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?
How do the notes define an audit?
Why are the words independent and opinion so important in the definition of an audit?
Who are the three parties in an assurance engagement and what is each responsible for?
Give examples of the forms the subject matter of an assurance engagement can take.
What makes subject matter appropriate for an assurance engagement?
What are criteria in an assurance engagement and why are suitable criteria needed?
What five characteristics does the chapter say suitable criteria exhibit?
Distinguish sufficiency from appropriateness of evidence.
What influences the reliability of evidence?
What does an attitude of professional scepticism mean?
How is the conclusion worded in a reasonable assurance engagement compared with a limited assurance engagement?
Which level of assurance does a statutory audit give, and what are positive and negative assurance also called?
In what two situations would a practitioner not express an unmodified conclusion, in either type of assurance engagement?
How is corporate governance defined?
What are the objectives of corporate governance?
Explain the agency problem in a company.
How does the external audit help shareholders judge the directors' performance?
What does the OECD say a corporate governance framework should do?
Which corporate governance code does the ACCA specify as an example of best practice for AA, and who publishes it?
What are the main principles of the UK Corporate Governance Code?
What does comply or explain mean?
Why should the roles of chief executive and chair not be held by the same person?
What does the Code require on board appointments and evaluation?
What does the Code expect of the board on audit, risk and internal control?
What does the Code expect on directors' remuneration?
How should an audit committee be composed?
What are the audit committee's main responsibilities towards the external auditors?
What are the audit committee's main responsibilities towards internal audit and the financial statements?
What rights do auditors have so that they can carry out their duties?
Why do auditors' rights in relation to general meetings matter?
What are the typical duties of an auditor?
What qualification and membership requirements must a person meet to act as an auditor?
Which relationships prevent a person from acting as auditor of a company?
Who can appoint auditors other than the members in general meeting?
How do auditors resign, and what must be sent out?
Why must a resigning auditor give a statement of circumstances?
What extra step can a resigning auditor take if genuinely concerned about the company?
Who removes an auditor from office, and for what sorts of reasons?
What rights protect an auditor who is being removed from office?
Who regulates auditors?
What is the purpose of IFAC, and what do its boards IAASB and IESBA do?
How do international standards and codes take effect nationally?
What are the ACCA's five fundamental principles of professional ethics?
Distinguish integrity from objectivity.
What does the principle of confidentiality require, and when may information be disclosed?
What is the conceptual framework approach to professional ethics?
What are the five categories of threat to compliance with the fundamental principles?
What three responses are open to an auditor who identifies a threat to the fundamental principles?
Give examples of relationships and interests that create a self-interest threat.
Why do overdue fees and contingent fees create ethical problems?
When does a self-review threat arise, and how is it usually managed?
What is an advocacy threat?
What creates a familiarity threat, and what rotation does the Code require?
What is an intimidation threat and what might cause one?
How does the Code define safeguards, and when is an action not a safeguard?
Give examples of actions that might be safeguards against threats.
What must a firm do if it breaches an independence provision of the Code?
Which statements make up the financial statements on which the auditor reports?
What headings can the opinion and basis sections of an auditor's report carry?
What does the Basis for Opinion section contain?
What is an emphasis of matter paragraph used for?
What is an other matter paragraph used for, and when might one be needed?
Why might an auditor include an Other Information paragraph?
What level of assurance does the auditor give, and what does it cover?
Why is the date of the auditor's report important?
What are key audit matters and for which entities does the chapter say they are reported?
Why is there no key audit matters section when the auditor disclaims an opinion?
What do true and fair mean, and what equivalent phrase does the IAASB prefer?
When is a matter material?
What rules of thumb do the notes give for deciding whether a misstatement is material?
What is performance materiality and why is it set?
What should the auditor do about misstatements found during the audit?
What does an unmodified audit opinion say?
Which three additional sections does chapter 6 cover in a report with an unmodified opinion?
Distinguish an emphasis of matter paragraph from an other matter paragraph.
Who is responsible for the going concern assessment, and what must the auditor do?
What period does the foreseeable future cover for going concern purposes?
On what basis should financial statements be prepared if there is no realistic prospect of the company surviving?
What signs suggest a company may have going concern difficulties?
