©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
ACCA - Audit and Assurance (AA) Exam
Study Guide
Objective of an external audit - 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 - 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.
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
Accountability - 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 - ANSWER✔✔Refers to the duties and obligations of a person who manages another
persons property.
Agents - 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 - 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 - 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.
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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 - ANSWER✔✔The individual or organisation, or group thereof that the practitioner
expects will use the assurance repot.
Reasonable party - ANSWER✔✔The party responsible for the underlying subject matter.
Practitioner - 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 - 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 - ANSWER✔✔Is obtain limited assurance about whether the subject
matter information is free from material misstatement.
An attestation engagement - 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.
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, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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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FIRST PUBLISH OCTOBER 2024
ACCA - Audit and Assurance (AA) Exam
Study Guide
Objective of an external audit - 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 - 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.
Page 1/53
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
Accountability - 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 - ANSWER✔✔Refers to the duties and obligations of a person who manages another
persons property.
Agents - 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 - 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 - 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.
Page 2/53
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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 - ANSWER✔✔The individual or organisation, or group thereof that the practitioner
expects will use the assurance repot.
Reasonable party - ANSWER✔✔The party responsible for the underlying subject matter.
Practitioner - 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 - 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 - ANSWER✔✔Is obtain limited assurance about whether the subject
matter information is free from material misstatement.
An attestation engagement - 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.
Page 3/53
, ©EMILLECT 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED
FIRST PUBLISH OCTOBER 2024
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
Page 4/53
