ACA Assurance & Audit 1

Question 1

Which International Standard on Auditing requires the auditor to communicate Key Audit Matters?

Accepted Answer

ISA 701

Answer

ISA 701 (Communicating Key Audit Matters in the Independent Auditor's Report) requires auditors of listed entities to describe matters of most significance in the audit.

Question 2

Under ISA 315, the auditor is required to obtain an understanding of the entity and its environment to:

Accepted Answer

Identify and assess risks of material misstatement

Answer

ISA 315 requires the auditor to understand the entity, its environment, and internal controls to identify and assess risks of material misstatement at the financial statement and assertion levels.

Question 3

The concept of materiality in auditing means that:

Accepted Answer

Misstatements are material if they could influence economic decisions of users

Answer

Materiality is defined by the potential to influence the economic decisions of users; the auditor uses professional judgement to determine quantitative and qualitative materiality thresholds.

Question 4

Which type of audit opinion is issued when financial statements present a true and fair view with no material misstatements?

Accepted Answer

Unmodified opinion

Answer

An unmodified (clean) opinion is issued when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable framework.

Question 5

Under ISA 530, audit sampling involves:

Accepted Answer

Applying procedures to less than 100% of a population to draw conclusions about the whole

Answer

Audit sampling applies procedures to a representative subset of a population, allowing the auditor to draw conclusions about the entire population with an acceptable level of audit risk.

ACA ICAEW Practice Test

ACA ICAEW Practice Test

ACA Assurance & Audit 1