What evidence can the auditor obtain in a going concern review?
How does the auditor report a material uncertainty over going concern that is adequately disclosed?
What are the reporting consequences if going concern worries are not adequately disclosed?
Which opinion is given if the auditor believes the going concern basis itself is inappropriate?
What are the two reasons for modifying an audit opinion, and how many degrees of seriousness does each have?
Which opinion does the auditor give for a material misstatement, and when does it become adverse?
Which opinion does the auditor give when unable to obtain sufficient appropriate evidence?
Set out the matrix of modified opinions, and explain pervasive.
What are the main stages of an audit, from appointment to the auditor's report?
What must a firm consider before accepting appointment as auditor of an organisation?
Why does the size of an audit fee not justify accepting a risky client?
What guideline do the notes give on fees when deciding whether to accept an audit appointment for a public interest company?
What should a proposed auditor do if the audit client is a new business with no previous auditors?
What should a proposed auditor do if the client refuses permission to contact the existing auditor?
Why can the existing auditor not simply send the proposed auditor the information requested?
Does a new auditor need the existing auditor's consent or reply before accepting appointment?
Should a proposed auditor refuse the appointment because the client owes the existing auditor unpaid fees?
What are the preconditions for an audit under ISA 210 Agreeing the Terms of Audit Engagements?
When must an audit engagement be declined or discontinued?
Why is an engagement letter of crucial importance to the auditor?
What does an engagement letter do, and when should it be sent and updated?
How should the fee be described in an engagement letter?
How does an engagement letter describe the respective responsibilities of management and the auditor?
What is a substantive procedure?
When does the auditor test controls rather than rely only on substantive procedures?
What happens if the auditor planned to rely on controls but testing shows they are not operating satisfactorily?
Must the same audit approach be taken to every area of the audit?
What are the objectives of adequate audit planning?
What is the overall audit strategy and what does it include?
What does the audit plan contain, and how does it relate to the overall audit strategy?
Must the overall audit strategy and audit plan be documented once only?
What understanding must the auditor obtain in order to identify and assess the risks of material misstatement?
Which risk assessment procedures must the auditor perform?
When does a risk of material misstatement exist?
At which two levels must risks of material misstatement be assessed?
What is the interim audit and what is done at it?
How does the final audit differ from the interim audit?
What is audit risk?
Why can audit risk never be reduced to zero?
What is the audit risk model?
What are the two components of the risk of material misstatement?
What is inherent risk and what increases it?
What is control risk and what affects it?
What is detection risk and what increases it?
What is the difference between sampling risk and non-sampling risk?
Which components of audit risk can the auditor assess, and which can the auditor change?
Give an example of a response that changes the nature, the timing and the extent of audit work.
What is the effect on audit work if inherent risk and control risk are both assessed as high?
How does the auditor respond to risks assessed at the financial statement level?
What is a significant risk under ISA 315 (Revised 2019)?
What does ISA 315 (Revised 2019) mean by a relevant assertion and by inherent risk factors?
For which balances must substantive procedures be performed, whatever the assessed risk of material misstatement?
Which procedures for obtaining audit evidence do the notes list, and how are they remembered?
What does ISA 500 require of audit evidence, and what does 'sufficient' mean?
What does 'appropriate' audit evidence mean?
What general rules govern the reliability of audit evidence?
Why is evidence obtained directly by the auditor more reliable than evidence passed on by the client?
What are analytical procedures?
At which three stages of the audit may analytical procedures be used?
Why must analytical procedures be used at the planning stage?
Are substantive analytical procedures compulsory, and when are analytical procedures compulsory?
What might a sharp change in receivables, with sales largely unchanged, suggest to the auditor?
How does the auditor use analytical procedures on expenses?
What can amounts in the financial statements assert, and what cross-category memory aid do the notes use for them?
What does the cut-off assertion mean for receivables?
What does the rights and obligations assertion mean for receivables?
How does the allocation assertion differ from classification and presentation?
What is audit sampling and why is it needed?
What steps does the audit sampling process involve?
What makes sampling statistical rather than non-statistical?
What is random selection and what is its drawback?
What is systematic, or interval, selection?
Why can haphazard selection not be used for statistical sampling?
What is block selection and what is wrong with it?
