Audit and Assurance Principles Flashcards
7 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Audit and Assurance Principles flashcards as text
Which element of the fraud triangle describes management's rationalization that fraudulent behavior is acceptable?
Answer: Rationalization
Rationalization is the third element of the fraud triangle, where the perpetrator justifies the fraudulent act to themselves.
ISA 315 requires auditors to obtain an understanding of the entity's environment. Which is NOT a component of this understanding?
Answer: The auditor's own firm's quality control policies
Understanding the entity under ISA 315 covers the entity's environment and internal controls, not the audit firm's own policies.
When should an auditor perform subsequent events procedures?
Answer: From the balance sheet date to the date of the auditor's report
Under ISA 560, subsequent events procedures cover the period from the balance sheet date to the date of the auditor's report.
What is the primary purpose of an engagement letter?
Answer: To define the terms of the audit engagement and responsibilities of each party
An engagement letter establishes the agreed terms of the audit, reducing the risk of misunderstandings between the auditor and client.
Under ISA 505, if a positive confirmation is not returned by the debtor, what must the auditor do?
Answer: Perform alternative procedures to obtain sufficient appropriate evidence
Non-response to a positive confirmation request requires the auditor to perform alternative procedures such as examining subsequent cash receipts.
Which analytical procedure would best identify an unusual relationship between cost of sales and revenue?
Answer: Recalculating the gross profit margin and comparing it to prior periods
Calculating and comparing the gross profit margin across periods or against industry benchmarks quickly highlights anomalies in the cost-revenue relationship.
A self-review threat arises when an auditor:
Answer: Reviews work that they or their firm previously performed
A self-review threat occurs when an auditor evaluates their own previous judgments or work, making objective re-evaluation difficult.