ACCA Advanced Audit and Assurance

Question 1

Under ISA 315 (Revised 2019), what is the main purpose of the auditor's risk assessment procedures?

Accepted Answer

To identify and assess the risks of material misstatement at the financial statement and assertion levels

Answer

ISA 315 (Revised 2019) requires the auditor to identify and assess the risks of material misstatement, whether due to fraud or error. This assessment gives a basis for designing further audit procedures.

Question 2

Management has adequately disclosed a material uncertainty about the entity's going concern status in the financial statements. What type of audit report should the auditor issue under ISA 570?

Accepted Answer

An unmodified opinion with a separate section headed 'Material Uncertainty Related to Going Concern'

Answer

If the material uncertainty is adequately disclosed, the auditor expresses an unmodified opinion. The report must include a separate 'Material Uncertainty Related to Going Concern' section that draws attention to the disclosure.

Question 3

Under ISA 701, what are key audit matters (KAMs)?

Accepted Answer

Matters that, in the auditor's professional judgment, were of most significance in the audit of the current period's financial statements

Answer

ISA 701 defines KAMs as the matters of most significance in the audit of the current period, selected from those communicated with those charged with governance. They are communicated in the auditor's report for listed entities.

Question 4

In a group audit under ISA 600, who is responsible for the direction, supervision and performance of the group audit engagement and for the auditor's report?

Accepted Answer

The group engagement partner

Answer

The group engagement partner is responsible for the direction, supervision and performance of the group audit and for the report issued. This applies even when component auditors perform work on components.

Question 5

An audit firm prepares the financial statements of its audit client and then audits them. Which ethical threat does this mainly create?

Accepted Answer

Self-review threat

Answer

Auditing financial statements that the firm itself prepared creates a self-review threat, because the firm would be evaluating its own work. Safeguards or declining the engagement may be needed, especially for public interest entities.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Advanced Audit and Assurance