ACCA - Audit and Assurance (AA) Exam
Study Guide
Objective of an external audit - ANSWERThe objective of an audit of financial statements is to
enable the auditor to express an opinion on whether the financial statements are prepared, in all
material respects, in accordance with applicable fina...
A direct engagement - ANSWER✔✔Where the underlying subject matter has been measured and
evaluated by the practitioner, and the practitioner then presents conclusions on the reported outcome in
the insurance report.
Internal audit function - ANSWER✔✔Will perform assurance and consulting activities designed to
evaluate and improve the effectiveness of the entities governance, risk management and internal control
processes.
True - ANSWER✔✔Information is factual and conforms with reality. In addition, the information
conforms with required standards and law. The financial statements have been correctly extracted from
the books and records.
Fair - ANSWER✔✔Information is free from discrimination and bias and is in compliance with expected
standards and rules. The accounts should reflect the commercial substance of the companies underlying
transactions.
Reasonable assurance - ANSWER✔✔An audit gives the reader this assurance on the truth and fairness of
the financial statements, which is high, but not absolute, level of assurance. The auditors report does not
guarantee that the financial statements are correct, but that they are true and fair with in a reasonable
margin of error.
Materiality - ANSWER✔✔An expression of the relative significance or importance of a particular matter
in the context of the financial statements as a whole. The matter is material if it's a mission or
misstatement would reasonably be expected to influence the economic decisions of use is taken on the
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