ACCA AA
ACCA Audit and Assurance (AA) Flashcards
What are the five fundamental principles of professional ethics?
What are the five elements of an assurance engagement?
What assurance does a reasonable assurance engagement provide?
What assurance does a limited assurance engagement provide?
When would a practitioner NOT be able to express an unmodified conclusion on an assurance engagement?
Who sets International Standards on Auditing?
What is a "statement of circumstances"?
What TWO provisions support this principle?
In relation to corporate governance, what does "comply or explain" mean?
What are the main roles of an audit committee? (Give THREE)
What are the FIVE main principles of the UK Corporate Governance Code?
What committee of the board of directors is responsible for determining directors’ pay?
What committee of the board of directors should lead appointments to the board?
To comply with this, what roles should be separated?
Define an audit
Define corporate governance
In relation to corporate governance, what is the ‘agency problem’?
What are the FIVE categories of threats to the fundamental principles of professional ethics?
The ACCA Code of Ethics and Conduct requires that a key auditor partner cannot serve a PIE client for more than how many years?
What is a familiarity threat?
What is the restriction on percentage fees from a public interest entity (PIE) client?
If the client refuses permission for communication to take place, what should the proposed new auditor do?
What are the three components of audit risk?
What are the two components of the risk of material misstatement in financial statements?
What are the two components of detection risk?
What is sampling risk?
What are the TWO types of substantive procedures for obtaining audit evidence?
Against what may these ratios be compared?
What is meant by “overall audit strategy”?
What is the difference between an interim and final audit?
What is ‘materiality’?
What is performance materiality?
What is the auditors’ primary responsibility with respect to fraud?
What are the two types of audit file?
Which assertions are relevant to account balances and related disclosures at the period end?
What is the difference between the audit procedures “recalculation” and “reperformance”?
What are the FIVE procedures for obtaining of audit evidence?
Name SIX sample selection methods.
Does sampling risk increase or decrease as the sample size increases?
Does non-sampling risk increase or decrease as the sample size increases?
What is "audit software"?
What is "test data"?
What is the difference between management's expert and the auditor's expert?
What THREE criteria must be met for an external auditor to use the work of internal audit?
What aspects of an expert’s audit work should an auditor evaluate?
In what TWO circumstances would tests of control NOT be carried out?
What are the five components of a system of internal control?
What are the two general classes of control activities in information processing?
What is ‘standing data’?
What are the main inherent limitations of internal controls?
What three headings (or columns) will usually be used to structure such letters?
What three methods can be used to record accounting and internal control systems?
What are “control activities”?
What is meant by the “control environment”?
Is this a control objective, a control procedure or a control test?
What evidence gathering procedures can be used to test the operating effectiveness of controls?
To whom should the auditor report (a) significant deficiencies and (b) other deficiencies ?
What does the assertion of “cut-off” mean?
What is meant by the term "assertions"?
What are the assertions about account balances and related disclosures?
What are the assertions about classes of transactions and events and related disclosures?
What are the two types of external confirmation request?
Goods were received on 31 December 20X0, the reporting date. The related supplier's invoice was received on 5 January 20X1.
Is purchases cut-off correct?
Is sales cut-off correct?
Define a contingent liability
What is the correct accounting treatment of a contingent liability where settlement is less than probable?
What is the correct treatment of a contingent asset where the inflow of economic benefits is not probable?
Define an adjusting event
Define a non-adjusting event.
For how long after the date of the statement of financial position should going concern be assessed?
What audit opinion should be expressed if doubts about going concern are fully disclosed in the financial statements?
What audit opinion should be expressed if doubts about going concern are not fully disclosed in the financial statements?
What written representations must be obtained concerning management's responsibilities?
What do financial statements consist of?
In what circumstances would an auditor refer to the directors’ report in an auditor's report?
What words are missing from the following extract from an auditor's report?
What two circumstances require the audit opinion to be modified?
What paragraph would be included in an auditor's report to draw users’ attention to a matter that is fundamental ...
The inclusion of an emphasis of matter paragraph in the auditor's report does not modify the audit opinion.
What type of audit opinion is given if the financial statements contain misstatements that are material and pervasive?
What type of audit opinion is given if the auditor is unable to obtain sufficient appropriate audit evidence ...
What type of audit opinion is given if the financial statements contain a non-material misstatement?
Under the UK Corporate Governance Code listed companies are required to have an internal audit department.
