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
Under ISA 315 (Revised), the auditor's understanding of the entity must include:
Answer: The entity, its environment, its applicable financial reporting framework, and its system of internal controls
ISA 315 (Revised 2019) requires the auditor to obtain an understanding of the entity and its environment, applicable FRF, and the entity's system of internal control to identify and assess risks of material misstatement.
Which of the following is a component of the COSO internal control framework?
Answer: Control environment, Risk assessment, Control activities, Information & communication, and Monitoring activities
COSO identifies five components of internal control: (1) Control environment, (2) Risk assessment, (3) Control activities, (4) Information and communication, and (5) Monitoring activities.
'Intimidation threat' to auditor independence arises when:
Answer: A client threatens to replace the auditor if an unfavourable opinion is issued
An intimidation threat occurs when the auditor is deterred from acting objectively by threats (actual or perceived), such as a threat to dismiss the auditor or damage the firm's reputation.
Under ISA 240, the fraud triangle identifies three conditions that increase the risk of fraud:
Answer: Pressure (incentive), Opportunity, and Rationalisation
Cressey's fraud triangle comprises: (1) Pressure/incentive to commit fraud, (2) Opportunity (weak controls), and (3) Rationalisation (justifying the act). ISA 240 uses this to assess fraud risk.
An 'agreed-upon procedures' engagement differs from a reasonable assurance engagement in that:
Answer: The practitioner performs specified procedures and reports factual findings without expressing an opinion or conclusion
In an AUP engagement (ISRS 4400), the practitioner applies specified procedures agreed with the engaging party and reports factual findings. No opinion or conclusion is expressed; users draw their own conclusions.
Under ISA 570, if material uncertainty about going concern exists and is adequately disclosed, the auditor should:
Answer: Issue an unmodified opinion with a 'material uncertainty related to going concern' section
ISA 570: if going concern uncertainty is material but adequately disclosed in the financial statements, the auditor issues an unmodified opinion but adds a 'Material Uncertainty Related to Going Concern' section to the report.