Exam (elaborations)
ACCA Audit And Assurance (AA) Questions And Answers 100% Verified.
- Module
- Institution
ACCA Audit And Assurance (AA) Questions And Answers 100% Verified.
[Show more]
Seller
Follow
techgrades
Reviews received
Content preview
ACCA Audit And Assurance (AA) QuestionsAnd Answers 100% Verified.
Objective of an external audit - correct answer. The 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 financial
reporting framework. An audit of financial statements is an example of an assurance
engagement.
Advantages of a non-statutory audit - correct answer. It can provide a means of
settling accounts between the partners.
Where audited accounts are available this may make the accounts more acceptable to
taxation authorities.
The sale of the business or the negotiation of loan or overdraft facilities may be
facilitated if the firm is able to produce audited accounts.
An audit on behalf of a sleeping partner is useful since generally such a personal have
you have a means of checking the accounts of the business or confirming the share of
profits due to them.
Accountability - correct answer. The quality or state of being accountable; that is,
being required or expected to justify actions and decisions. It suggests an application or
willingness to accept responsibility for one's actions.
Stewardship - correct answer. Refers to the duties and obligations of a person who
manages another persons property.
Agents - correct answer. Are people who are employed or used to provide a particular
service. In the case of a company, the people being used to provide the service or
managing the business also have the second role of trying to maximise their personal
wealth in their own right.
Assurance engagement - correct answer. A practitioner that aims to obtain sufficient
appropriate evidence in order to express a conclusion designed to enhance the degree
,of confidence of the intended users other than the responsible party about the outcome
of the measurement or evaluation of an underlying subject matter against criteria.
Elements of an assurance engagement - correct answer. A three party relationship.
The three parties are the intended user, the responsible party and the practitioner.
A subject matter, where the data to be evaluated has been prepared by the responsible
party. It can take many forms, including the financial performance, non-financial
performance, process and behaviour.
Suitable criteria, where the subject matter is evaluated or measured against criteria in
order to reach an opinion.
Evidence, where sufficient appropriate evidence needs to be gathered to support the
required level of assurance.
An assurance report, where a written report containing the practitioners opinion is
issued to the intended user in the form appropriate to reasonable assurance
engagement or a limited assurance engagement.
Intended users - correct answer. The individual or organisation, or group thereof that
the practitioner expects will use the assurance repot.
Reasonable party - correct answer. The party responsible for the underlying subject
matter.
Practitioner - correct answer. The individual conducting the engagement which will
usually be the engagement partner or other members of the engagement team, or as
applicable, the firm.
Objective of a reasonable assurance engagement - correct answer. Is a reduction in
assurance engagement risk to an acceptably low level in the circumstances of
engagement as the basis for the insurance practitioners conclusion. The conclusion
would usually be expressed in a positive forum.
Objective of a review engagement - correct answer. Is obtain limited assurance about
whether the subject matter information is free from material misstatement.
An attestation engagement - correct answer. Where underlying subject matter has not
been measured or evaluated by the practitioner, and the practitioner concludes whether
or not the subject matter information is free from material misstatement.
A direct engagement - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 fdecisions fof fuse fis ftaken fon fthe fbasis fof fthe ffinancial fstatements.
fMateriality fdepends fon fthe fsize fof fthe fitem for ferror fjudged fin fthe fparticular
fcircumstances fof fits fomission for fmisstatement.
Corporate fgovernance f- fcorrect fanswer. f f f fIs fthe fsystem fby fwhich fcompanies
fare fdirected fand fcontrolled.
Chair f- fcorrect fanswer. f f f fThe fchair fand fthe fchief fexecutive fcannot fbe fthe
fsame findividual. fThere fis fa ftime flimit fon fthe fchairs fposition, fand fcannot fremain
fin fpost ffor fbeyond fnine fyears. fThey fmust fbe findependent, fand fcannot fbe fa
fformer fChief fExecutive fof fthe fsame fcompany fexcept fin fexceptional
fcircumstances.
Non-executive fdirectors f- fcorrect fanswer. f f f fAre fdirectors fwho fdo fnot fhave fday-
to-day foperational fresponsibility ffor fthe fcompany. fThey fare fnot femployees fof fthe
fcompany for faffiliated fwith fit fin fany fway. f
They fcan fbe fcompromised fby fthe ffollowing: fEmployment fwith fthe fcompany for
fgroup fin fthe flast ffive fyears. f
Material fbusiness frelationships fwith fthe fcompany fin fthe fpast fthree fyears. f
Remuneration fbeyond fthe fbasic ffee ffor fthe frole. f
Close ffamily fties fwith fany fof fthe fcompanies fadvisors, fdirectors for fsenior
femployees. f
Representing fa fsignificant fshareholder. f
Serving flonger fthan fnine fyears fon fthe fboard.
Remuneration fcommittee f- fcorrect fanswer. f f f fMust fbe festablished, fmade fup fof
fat fleast f3 findependent fnon-executive fdirectors, fbut fin fsmaller fcompanies fit fmay
fbe f2. f
Executive fdirectors fcannot fsit fon fthis fcommittee. f
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller techgrades. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £11.09. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67474 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now