ACA ASSURANCE EXAM QUESTIONS
AND ANSWERS. VERIFIED 2026.
5 key elements of audit - ANS 1. 3 party involvement
2. subject matter (f/s)
3. suitable criteria (e.g. UK CGC)
4. evidence
5. written report
ISA 200 - what are the objectives of auditors? - ANS - obtain reasonable assurance f/s are free
from material misstatement (fraud or error)
- express opinion whether f/s prepared in accordance w/ financial reporting framework
Exemption from statutory audit - ANS - CA 2006 exempts small p. ltd. if 2/3:
-> 50 employees or less
-> turnover £10.2m or less
-> gross assets £5.1m or less
Auditor requirements - ANS basic:
- employment by firm controlled by qualified persons
- CA2006 no officers/employees of company or partner of above
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,qualified auditors:
- membership of recognised supervisory body
Money laundering check (client due diligence) - ANS - req. per. Money Laundering
Regulations 2007
- client id docs retained 5 yrs
ISA 210: mandatory contents of engagement letter (6) - ANS - auditor's and management's
responsibilities
- scope of work (stat/non-stat)
- form of reports (reasonable/limited)
- written confirmation of firm's acceptance of engagement
- level of access to books & records (full = audit & limited = review engagement)
- reporting framework
ISA 210: optional contents of engagement letter (5) - ANS - limitations of engagement
- confidentiality/restricted use of report
- reliance on internal controls
- basis of fee calculations
- restrictions on auditor's liability
Key components of audit strategy - ANS - understanding the entity and its environment
- materiality
- risk assessment
- nature, extent & timing of audit procedures
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, - direction, supervision & review of work
ISA 315 - what 6 things are important in understanding the entity and its environment? -
ANS - industry, regulatory, financial reporting framework
- nature of the entity
- accounting policies
- objectives and strategies & business risks that may result in material misstatement
- measurement of entity's financial performance
- internal controls
ISA 315 - How to understand the entity and its environment? (4) - ANS - enquires of
management & client staff
- analytical procedures
- observation
- inspection
Risk assessment - ANS -> audit risk = inherent risk x control risk x detection risk
Audit risk - ANS = risk auditor gives inappropriate opinion on f/s
Inherent risk - ANS = risk of misstatement in a transaction irregardless of internal controls
Control risk - ANS = risk of material misstatement not prevented, detected or corrected by
internal controls
Detection risk - ANS = risk auditor's procedures will not detect material misstatement
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
AND ANSWERS. VERIFIED 2026.
5 key elements of audit - ANS 1. 3 party involvement
2. subject matter (f/s)
3. suitable criteria (e.g. UK CGC)
4. evidence
5. written report
ISA 200 - what are the objectives of auditors? - ANS - obtain reasonable assurance f/s are free
from material misstatement (fraud or error)
- express opinion whether f/s prepared in accordance w/ financial reporting framework
Exemption from statutory audit - ANS - CA 2006 exempts small p. ltd. if 2/3:
-> 50 employees or less
-> turnover £10.2m or less
-> gross assets £5.1m or less
Auditor requirements - ANS basic:
- employment by firm controlled by qualified persons
- CA2006 no officers/employees of company or partner of above
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,qualified auditors:
- membership of recognised supervisory body
Money laundering check (client due diligence) - ANS - req. per. Money Laundering
Regulations 2007
- client id docs retained 5 yrs
ISA 210: mandatory contents of engagement letter (6) - ANS - auditor's and management's
responsibilities
- scope of work (stat/non-stat)
- form of reports (reasonable/limited)
- written confirmation of firm's acceptance of engagement
- level of access to books & records (full = audit & limited = review engagement)
- reporting framework
ISA 210: optional contents of engagement letter (5) - ANS - limitations of engagement
- confidentiality/restricted use of report
- reliance on internal controls
- basis of fee calculations
- restrictions on auditor's liability
Key components of audit strategy - ANS - understanding the entity and its environment
- materiality
- risk assessment
- nature, extent & timing of audit procedures
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, - direction, supervision & review of work
ISA 315 - what 6 things are important in understanding the entity and its environment? -
ANS - industry, regulatory, financial reporting framework
- nature of the entity
- accounting policies
- objectives and strategies & business risks that may result in material misstatement
- measurement of entity's financial performance
- internal controls
ISA 315 - How to understand the entity and its environment? (4) - ANS - enquires of
management & client staff
- analytical procedures
- observation
- inspection
Risk assessment - ANS -> audit risk = inherent risk x control risk x detection risk
Audit risk - ANS = risk auditor gives inappropriate opinion on f/s
Inherent risk - ANS = risk of misstatement in a transaction irregardless of internal controls
Control risk - ANS = risk of material misstatement not prevented, detected or corrected by
internal controls
Detection risk - ANS = risk auditor's procedures will not detect material misstatement
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
