ACA Assurance & Audit 4

Question 1

The concept of 'true and fair view' in UK auditing means the financial statements:

Accepted Answer

Give a fair presentation of the financial position and performance

Answer

True and fair view means the financial statements faithfully represent the financial position and performance without material misstatements, giving users a reliable picture of the entity.

Question 2

Under ISA 500, the reliability of audit evidence is generally higher when:

Accepted Answer

Evidence is obtained from external, independent sources

Answer

ISA 500 indicates evidence is more reliable when obtained from independent external sources, compared to internally generated evidence or representations from management.

Question 3

An auditor issues an adverse opinion when:

Accepted Answer

The financial statements contain pervasive material misstatements

Answer

An adverse opinion is issued when misstatements are both material and pervasive, meaning they fundamentally affect the financial statements and would mislead users.

Question 4

Under ISA 620, an auditor may use an expert's work. The responsibility for the audit opinion:

Accepted Answer

Remains with the auditor

Answer

ISA 620 is clear that even when using an auditor's expert, the auditor retains sole responsibility for the audit opinion and must evaluate the adequacy of the expert's work.

Question 5

Which of the following is a control risk indicator?

Accepted Answer

Management override of internal controls

Answer

Control risk is the risk that internal controls fail to prevent or detect a material misstatement; management override of controls is a significant indicator of high control risk.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Assurance & Audit 4