ACCA Advanced Audit and Assurance Exam Practice Questions and Answers
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Course
ACCA
Institution
ACCA
ACCA Advanced Audit and Assurance
Exam Practice Questions and Answers
Define materiality - ANSWERMatters are material if their omission or misstatement could influence
the economic decisions of users of the financial statements.
What are the materiality benchmarks? - ANSWER- Above 1⁄2- 1% of ...
are those which affect a substantial proportion of the financial statements or fundamentally affect the
users' understanding of the financial statements.
When is an emphasis of matter used? - ANSWER✔✔Emphasis of matter is only used for matters where
the auditor has obtained sufficient appropriate evidence that the matter is not materially misstated in
the financial statements.
What are the seven key assertions? - ANSWER✔✔Completeness, Occurrence, Disclosure, Existence, Cut-
Off, Accuracy and Rights and Obligations
Define aggregation risk - ANSWER✔✔Aggregation risk is the risk that the sum of all uncorrected and
undetected misstatements is greater than materiality for the group. This risk is greater where a group is
made up of many components which are audited separately. Risk is reduced by setting PM lower than
group PM
How long can administration last? - ANSWER✔✔Up to 12 months
What is a compulsory liquidation? - ANSWER✔✔One ordered by the courts.
What does ISA 300 state? - ANSWER✔✔-Establish the overall audit strategy for the engagement
-develop an audit plan
What does the audit strategy set out? - ANSWER✔✔The scope, timing and direction of the audit.
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