What is stratification?
What does monetary unit sampling achieve?
How do the results of a test of controls differ from the results of a test of details?
What is an anomalous error, and why does it matter?
A control test allows a 2 per cent deviation rate but the sample rate is 4 per cent. What should the auditor do?
Purchases are 800,000; sample 270,000; errors 5,600, of which 1,500 is an anomaly and 4,100 is overpricing. What is the projected error?
Following on, total potential misstatement is 13,625 and the tolerable error is 16,000. What is the conclusion?
If instead tolerable error were 8,000 and management corrected all errors found, what would the auditor do?
How may an auditor record the client's accounting system and internal control processes?
What are the advantages and the main problem of narrative notes?
What is the difference between an ICQ and an ICEQ?
What does the control environment include?
What monitoring may a less complex entity have?
What examples of control activities do the notes give?
What is segregation of duties, and what is done where segregation is limited?
What are the inherent limitations of a system of internal control?
What is the difference between direct and indirect controls?
Which audit procedures can be used to test internal controls?
Is enquiry on its own enough to test the operating effectiveness of a control?
When does a deficiency in internal control exist, and when is it significant?
To whom must control deficiencies be reported, and in what form?
How should each point in a report to management on internal control be structured?
State four control objectives of an effective purchases system.
What does a watertight audit trail over the purchases system mean in practice?
State four control objectives of the sales system.
Which documents form the audit trail for the sales system?
State the main control objectives of the payroll system.
Why must leavers be removed from the payroll system promptly?
State four control objectives of the inventory system.
How does the inventory system of a manufacturer differ from that of a retailer?
State the control objectives of the cash system.
How does the non-current asset system parallel the purchases, inventory and sales systems?
State the control objectives specific to non-current assets.
Why do the inventory and non-current asset systems overlap with other systems?
What are the two broad groupings of control activities in information processing?
Give five examples of general IT controls.
What are information processing controls designed to do, and in what forms do they come?
Why is an unauthorised change to a program more serious than a change to data?
Why is control over input particularly important in a computerised system?
What is a sequence check and which input objective does it serve?
What is an edit check, and name four types.
What is a one-for-one check and what is a control total?
What is standing data, and why is it a risk?
What control can be used over standing data?
What is the difference between a run log and a transaction log?
How should run logs and transaction logs be used as controls?
How do output controls check completeness and accuracy where batch processing is used?
What two things may an exception report show, and what other output control follows rejected items?
What controls should apply to the distribution of output?
What are automated tools and techniques, and which two types are most relevant to AA?
What is audit software, and what is it run against?
Give four uses of audit software.
What is test data, and what is it run against?
What kinds of items should test data include?
How should the auditor run and evaluate test data?
How do audit programs and test data add to audit efficiency and effectiveness?
What is data analytics, and what is its most obvious audit application?
Give three data analytics routines that help with the valuation of assets.
Give three data analytics routines used to analyse revenue and expenditure.
What is can do did do testing, and what does it examine?
Which data analytics routines test whether transactions are complete and properly matched?
What is the main benefit of using automated tools and techniques?
State four challenges of using automated tools and techniques.
What is the purpose of the final audit, and why is it still sometimes called the balance sheet audit?
According to ISA 315, what are assertions and how are they categorised?
Name the six assertions about classes of transactions and events and related disclosures.
Define the occurrence and completeness assertions for transactions and events.
Define the accuracy, cut-off and classification assertions for transactions and events.
Name the six assertions about account balances and related disclosures.
Define the existence and rights and obligations assertions.
Define the accuracy, valuation and allocation assertion for account balances.
What does the presentation assertion require?
Which assertions apply to both transactions and events and account balances?
Which assertions apply only to transactions and events, and which only to account balances?
What is a receivables circularisation, and which assertions does it support?
Why does a receivables confirmation give weak evidence about valuation?
What is a positive confirmation request and when is it most suitable?
What is a negative confirmation request, when is it appropriate, and what is its weakness?
Why must the auditor control the sending of confirmation requests and receive replies directly?
Which receivables balances should be selected for confirmation?
What should the auditor do with disagreements returned on a circularisation?
What should the auditor do if a customer does not reply to a confirmation request?
