ICAEW Assurance Exam Questions And Accurate
Answers 2024-2025
Reasonable Assurance - Answer Positive opinion, intrusive, high audit risk as providing
more definite opinion
Limited Assurance - Answer Negative opinion, less intrusive low audit risk
Required Assurance by Regulators - Answer Statutory audit, bank audits, pension
scheme audits, charity audits, solicitor audits
Voluntary Assurance - Answer Environmental audit, Due diligence, Internal audit, Fraud
investigations, Internal control reports
Companies Act 2006 requires auditors be a member of what? - Answer Recognised
Supervisory Body (e.g ICAEW)
What are the responsibilities of RSB? - Answer Ensure individuals hold appropriate
qualification to conduct the audit and those individuals and firms are monitored on
regular basis
What does the Financial Reporting Council do? - Answer Monitors accounting
profession, issues audit standards which it does through its Codes and Standards
Committee which has adopted international standards on auditing, and issuing Ethical
Standards
Ethical Standards relate to what about the auditors? - Answer Integrity, objectivity
ISA 200 - Answer Obtain assurance about whether F/S is free from misstatement (F&E),
,report on F/S and communicate as required by ISAs
What does ISA stand for
Answer International Standards on Auditing
How does the auditor meet objectives of obtaining evidence to support FS are free of
material misstatement?
Answer Comply with ethical requirements, plan and perform with professional
scepticism, exercise professional judgement, obtain sufficient and appropriate audit
evidence
Stages of Audit
Answer Obtain engagement, plan, perform procedure, review and completion, report
Who benefits from assurance? - Answer Users (SH e.g whether to invest), 3rd parties
(bank e.g whether to give loan), directors (reduce management bias/ deterrent)
Audit Exemption - Answer Must have 2/3 of following:
Turnover < 10.2m
Total Assets < 5.1m
Employees < 50
What are the 7 limitations of assurance meaning it can never be absolute? - Answer The
fact testing is used and the process of building FS isn't overseen. The fact that sampling
is used and not every item is tested. The fact that auditors relied on account systems
leading to reliance on inherent limitations. The fact that some staff may collude and hide
fraud. The fact that most audit evidence is persuasive rather than conclusive. The fact
that some items in subject matter are estimates. The fact that judgments have to be
made.
How do assurance providers close the expectation gap? - Answer Issuance of
, engagement letters, periodic review of form and content of reports
What are the 5 acceptance procedures for an engagement? - Answer Ensure
professionally qualified to act. Ensure existing resources are adequate. Obtain
references. Communicate with present auditors, Consider integrity of those managing
the company.
What shall the auditor do in case the client does not permit contacting of the old auditor
or VICE VERSA? - Answer Normally decline appointment
What shall he do if it's the first audit of the client? -Answer Make own decision
What if the old auditor does not give all relevant info prior to the audit? - Answer Give old
auditor due notice then decide on basis of knowledge obtained whether to accept or
reject appointment.
What 4 things should be done subsequent to accepting an engagement? - Solution
Ensure outgoing auditors' removal has been done based on national statute. Ensure
new auditors' appointment is valid. Send in engagement letter. Perform money
laundering checks.
Under what circumstances should ID be checked? - 2 situations - Solution When an
ongoing relationship is expected. Where a one-off transaction is in excess of 15,000
Copies of ID checks how long to retain? - 5 years post end
How would you ID check companies? - Certificate of incorporation, registered address,
confirmation statement for directors and shareholders, previous FS
How would you ID check individuals? - Photo, full name, address, passport/utility bill
ISA 210 - Auditor and client agree terms of engagement
When should auditors send an engagement letter? - Answer Soon after their
appointment as auditors and before commencement of first audit assignment.
Answers 2024-2025
Reasonable Assurance - Answer Positive opinion, intrusive, high audit risk as providing
more definite opinion
Limited Assurance - Answer Negative opinion, less intrusive low audit risk
Required Assurance by Regulators - Answer Statutory audit, bank audits, pension
scheme audits, charity audits, solicitor audits
Voluntary Assurance - Answer Environmental audit, Due diligence, Internal audit, Fraud
investigations, Internal control reports
Companies Act 2006 requires auditors be a member of what? - Answer Recognised
Supervisory Body (e.g ICAEW)
What are the responsibilities of RSB? - Answer Ensure individuals hold appropriate
qualification to conduct the audit and those individuals and firms are monitored on
regular basis
What does the Financial Reporting Council do? - Answer Monitors accounting
profession, issues audit standards which it does through its Codes and Standards
Committee which has adopted international standards on auditing, and issuing Ethical
Standards
Ethical Standards relate to what about the auditors? - Answer Integrity, objectivity
ISA 200 - Answer Obtain assurance about whether F/S is free from misstatement (F&E),
,report on F/S and communicate as required by ISAs
What does ISA stand for
Answer International Standards on Auditing
How does the auditor meet objectives of obtaining evidence to support FS are free of
material misstatement?
Answer Comply with ethical requirements, plan and perform with professional
scepticism, exercise professional judgement, obtain sufficient and appropriate audit
evidence
Stages of Audit
Answer Obtain engagement, plan, perform procedure, review and completion, report
Who benefits from assurance? - Answer Users (SH e.g whether to invest), 3rd parties
(bank e.g whether to give loan), directors (reduce management bias/ deterrent)
Audit Exemption - Answer Must have 2/3 of following:
Turnover < 10.2m
Total Assets < 5.1m
Employees < 50
What are the 7 limitations of assurance meaning it can never be absolute? - Answer The
fact testing is used and the process of building FS isn't overseen. The fact that sampling
is used and not every item is tested. The fact that auditors relied on account systems
leading to reliance on inherent limitations. The fact that some staff may collude and hide
fraud. The fact that most audit evidence is persuasive rather than conclusive. The fact
that some items in subject matter are estimates. The fact that judgments have to be
made.
How do assurance providers close the expectation gap? - Answer Issuance of
, engagement letters, periodic review of form and content of reports
What are the 5 acceptance procedures for an engagement? - Answer Ensure
professionally qualified to act. Ensure existing resources are adequate. Obtain
references. Communicate with present auditors, Consider integrity of those managing
the company.
What shall the auditor do in case the client does not permit contacting of the old auditor
or VICE VERSA? - Answer Normally decline appointment
What shall he do if it's the first audit of the client? -Answer Make own decision
What if the old auditor does not give all relevant info prior to the audit? - Answer Give old
auditor due notice then decide on basis of knowledge obtained whether to accept or
reject appointment.
What 4 things should be done subsequent to accepting an engagement? - Solution
Ensure outgoing auditors' removal has been done based on national statute. Ensure
new auditors' appointment is valid. Send in engagement letter. Perform money
laundering checks.
Under what circumstances should ID be checked? - 2 situations - Solution When an
ongoing relationship is expected. Where a one-off transaction is in excess of 15,000
Copies of ID checks how long to retain? - 5 years post end
How would you ID check companies? - Certificate of incorporation, registered address,
confirmation statement for directors and shareholders, previous FS
How would you ID check individuals? - Photo, full name, address, passport/utility bill
ISA 210 - Auditor and client agree terms of engagement
When should auditors send an engagement letter? - Answer Soon after their
appointment as auditors and before commencement of first audit assignment.
