while disregarding evidence, the challenges them

Question 6

What is survivorship bias?

Answer 6

The tendency to focus on things that make it past the selection process overlooking those that did not