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ACA audit and assurance with complete solutions graded A+
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ACA audit and assurance with complete solutions graded A+
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ACA audit and assuranceAssurance conclusions - correct answer ✔✔- give limited assurance
- expressed negatively, concluding that 'nothing has come to our attention...'
- the level of assurance is lower than for an audit
- procedures are typically limited to analytical procedures and enquiries (less work is done than in an
audit)
- the objective is to reduce risk to an acceptable level
Audit conclusions - correct answer ✔✔- give reasonable assurance (higher but not absolute)
- expressed positively, stating that in the auditors opinion, the financial statements are 'true and fair'
- involve tests of detail and tests of control
- objective is to reduce risk to a low level
General safeguards - correct answer ✔✔- Consult ethics partner
- Engagement quality review (all listed companies must have one)
- Communicate with those charged with governance
Self interest threat - key words - correct answer ✔✔'reluctant to identify errors'
'reluctant to challenge management'
'reluctant to modify the audit report'
due to
'undue dependence on fee income'
'gifts/hospitality'
'job offer'
self interest threat safeguards - correct answer ✔✔Fee limits
Extended EQR
,Do not accept gifts - policies for accepting gifts - 3rd party test
self review threat - key words - correct answer ✔✔'unable to take an impartial view'
'inhibited from questioning judgements'
due to
reviewing your own work or a colleague's work
self review threat - safeguards - correct answer ✔✔Separate teams ( without information barriers)
management threat - keywords - correct answer ✔✔'required to make judgements and take
management decisions'
'too closely aligned'
'erode the distinction between the entity and the firm'
'not able to apply a proper degree of professional scepticism'
management threat - safeguards - correct answer ✔✔Inform management that all work will be of a
- Technical
- Mechanical
- Informative
nature only.
Advocacy threat - keywords - correct answer ✔✔'would not be seen to be independent'
'promoting the client'
Advocacy threat - safeguards - correct answer ✔✔Say no
familiarity threat - keywords - correct answer ✔✔'predisposed to accept the point of view of your client'
'insufficiently questioning'
due to
, 'long association'
'close personal relationships'
familiarity threat - safeguards - correct answer ✔✔Rotate staff
Remove staff with close relationships with client
intimidation threat - keywords - correct answer ✔✔'influenced by fear of threats'
'aggressive or dominating behaviour'
intimidation threats - safeguards - correct answer ✔✔Explain you wont be intimidated
Consider resignation
conflict of interest threat - keywords - correct answer ✔✔'not acting in the best interest of both parties'
'confidential information may be leaked'
conflict of interest threat - safeguards - correct answer ✔✔Separate teams with information barriers
Signed confidentiality agreements
Inform both parties and get written consent
safeguard when staff from the audit are loaned to the audit client - correct answer ✔✔prohibited apart
from low level secondments to national audit agencies
safeguard when audit partner joins the audited entity as key management personnel - correct answer
✔✔audit firm should resign and not accept reappointment for 2 years
safeguards when member of the audit team (not audit partner) joins the audited entity as key
management personnel - correct answer ✔✔Review by more senior engagement professional and get
advice from professional body
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