ACCA Audit and Assurance Principles 2

Question 1

Which sampling method gives every item in a population an equal chance of selection, making it statistically defensible?

Accepted Answer

Random sampling

Answer

Random sampling ensures each item has an equal probability of selection, providing a statistically valid basis for audit conclusions.

Question 2

An auditor identifies a significant deficiency in internal control over financial reporting. To whom must this be communicated?

Accepted Answer

Those charged with governance

Answer

Significant deficiencies in internal control must be communicated in writing to those charged with governance under ISA 265.

Question 3

What is 'inherent risk' in the context of the audit risk model?

Accepted Answer

Susceptibility of an assertion to misstatement before considering controls

Answer

Inherent risk is the susceptibility of an assertion to a material misstatement assuming no related internal controls exist.

Question 4

Under ISA 570, what is the auditor's responsibility if a going concern assumption is used but substantial doubt exists?

Accepted Answer

Evaluate management's plans and assess adequacy of disclosures

Answer

The auditor must evaluate management's plans to mitigate the doubt and determine whether financial statement disclosures are adequate.

Question 5

Which procedure provides the MOST reliable evidence about the existence of recorded accounts receivable?

Accepted Answer

Confirming balances directly with customers

Answer

Direct external confirmation from customers provides third-party evidence and is considered highly reliable for the existence assertion.

ACCA - Association of Chartered Certified Accountants Practice Test