In a listed company, to whom should internal audit report?
What are the three elements of the ACCA’s conceptual framework approach to independence?
What category of ethical threat may be created if fees from an audit client remain overdue?
What category of threat arises if the auditor prepares the financial statements for an audit client?
What category of threat arises if the auditor owns shares in a client company?
What category of threat arises if the auditor is a close friend of the financial director of the client company?
What categories of threat may be created if a firm assumes management responsibility for an audit client?
What is ‘audit risk’?
Analytical procedures MUST be used at which stages of an audit?
What percentage benchmarks are often applied as a starting point in determining materiality?
Why is it important that audits are properly documented? (Four reasons)
What factors affect the reliability of audit evidence?
How may advocacy threats arise?
What is “internal audit”?
What is "control risk"?
What two types of fraud may result in the misstatement of financial statements?
Define 'substantive procedure'.
Define 'audit evidence'.
What is the “expectation gap” in auditing?
What do the auditors mean when they say financial statements give a “true and fair view”?
Distinguish accountability, stewardship and agency.
Give FOUR limitations of an external audit.
What is professional scepticism?
Give THREE benefits to the audit of a client having an effective audit committee.
Give TWO limitations of an audit committee.
What are the directors’ responsibilities for internal control and risk management under a corporate governance code?
What are the auditor’s statutory rights?
What are “professional clearance” procedures on a new audit appointment?
What are the two main reasons put forward for regulating auditors?
How does an auditor resign from office?
How is an auditor removed from office before the end of their term?
What is the relationship between ISAs and national auditing standards?
What is a self-review threat, and give one example.
What is an intimidation threat, and give one example.
What is a safeguard, and what TWO categories of safeguard does the Code of Ethics recognise?
In what circumstances may an auditor disclose confidential client information?
What steps should a firm take on identifying a breach of the ACCA Code of Ethics?
What is a conflict of interest for an audit firm, and how is it managed?
What are Key Audit Matters (KAM)?
What effect does reporting a Key Audit Matter have on the audit opinion?
What is an “Other Matter” paragraph, and how does it differ from an Emphasis of Matter paragraph?
Name, in order, the main sections of an unmodified auditor’s report.
Why must the auditor’s report be dated, and what date is used?
What does the “Basis for Opinion” section of the auditor’s report state?
What audit opinion is given if misstatements are material but NOT pervasive?
When does a “limitation on scope” lead to a disclaimer of opinion rather than a qualified opinion?
What does “pervasive” mean when deciding on a modified opinion?
Name FOUR indicators that an entity may not be a going concern.
What procedures should an auditor perform in a going concern review?
What are the respective responsibilities of management and of the auditor for going concern?
What are the preconditions for an audit?
Name FOUR matters to consider before accepting a new audit engagement.
What is the purpose of an engagement letter?
Name FOUR contents of an engagement letter.
In what circumstances should the engagement letter be revised for a recurring audit?
What should an auditor do if management imposes a scope limitation before the engagement is accepted?
What is the difference between engagement acceptance and engagement continuance?
What is the difference between the overall audit strategy and the audit plan?
Name FOUR benefits of properly planning an audit.
What is the purpose of an interim audit?
What effect does the work performed at the interim audit have on the final audit?
Name FOUR matters an auditor considers when obtaining an understanding of the entity and its environment.
What is the purpose of analytical procedures at the planning stage?
Which ratios would you calculate to assess a client’s liquidity?
What is “inherent risk”?
How does an auditor respond to a HIGH assessed risk of material misstatement?
Why might the auditor need to revise materiality during the audit?
What is meant by materiality “by nature”?
Why does the auditor set performance materiality below overall materiality?
What is a “significant risk”?
What is meant by “sufficient appropriate” audit evidence?
Give TWO examples of analytical procedures used as substantive procedures.
What problems are associated with auditing accounting estimates?
What is the difference between a test of control and a substantive procedure?
What types of evidence are likely to be available in a smaller entity?
Define audit sampling and explain why it is needed.
What is the difference between statistical and non-statistical sampling?
How does an auditor project the results of a sample?
What should an auditor do if the results of a sample are unacceptable?
What is a “significant deficiency” in internal control?
What advantages and disadvantages do flowcharts have for recording a system?
What is an internal control questionnaire (ICQ), and how does it differ from an internal control evaluation questionnaire (ICEQ)?
