ACCA SP Advanced Audit & Assurance

Question 1

Under ISA 315 (Revised), the auditor's understanding of the entity must include:

Accepted Answer

The entity, its environment, its applicable financial reporting framework, and its system of internal controls

Answer

The audit client's market share only

Answer

The personal financial position of each director

Answer

The names and contact details of all major customers

Question 2

Which of the following is a component of the COSO internal control framework?

Accepted Answer

Control environment, Risk assessment, Control activities, Information & communication, and Monitoring activities

Answer

Board independence

Answer

Audit committee composition

Answer

External auditor rotation policy

Question 3

'Intimidation threat' to auditor independence arises when:

Accepted Answer

A client threatens to replace the auditor if an unfavourable opinion is issued

Answer

The auditor is asked to prepare management accounts

Answer

The audit partner develops a close personal friendship with a director

Answer

The audit firm provides both audit and tax services

Question 4

Under ISA 240, the fraud triangle identifies three conditions that increase the risk of fraud:

Accepted Answer

Pressure (incentive), Opportunity, and Rationalisation

Answer

Motive, Means, Opportunity

Answer

Greed, Deception, Concealment

Answer

Management override, Collusion, False documentation

Question 5

An 'agreed-upon procedures' engagement differs from a reasonable assurance engagement in that:

Accepted Answer

The practitioner performs specified procedures and reports factual findings without expressing an opinion or conclusion

Answer

It provides a higher level of assurance

Answer

It is always performed by an internal auditor

Answer

It requires a full audit of the financial statements

Question 6

Under ISA 570, if material uncertainty about going concern exists and is adequately disclosed, the auditor should:

Accepted Answer

Issue an unmodified opinion with a 'material uncertainty related to going concern' section

Answer

Issue an adverse opinion

Answer

Issue a qualified 'except for' opinion

Answer

Withdraw from the engagement