There is an mcq that
You are planning audit of Veryan co a new client. Veryan operates in oil and gas exploration industry. It has been in existence for 30 years and has grown its revenue at average of 17% per annum. During your planning meeting you were informed that the forecast PBT for this financial year is $9.5m based on revenues of $124m
Which of the following is the least significance audit risk to be considered when planning the audit of veryan?
a)Non compliance with laws and reguations
b)Understatement of trade payables
c)Adequacy of provisions and contingent liabilities for events such as oil spills for personal injury
d)Reasonableness of estimates of oil and gas reserves
Correct ans is B. But please can you explain me why B is correct answer and why a, c and d are not correct?
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Veryan co MCQ
7y ago#1This is not an ACCA question and oil and gas exploration is an extractive industry that is not examinable in ACCA. It is also poorly worded so I recommend you disregard it.
My colleague answered the same post already https://opentuition.com/topic/audit-risk-37/ mentioning business risk - again a reason to ignore this question as business risk is not examinable in AA.
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