ACA Audit and Assurance

Question 1

Under ISA (UK) 200, what is the overall objective of the auditor in conducting an audit of financial statements?

Accepted Answer

To obtain reasonable assurance that the financial statements as a whole are free from material misstatement

Answer

To detect all fraud within the entity

Answer

To guarantee the accuracy of the financial statements

Answer

To ensure the entity complies with all applicable laws

Question 2

Which of the following audit procedures provides the MOST reliable evidence?

Accepted Answer

External confirmation from a third party

Answer

Enquiry of management

Answer

Analytical review of financial data

Answer

Inspection of internally generated documents

Question 3

Under the FRC's Ethical Standard, which threat arises when an audit firm provides non-audit services to an audit client?

Accepted Answer

Self-review threat

Answer

Intimidation threat

Answer

Familiarity threat

Answer

Advocacy threat

Question 4

What is the purpose of an engagement letter in an audit?

Accepted Answer

To agree the terms of the audit engagement between the auditor and the entity

Answer

To replace the audit report

Answer

To communicate audit findings to shareholders

Answer

To document the audit plan

Question 5

Under ISA (UK) 315, which of the following is a component of an entity's internal control system?

Accepted Answer

The control environment

Answer

The audit committee's report to shareholders

Answer

The auditor's risk assessment

Answer

The engagement partner's review

Question 6

An auditor discovers a potential material misstatement in the financial statements but management refuses to make an adjustment. What type of audit opinion should the auditor consider?

Accepted Answer

Qualified or adverse opinion

Answer

Unmodified opinion

Answer

Disclaimer of opinion

Answer

No opinion is necessary