How does the auditor agree the receivables listing to the financial statements?
Why is the aged receivables listing essential, and how is a general allowance calculated?
What evidence do customer correspondence and board minutes give about receivables?
How is the collection period calculated and what does it indicate?
Which tests give evidence of the existence and of the completeness of receivables?
Why does the auditor examine after-date cash receipts and post year-end credit notes?
Into which two types of substantive procedure do the tests on receivables fall?
Which misstatement most concerns the auditor of trade payables, and why?
Which procedure is the main test of the completeness of trade payables?
How should cash-in-transit and goods-in-transit on a supplier statement reconciliation be dealt with?
How should a disputed invoice on a supplier statement reconciliation be dealt with?
What should the auditor do if the client does not receive regular monthly supplier statements?
Which directional tests on payables give evidence of completeness and of existence?
Why does the auditor review payments made just before and just after the year end?
What may a review of supplier correspondence and board minutes reveal?
How is the payment period calculated and how is an increase interpreted?
How does the auditor agree the payables listing to the financial statements?
Why are accruals and prepayments audited even though they are usually small balances?
Why is comparing this year's accruals and prepayments with last year's one of the first procedures performed?
Which procedure best identifies unrecorded accruals at the year end?
How does the auditor identify prepayments from the client's payment records?
How do analytical procedures help in auditing accruals and prepayments?
What is a 'goods received - not invoiced' accrual and why is it needed?
What is a letter of representation and what does it contribute to the audit of liabilities?
Why is inventory usually a material and high-risk audit area?
What three things must the auditor check about inventory?
What are the main aspects of a well-run year-end physical inventory count?
Why must inventory count sheets be sequentially pre-numbered?
What is the best composition of an inventory count team and why?
Is it the auditor's job to carry out the inventory count?
What does the auditor do in relation to a year-end inventory count?
Which assertion does each direction of inventory test checking support?
Why does the auditor note the last goods received and despatched notes of the year at the count?
What makes up the cost of inventory and what evidence supports each element?
Why must the auditor check the inventory valuation calculations and the final total?
When must inventory be written down, and where may expert help be needed?
How should goods received before and after the year end be treated for purchases cut-off?
How should goods despatch notes dated before and after the year end be treated for sales cut-off?
What does the auditor request from the client's bank, and what should it show?
Why is the bank balance one of the more straightforward balances to audit?
What does the auditor do with the client's cash book balance and bank reconciliation?
What are the steps in reperforming a bank reconciliation?
Why are outstanding deposits and unpresented cheques agreed to the next month's bank statement?
When will the auditor carry out cash counts?
Why might the auditor count cash even when the balance is not material?
What is an imprest system and how might the auditor test it?
What is the direction of testing when using physical inspection to verify the existence of non-current assets, and what else may it reveal?
What documentary evidence supports additions to and disposals of non-current assets?
Why does the auditor scrutinise the repairs and maintenance account?
What does reconciling the general ledger to the non-current asset register achieve?
How may the depreciation charge be tested using a substantive analytical procedure?
When is a proof in total on depreciation not enough on its own?
What should the auditor check when testing disposals of non-current assets?
When checking disposals, how do the notes deal with an asset traded in part exchange for a new asset?
Why is physical inspection alone not enough to verify non-current assets, and what procedure completes the evidence?
What does the auditor check where a non-current asset has been revalued?
How should a revaluation gain and the subsequent depreciation be accounted for?
What is the internal audit function?
What do corporate governance codes require directors to do about internal audit?
To whom should internal audit report, and why?
What is the main function of an internal audit department?
What are the typical functions of an internal audit department?
What is a value for money audit?
How does internal audit typically share work with the external auditor in a large organisation?
What must the external auditor evaluate about the internal audit function before deciding to use its work?
Can strength in one of the criteria for using internal audit work make up for weakness in another?
What is the difference between management's expert and an auditor's expert?
What must the auditor evaluate if the work of management's expert is to be used as audit evidence under ISA 500?
When may an auditor's expert be needed under ISA 620?
At what stage do the notes say the need for an auditor's expert is determined, and what must the auditor assess?
What must be agreed in writing with an auditor's expert?
How does the auditor evaluate whether an expert's work is adequate?
