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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.

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  1. The ICAEW Code of Ethics is based on which framework?

    Answer: Principles-based framework

    The ICAEW Code of Ethics, aligned with the IESBA Code, uses a principles-based framework built around five fundamental principles rather than prescriptive rules for every situation.

  2. Which threat to independence arises when an auditor audits work they previously prepared?

    Answer: Self-review threat

    A self-review threat arises when the auditor is required to evaluate work that they or their firm previously performed, making it difficult to be objective about that work.

  3. Analytical procedures performed at the planning stage of an audit are used to:

    Answer: Identify areas of potential risk and focus audit effort

    Preliminary analytical procedures at planning stage help the auditor understand the entity's performance, identify unusual trends or ratios, and focus audit effort on higher-risk areas.

  4. Under ISA 330, the auditor's response to assessed risks should be:

    Answer: Proportional to the assessed risks of material misstatement

    ISA 330 requires the auditor to design and perform audit procedures whose nature, timing, and extent are responsive to the assessed risks at both the financial statement and assertion levels.

  5. Which of the following bodies oversees audit quality in the UK?

    Answer: Financial Reporting Council (FRC)

    The Financial Reporting Council (FRC) is the UK's independent regulator responsible for promoting high-quality corporate governance and reporting, including oversight of audit quality.

  6. Under ISA 260, the auditor is required to communicate audit findings to:

    Answer: Those charged with governance

    ISA 260 requires the auditor to communicate on a timely basis significant findings from the audit to those charged with governance, which may include the board, audit committee, or equivalent body.