ACCA Audit and Assurance 2

Question 1

Under ISA 530, which sampling method gives every item in the population an equal chance of selection?

Accepted Answer

Random sampling

Answer

Random sampling ensures that every item in the population has an equal probability of being selected, making it a statistically valid method under ISA 530.

Question 2

What type of modified audit opinion is issued when a misstatement is material but not pervasive?

Accepted Answer

Qualified opinion

Answer

A qualified opinion ('except for') is issued when the auditor concludes that misstatements are material but not pervasive to the financial statements.

Question 3

Which of the following best describes 'control risk'?

Accepted Answer

The risk that a misstatement will not be prevented or detected by the entity's internal controls

Answer

Control risk is the risk that a material misstatement that could occur will not be prevented, or detected and corrected, on a timely basis by the entity's internal control.

Question 4

Which ISA deals with the auditor's responsibilities regarding fraud?

Accepted Answer

ISA 240

Answer

ISA 240 'The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements' sets out the auditor's duties when considering fraud risk.

Question 5

What is 'tolerable misstatement' in the context of audit sampling?

Accepted Answer

The maximum monetary error in a population that the auditor is willing to accept

Answer

Tolerable misstatement is the maximum monetary error in a population that the auditor is willing to accept and still conclude that the audit objective has been achieved.

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA - Association of Chartered Certified Accountants Certification Practice Test

ACCA Audit and Assurance 2