ACCA Audit and Assurance Principles 5

Question 1

Which of the following best describes 'professional skepticism' as required by ISA 200?

Accepted Answer

An attitude that includes a questioning mind and critical assessment of audit evidence

Answer

Professional skepticism means maintaining a questioning mind and critically evaluating evidence without assuming dishonesty or unquestioning acceptance.

Question 2

When an auditor uses the work of an auditor's expert, who retains sole responsibility for the audit opinion?

Accepted Answer

The auditor, without sharing responsibility with the expert

Answer

Under ISA 620, the auditor remains solely responsible for the audit opinion even when using the work of an expert.

Question 3

Which type of assurance engagement provides a lower level of assurance than a full audit?

Accepted Answer

Review engagement

Answer

A review engagement provides limited (negative) assurance, concluding that nothing has come to the auditor's attention indicating the financial statements are misstated.

Question 4

Under ISA 550, which transaction type between related parties requires the MOST auditor attention?

Accepted Answer

Transactions not in the normal course of business

Answer

Related party transactions outside the normal course of business require heightened scrutiny because they may lack commercial substance or be used to manipulate results.

Question 5

Performance materiality is set at a level LOWER than overall materiality primarily to:

Accepted Answer

Provide a buffer to reduce the probability that the aggregate of uncorrected misstatements exceeds overall materiality

Answer

Performance materiality creates a safety margin so that the combined effect of uncorrected and undetected misstatements does not exceed overall materiality.

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA - Association of Chartered Certified Accountants Practice Test

ACCA Audit and Assurance Principles 5