ACA Assurance Exam
What does CREST stand for? - correct answer ✔✔Credit
Report
Evidence
Subject matter
Three Party Relationship
Two types of assurance - correct answer ✔✔Reasonable (expressed positively)
Limited (expressed negatively)
What does MANICS stand for? - correct answer ✔✔Management intergrity
Adequate resources
Nature of engagement (level of risk)
Identification
Communicate with previous auditor
Stability
3 functions which should be separated in a client firm? - correct answer ✔✔- Authorisation of
transactions
- Custody or handling of assets
- Recording of transactions
Who makes up an audit committee? - correct answer ✔✔Non-executive directors only
, What does CREST relate to? - correct answer ✔✔The key elements of an assurance engagement
Benefits of assurance (5 things) - correct answer ✔✔- Independent and external professional verifcation
(key)
- May give confidence to other users (enhances credibility of the information)
- Deterrent against fraud and error and reducing management bias
- Draws attention to deficiencies or modifications in the prepared information
- Leads to effective markets as investors have more faith and trust in financial accounts and the
underlying companies
Limitations of assurance (5 things) - correct answer ✔✔- Sampling (not everything tested)
- The accounting systems upon which assurance providers rely have their own inherent limitations
- Most audit evidence is persuasive rather than conclusive
- Human element (collusion, fraud, error etc.)
- Use of estimates and judgements
What does MANICS relate to? - correct answer ✔✔Acceptance procedures re appointment
considerations
DEFINE - Letter of engagement - correct answer ✔✔Sets out the objectives, scope and responsibilities of
the audit.
What does CREST stand for? - correct answer ✔✔Credit
Report
Evidence
Subject matter
Three Party Relationship
Two types of assurance - correct answer ✔✔Reasonable (expressed positively)
Limited (expressed negatively)
What does MANICS stand for? - correct answer ✔✔Management intergrity
Adequate resources
Nature of engagement (level of risk)
Identification
Communicate with previous auditor
Stability
3 functions which should be separated in a client firm? - correct answer ✔✔- Authorisation of
transactions
- Custody or handling of assets
- Recording of transactions
Who makes up an audit committee? - correct answer ✔✔Non-executive directors only
, What does CREST relate to? - correct answer ✔✔The key elements of an assurance engagement
Benefits of assurance (5 things) - correct answer ✔✔- Independent and external professional verifcation
(key)
- May give confidence to other users (enhances credibility of the information)
- Deterrent against fraud and error and reducing management bias
- Draws attention to deficiencies or modifications in the prepared information
- Leads to effective markets as investors have more faith and trust in financial accounts and the
underlying companies
Limitations of assurance (5 things) - correct answer ✔✔- Sampling (not everything tested)
- The accounting systems upon which assurance providers rely have their own inherent limitations
- Most audit evidence is persuasive rather than conclusive
- Human element (collusion, fraud, error etc.)
- Use of estimates and judgements
What does MANICS relate to? - correct answer ✔✔Acceptance procedures re appointment
considerations
DEFINE - Letter of engagement - correct answer ✔✔Sets out the objectives, scope and responsibilities of
the audit.
