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

ISA 315 (Revised 2019) requires the auditor to obtain an understanding of the entity and its environment, applicable FRF, and the entity's system of internal control to identify and assess risks of material misstatement.

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

COSO identifies five components of internal control: (1) Control environment, (2) Risk assessment, (3) Control activities, (4) Information and communication, and (5) Monitoring activities.

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

An intimidation threat occurs when the auditor is deterred from acting objectively by threats (actual or perceived), such as a threat to dismiss the auditor or damage the firm's reputation.

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

Cressey's fraud triangle comprises: (1) Pressure/incentive to commit fraud, (2) Opportunity (weak controls), and (3) Rationalisation (justifying the act). ISA 240 uses this to assess fraud risk.

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

In an AUP engagement (ISRS 4400), the practitioner applies specified procedures agreed with the engaging party and reports factual findings. No opinion or conclusion is expressed; users draw their own conclusions.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Advanced Audit & Assurance