What THREE elements should each point in a report to management contain?
Why must the auditor communicate with those charged with governance?
Give TWO control objectives for the sales system.
Describe a test of control over the despatch of goods.
Give TWO key controls in the purchases system.
Describe a control that prevents payment of a supplier’s invoice twice.
Give TWO key controls over the payroll system.
Describe a test of control over the payroll standing data.
Give TWO key controls over the bank and cash system.
Give TWO key controls over non-current assets.
What is the difference between general IT controls and information processing controls?
Give THREE examples of general IT controls.
Give THREE examples of application (information processing) controls.
What is a “check digit” and what does it prevent?
How does segregation of duties operate in an IT department?
Give THREE examples of what audit software can do.
What are the disadvantages of using test data?
Give THREE benefits of using automated tools and techniques.
Give THREE challenges of using automated tools and techniques.
What is “data analytics” in an audit context?
Which assertion is most at risk when auditing trade payables, and why?
Which assertions apply to disclosures in the financial statements?
What is the primary purpose of a receivables circularisation?
What should the auditor do if a customer does not reply to a positive confirmation request?
Who controls a receivables circularisation, and why does it matter?
Describe TWO procedures to test the valuation of trade receivables.
Describe TWO procedures to test the completeness and occurrence of revenue.
How would you test that sales cut-off is correct?
Describe a procedure to test prepayments.
What is a supplier statement reconciliation and what does it provide evidence of?
How does the auditor test for unrecorded liabilities?
Why is a payables circularisation used less often than a receivables circularisation?
How would you select suppliers for testing when the objective is completeness of payables?
How would you test that purchases cut-off is correct?
Describe TWO procedures to audit payroll expense.
Describe a procedure to test the completeness of accruals.
Describe a procedure to test an accrual for unpaid electricity.
How would you audit an accrual for holiday pay?
Why does the auditor attend the inventory count?
In which TWO directions should test counts be performed at an inventory count, and why?
Name THREE matters to review in a client’s inventory count instructions.
How is inventory measured under IAS 2, and how does the auditor test it?
How does the auditor obtain evidence over inventory held by a third party?
What is a continuous (perpetual) inventory system, and what must the auditor check?
What does a bank confirmation letter provide evidence of?
Describe TWO procedures to audit the year-end bank reconciliation.
Why does the auditor investigate long-outstanding unpresented cheques?
How does the auditor audit petty cash?
What disclosure issue arises where a client holds several bank accounts, some in overdraft?
Describe TWO procedures to verify additions to non-current assets.
How does the auditor test the depreciation charge?
How would you audit a disposal of a non-current asset?
Name THREE audit procedures over a revaluation of property.
How does the auditor verify the client’s rights over land and buildings?
What evidence should the auditor obtain over directors’ remuneration?
Give THREE differences between internal and external audit.
Name THREE factors to consider when assessing whether an entity needs an internal audit function.
Give TWO advantages and TWO disadvantages of outsourcing the internal audit function.
What is a “value for money” internal audit assignment?
What audit considerations arise when a client uses a service organisation?
What is the objective of ISQM 1?
Name the EIGHT components of a firm’s system of quality management under ISQM 1.
What does ISQM 2 deal with?
For which engagements is an engagement quality review required?
Why must the auditor document the audit work performed?
What is the significance of uncorrected misstatements at the final review?
Who is responsible for the prevention and detection of fraud?
What are the three elements of the “fraud triangle”?
Why is the risk of not detecting a material misstatement due to fraud higher than for error?
What is the auditor’s responsibility in relation to laws and regulations?
What should an auditor do on identifying suspected non-compliance with laws and regulations?
What must an auditor do if money laundering is suspected?
What is the auditor’s responsibility for events between the year end and the date of the auditor’s report?
What is the auditor’s responsibility for events discovered AFTER the auditor’s report is signed but before the financial statements are issued?
Name THREE procedures in a subsequent events review.
What should the auditor do if management refuses to amend the financial statements for a material subsequent event?
When must a provision be recognised under IAS 37?
Name THREE procedures to audit a legal claim against the client.
Describe TWO audit procedures over long-term borrowings.
Why does the auditor obtain written representations?
How reliable are written representations as audit evidence?
Give THREE matters on which written representations are commonly obtained.
What should the auditor do if management refuses to provide a requested written representation?
Card 1 of 249. Question side.