ACCA Audit and Assurance Principles 3

Question 1

Which element of the fraud triangle describes management's rationalization that fraudulent behavior is acceptable?

Accepted Answer

Rationalization

Answer

Rationalization is the third element of the fraud triangle, where the perpetrator justifies the fraudulent act to themselves.

Question 2

ISA 315 requires auditors to obtain an understanding of the entity's environment. Which is NOT a component of this understanding?

Accepted Answer

The auditor's own firm's quality control policies

Answer

Understanding the entity under ISA 315 covers the entity's environment and internal controls, not the audit firm's own policies.

Question 3

When should an auditor perform subsequent events procedures?

Accepted Answer

From the balance sheet date to the date of the auditor's report

Answer

Under ISA 560, subsequent events procedures cover the period from the balance sheet date to the date of the auditor's report.

Question 4

What is the primary purpose of an engagement letter?

Accepted Answer

To define the terms of the audit engagement and responsibilities of each party

Answer

An engagement letter establishes the agreed terms of the audit, reducing the risk of misunderstandings between the auditor and client.

Question 5

Under ISA 505, if a positive confirmation is not returned by the debtor, what must the auditor do?

Accepted Answer

Perform alternative procedures to obtain sufficient appropriate evidence

Answer

Non-response to a positive confirmation request requires the auditor to perform alternative procedures such as examining subsequent cash receipts.

ACCA - Association of Chartered Certified Accountants Practice Test