Advanced Audit & Assurance Flashcards
6 cards from real ACCA SP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Advanced Audit & Assurance flashcards as text
Which of the following is an example of 'self-review threat' to auditor independence?
Answer: The audit firm prepared the financial statements it is now auditing
A self-review threat arises when the auditor reviews or relies on work they or their firm previously produced — such as auditing financial statements the firm prepared.
Under ISA 530, 'audit sampling' involves:
Answer: Applying audit procedures to less than 100% of items in a population to draw conclusions about the whole population
Audit sampling (ISA 530) involves selecting a representative sample from a population and applying audit procedures to it, enabling the auditor to draw conclusions about the entire population.
An 'emphasis of matter' paragraph differs from an 'other matter' paragraph in that:
Answer: Emphasis of matter refers to a matter disclosed in the financial statements; other matter refers to something outside the financial statements
Emphasis of matter (ISA 706) draws attention to a matter properly disclosed in the financial statements. Other matter paragraphs refer to matters relevant to users that are outside the financial statements.
Under ISAE 3000, a 'review engagement' provides:
Answer: Limited assurance — the practitioner concludes nothing has come to their attention indicating a material misstatement
A review engagement (ISAE 3000) provides limited (negative) assurance. The practitioner states that nothing has come to their attention to indicate the subject matter is materially misstated — a lower level than reasonable assurance.
Professional scepticism in an advanced audit context requires the auditor to:
Answer: Maintain a questioning mind, critically assess evidence, and be alert to conditions indicating fraud or error, without being predisposed to disbelieve management
Professional scepticism (ISA 200) is a critical mindset alert to conditions suggesting fraud or error. It requires evaluation of evidence quality and does not assume management is either honest or dishonest a priori.
Under the FRC's Ethical Standard, 'long association' of an audit partner with a listed client is addressed by:
Answer: Rotation of the audit partner (key audit partner) after a maximum of five years for listed entities (with a five-year cooling-off period)
The FRC Ethical Standard requires key audit partners on listed company audits to rotate off the engagement after five years (with a five-year cooling-off period) to safeguard independence and objectivity.