Assurance & Audit Flashcards
6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Assurance & Audit flashcards as text
An auditor discovers a significant deficiency in internal controls. Under ISA 265, this must be communicated to:
Answer: Those charged with governance
ISA 265 requires the auditor to communicate significant deficiencies in internal control in writing to those charged with governance and management.
Under ISA 240, the auditor's responsibility regarding fraud is to:
Answer: Obtain reasonable assurance that financial statements are free from material misstatement due to fraud or error
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.
Substantive procedures in an audit include:
Answer: Tests of details and analytical procedures
Substantive procedures comprise tests of details (examining individual transactions and balances) and substantive analytical procedures, both aimed at detecting material misstatements.
Under ISA 560, subsequent events that come to the auditor's attention after the financial statements are issued:
Answer: Require the auditor to discuss with management and consider whether amendment is needed
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.
Professional scepticism in auditing means:
Answer: An attitude that includes a questioning mind and critical assessment of evidence
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.
The primary purpose of an audit engagement letter is to:
Answer: Agree the terms of the engagement and define responsibilities
The engagement letter, required by ISA 210, defines the terms of the audit, including the objective, scope, responsibilities of each party, and the form of any reports to be issued.