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ACA Assurance with complete solutions graded A+ passed
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ACA Assurance with complete solutions graded A+ passed
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ACA AssuranceFor each of the following substantive procedures carried out on a schedule of non-current assets which
agrees to the financial statements, select which financial statement assertion will be addressed.
Tracing items from the non-current asset register to the schedule - correct answer ✔✔completeness
When testing the rights and obligations assertion for a sample of plant and machinery, which one of the
following sources of evidence would be most helpful?
Select one:
a. The client's asset register
b. Physical verification of the assets
c. Purchase invoices
d. Recalculation of the depreciation charge - correct answer ✔✔c. Purchase invoices
Direct confirmation with customers assists in obtaining evidence about which three of the following
assertions?
Select one or more:
a. Existence
b. Rights and obligations
c. Accuracy, valuation and allocation
d. Cut-off - correct answer ✔✔a
b
d
c -> collectibility -> not right
The following statements relate to the types of confirmations which may be sought from receivables. For
each statement select whether it is true or false.
,1. Under the negative method, the customer is requested to confirm the accuracy of the balance shown
or state his disagreement.
2. Under one of the options available for the positive method of direct confirmation, the customer may
be requested to provide the balance owed.
3. Positive confirmations must be used where there are a large number of balances. - correct answer
✔✔1. False
2. True
3. False
Under the negative method, the customer is requested to respond only in cases of disagreement. The
third statement is false as there is no such requirement to use positive confirmations where there are a
large number of balances. Further, it is permissible in this situation to use negative rather than positive
confirmations. The determining factor is risk level, not volume.
During the course of the audit of Ham Ltd, Mary receives 24 replies out of the 27 direct customer
confirmation letters. Mary has already communicated with the three outstanding respondents on at
least four occasions. Which one of the following should be Mary's next course of action?
Select one:
a. No action is necessary as 24 out of 27 responses is sufficient. Incorrect
b. Mary should pass on the details of the outstanding responses to an independent company official for
chasing.
c. Mary should continue her efforts to contact the customers.
d. Mary should deem that they are fictitious customers. - correct answer ✔✔b. Mary should pass on the
details of the outstanding responses to an independent company official for chasing.
Outstanding responses should be passed on to an independent company official for chasing as all
positive (which this seems to be) requests must be followed up.
Keeping the cash book open to take credit for remittances received after the year end is one way of
window dressing. Which one of the following demonstrates how the auditor can address this risk?
, Select one:
a. By checking the cheque payment slips to ensure that outstanding payments really relate to the current
period end
b. By checking the bank paying in slips of outstanding lodgements to ensure they belong to the current
year end Correct
c. By confirming with customers the date of their payments to the client
d. By confirming with suppliers the date of receipt of the client's payments - correct answer ✔✔b. By
checking the bank paying in slips of outstanding lodgements to ensure they belong to the current year
end
Feedback
Checking the paying in slips to ensure that remittances relate to before the year end will address the risk
that credit is taken for remittances received after the year end. Cheque slips for payment (per option A)
would not lead to increased remittances being recognised. Confirming dates of payments with customers
would also not assist in addressing the risk as there is a timing difference between the time the customer
pays and the time the client receives the payment (option C). The same applies to confirming with
suppliers date of receipt from the client (option D).
Which three of the following items will be included in a bank letter from a specific bank?
Select one or more:
a. Details of all standing orders with the bank
b. The bank balance on each account with the specific bank
c. Any guarantees made by the client
d. Any titles or other assets held for safe custody by the bank - correct answer ✔✔b. The bank balance
on each account with the specific bank
c. Any guarantees made by the client
d. Any titles or other assets held for safe custody by the bank
Which two of the following are among of the stated fundamental principles of the IESBA Code?
Select one or more:
a. Professional competence and due care
b. Professional scepticism
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