What purposes does audit documentation fulfil?
What is the difference between the permanent and the current audit file?
What are the typical contents of an audit working paper?
What does ISA 220 Quality Management for an Audit of Financial Statements deal with?
What must quality management at the engagement level provide reasonable assurance about?
What is the engagement partner responsible for in managing quality?
For which components of quality management does the engagement partner have specific responsibility?
What does direction of the engagement team involve?
What does supervision of the engagement team include?
When must the engagement partner review documentation, and must everything be reviewed?
Which areas of significant judgment is the engagement partner likely to review?
Which engagements need an Engagement Quality review and who performs it?
What is the difference between a hot review and a cold review?
How are quality management deficiencies identified and why does prompt identification matter?
How should the engagement partner respond to an identified deficiency or threat to quality?
How do the notes define fraud?
What are the two types of fraud that result in misstatement of the financial statements?
What distinguishes fraud from error?
What is teeming and lading?
Who is responsible for preventing and detecting fraud?
What is the auditor's responsibility for fraud in an audit of financial statements?
What must be discussed at the planning stage in relation to fraud?
Give five fraud risk factors that increase the risk of fraud.
When must a fraud be communicated to those charged with governance?
Why should even an apparently small fraud be investigated?
What written representations does the auditor usually obtain in relation to fraud?
What is the effect of an immaterial fraud or error on the auditor's report?
What is NOCLAR, and who is responsible for preventing it?
How may laws and regulations affect the financial statements directly rather than indirectly?
What is the auditor's responsibility for compliance with direct and with indirect laws and regulations?
Which period do subsequent events cover for audit purposes in this chapter?
What is an adjusting event?
What is a non-adjusting event?
A major customer goes into liquidation in January, after a December year end. How is this treated and why?
The company's factory burns down in mid-January, after a December year end. How is this treated?
What is the auditor's active duty regarding subsequent events?
After the auditor's report has been signed, what do the notes say the auditor's duty is, and what may it require?
Why must a contingent liability arise from past events?
A present obligation probably requires an outflow of resources. How is it treated?
A possible obligation will probably not require an outflow of resources. How is it treated?
An outflow of resources is remote. How is the obligation treated?
How is a legal action arising from a past event treated at each level of probability?
What evidence does the auditor examine when assessing whether a liability will crystallise?
An inflow of economic benefits is virtually certain. How is it treated?
An inflow of economic benefits is probable but not virtually certain. How is it treated?
An inflow of economic benefits is not probable. How is it treated?
Why is the treatment of contingent assets and contingent liabilities described as similar but not symmetrical?
An outflow of resources is probable but the amount cannot be estimated reliably. What is the treatment?
Under ISA 580 Written Representations, which three representations must the auditor obtain from management?
Who provides the letter of representation and to whom is it addressed?
In what circumstances are written representations particularly important?
Can written representations replace other audit evidence?
Can a written representation on its own provide sufficient appropriate audit evidence for an assertion?
An assertion depends on management's intention, such as settling a claim out of court. What must the auditor consider?
Give four subject-matter specific representations typically found in a letter of representation.
Which financial statement assertion do written representations particularly support?
Written representations are inconsistent with other evidence, or management refuses to provide them and the matter is unresolved. What must the auditor reassess?
What opinion is appropriate if the required representations on management's responsibilities are not provided or are not reliable?
What is the aim of an audit, to which the whole audit process leads?
What are the two sources of difficulty that can affect the audit opinion?
When is an unmodified audit opinion given?
When is a qualified except for opinion given?
When is an adverse opinion given?
When is a disclaimer of opinion given?
Which four additions may be made to the auditor's report without affecting the opinion?
What does the material uncertainty related to going concern section do?
What is an other information paragraph typically used for?
Why has the employability and technology skills section been added to the syllabus?
Why practise with the exam software even if already confident with computers?
What three options are available on the top bar of the exam screen?
How may calculators be used in the exam?
What is the scratch pad used for, and is it marked?
What rough paper is available in an exam centre and when sitting remotely?
What does the flag for review option do?
What is on the bottom bar of the exam screen?
Which ACCA document should be downloaded as essential reference material for the exam software?
What is available on the ACCA Practice Platform?
Card 1 of 633. Question side.