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Assurance & Audit Flashcards

6 cards from real ACA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Assurance & Audit flashcards as text

  1. Which International Standard on Auditing requires the auditor to communicate Key Audit Matters?

    Answer: ISA 701

    ISA 701 (Communicating Key Audit Matters in the Independent Auditor's Report) requires auditors of listed entities to describe matters of most significance in the audit.

  2. Under ISA 315, the auditor is required to obtain an understanding of the entity and its environment to:

    Answer: Identify and assess risks of material misstatement

    ISA 315 requires the auditor to understand the entity, its environment, and internal controls to identify and assess risks of material misstatement at the financial statement and assertion levels.

  3. The concept of materiality in auditing means that:

    Answer: Misstatements are material if they could influence economic decisions of users

    Materiality is defined by the potential to influence the economic decisions of users; the auditor uses professional judgement to determine quantitative and qualitative materiality thresholds.

  4. Which type of audit opinion is issued when financial statements present a true and fair view with no material misstatements?

    Answer: Unmodified opinion

    An unmodified (clean) opinion is issued when the auditor concludes that the financial statements are prepared, in all material respects, in accordance with the applicable framework.

  5. Under ISA 530, audit sampling involves:

    Answer: Applying procedures to less than 100% of a population to draw conclusions about the whole

    Audit sampling applies procedures to a representative subset of a population, allowing the auditor to draw conclusions about the entire population with an acceptable level of audit risk.

  6. Which assertion relates to whether transactions occurred during the accounting period?

    Answer: Occurrence

    The occurrence assertion addresses whether transactions and events that have been recorded actually occurred and pertain to the entity — a key assertion for revenue testing.