ACCA Audit and Assurance Principles 4

Question 1

Which type of audit opinion is issued when the financial statements are materially misstated but the misstatement is NOT pervasive?

Accepted Answer

Qualified opinion

Answer

A qualified opinion ('except for') is appropriate when there is a material but non-pervasive misstatement or limitation on scope.

Question 2

Under ACCA's Code of Ethics, which principle requires auditors not to disclose client information to third parties without proper authority?

Accepted Answer

Confidentiality

Answer

The confidentiality principle prohibits auditors from disclosing client information acquired during the engagement to unauthorized parties.

Question 3

What is 'tolerable misstatement' in audit sampling?

Accepted Answer

The maximum monetary error in a population the auditor can accept without modifying the opinion

Answer

Tolerable misstatement is the amount set by the auditor for sampling purposes, representing the maximum error acceptable before the conclusion about the population changes.

Question 4

Which assertion is MOST directly tested when an auditor reviews the physical inventory count?

Accepted Answer

Existence

Answer

Observing a physical count tests that recorded inventory items actually exist at the balance sheet date.

Question 5

An audit firm provides bookkeeping services to an audit client. Which threat does this primarily create?

Accepted Answer

Self-review threat

Answer

Preparing accounting records and then auditing those same records creates a self-review threat because the firm is auditing its own work.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Audit and Assurance Principles 4