ACA Assurance & Audit 2

Question 1

An auditor discovers a significant deficiency in internal controls. Under ISA 265, this must be communicated to:

Accepted Answer

Those charged with governance

Answer

ISA 265 requires the auditor to communicate significant deficiencies in internal control in writing to those charged with governance and management.

Question 2

Under ISA 240, the auditor's responsibility regarding fraud is to:

Accepted Answer

Obtain reasonable assurance that financial statements are free from material misstatement due to fraud or error

Answer

ISA 240 clarifies that the auditor's objective is to obtain reasonable assurance; the primary responsibility for prevention and detection of fraud rests with management and those charged with governance.

Question 3

Substantive procedures in an audit include:

Accepted Answer

Tests of details and analytical procedures

Answer

Substantive procedures comprise tests of details (examining individual transactions and balances) and substantive analytical procedures, both aimed at detecting material misstatements.

Question 4

Under ISA 560, subsequent events that come to the auditor's attention after the financial statements are issued:

Accepted Answer

Require the auditor to discuss with management and consider whether amendment is needed

Answer

ISA 560 requires the auditor to discuss newly discovered facts with management, determine whether amendment is needed, and take appropriate action if management refuses to amend.

Question 5

Professional scepticism in auditing means:

Accepted Answer

An attitude that includes a questioning mind and critical assessment of evidence

Answer

Professional scepticism is an attitude that includes a questioning mind, being alert to conditions that may indicate misstatement, and critically assessing audit evidence regardless of past experience.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Assurance & Audit 2