Ciurila Ovidiu

801A
Review IV

I.Indicate whether the following statements in Metaphors Used in Auditing are

true (T) or false (F) :
1.The client confirms an auditors first responsability of confidentiality to his client. F
2.The report suggests auditors must also consider other publics. F
3.Auditors should always go direct to the regulatory authorities in cases of fraud. F
4.There are no cases where an auditor is legally obliged to disclose information to
the authorities. T
5.Most professional people are aware of what auditors do. F
6.An auditors role is very often confused with that of an accountant. T

II. MATCH these three roles ( the expressions are metaphors) with their best
definition:
Roles: 1.Watchdog; 2.Bloodhound; 3.Whistle-blower.
Definitions: a.Responsibility for overseeing a companys finances; b.Responsibility
for informing the authorities of malpractice; c.Responsibility for tracking down the
instigators of malpractice.
1-a / 2-c / 3-b

III. MATCH the words in the first list with their best synonym in the second one:
1.to alert; 2.to stumble upon; 3. to spot; 4. To give a nod and a wink; 5.pro-active;
6.to spell out; 7. to see fit; 8.impunity; 9.to flout; 10.solace; 11.to impinge upon;
12.a gulf.

a.to affect; b.consolation;c.to consider right; d.to state clearly; e.tocome across; f.to
warn; g.to notice; h.to inform indirectly; i.initiating; j.to openly ignore; k.an abyss;
l.freedom from punishment.
1-f / 2-e / 3-g / 4-e / 5-I / 6-d / 7-c / 8-h / 9-j / 10-b / 11-a / 12-k

IV.ANSWER the following questions focused on Reporting on Financial Statements:

1.Which are the two types of banks existing in the U.K.?

U.K. incorporated banks and U.K. branches of foreign banks.
2.Which are the Acts the banks in the U.K. must refer to in order to prepare their
financial statement?
In accordance with the Companies Act in 1985 and the requirements of the Banking
Act in 1987.
3. Who are the people employed by the banks to perform work in accordance with
the Acts specified and what are their obligations?
The bank chose to appoint an auditor to report on the financial statements.
4.Which are the requirements of the Companies Act?
The auditors must consider not only whether it will be possible for the bank to
prepare reliable financial statements at a particular point in time, but also whether
the accounting records are maintained in such a way as to enable the directors and
management to control the business effectively from day to day.

5.Can you mention the audit tests used by the auditors to form an opinion on the
financial statements?
Compliance tests on systems and substantive tests.
6.Which are the U.K. auditing standards?

Planning, control and recording

Accounting systems
Audit evidence
Internal controls
Review of financial statements

7.Are there any differences between work performed by the auditors and that
performed by the reporting accountants?
The auditors are concerned only with those risks and control weaknesses that may
result in a material miss-statement in the financial statements. The reporting
accountants on the other hand are concerned with the much wider range of
inherent risks.
8.Can you specify the control types examined by the auditors and the reporting
accountants?
The auditors may be content to rely on detective controls, which provide assurance
that any misappropriation or loss is properly reflected in the financial statements.
The reporting accountants may be more concerned with preventative controls,

which reduce the likelihood of loss. The reporting accountants examination of

internal controls is therefore likely to be wider in scope and extent than of the
statutory auditors.