ACA Assurance Complete Exam Questions and
Answers – Full Audit Preparation Guide
Description: This complete ACA assurance exam resource compiles questions and
verified answers covering audit risk, internal controls, engagement letters, ISA
standards, audit evidence, and ethics. It is a full preparation guide aligned with
ICAEW assurance requirements, offering both breadth and depth for exam success.
5 key elements of audit - answer✔✔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? - answer✔✔- 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 -
answer✔✔- 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 -
answer✔✔basic: - employment by firm controlled by qualified persons - CA2006
no officers/employees of company or partner of above qualified auditors: -
membership of recognised supervisory body Money laundering check (client due
1
Page
diligence) - answer✔✔- req. per. Money Laundering Regulations 2007 - client id
, docs retained 5 yrs ISA 210: mandatory contents of engagement letter (6) -
answer✔✔- 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) - answer✔✔- 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 -
answer✔✔- understanding the entity and its environment - materiality - risk
assessment - nature, extent & timing of audit procedures - direction, supervision &
review of work ISA 315 - what 6 things are important in understanding the entity and
its environment? - answer✔✔- 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) - answer✔✔- enquires of management & client staff - analytical
procedures - observation - inspection Risk assessment - answer✔✔-> audit risk =
inherent risk x control risk x detection risk Audit risk - answer✔✔= risk auditor
gives inappropriate opinion on f/s Inherent risk - answer✔✔= risk of misstatement
in a transaction irregardless of internal controls Control risk - answer✔✔= risk of
2
material misstatement not prevented, detected or corrected by internal controls
Page
Answers – Full Audit Preparation Guide
Description: This complete ACA assurance exam resource compiles questions and
verified answers covering audit risk, internal controls, engagement letters, ISA
standards, audit evidence, and ethics. It is a full preparation guide aligned with
ICAEW assurance requirements, offering both breadth and depth for exam success.
5 key elements of audit - answer✔✔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? - answer✔✔- 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 -
answer✔✔- 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 -
answer✔✔basic: - employment by firm controlled by qualified persons - CA2006
no officers/employees of company or partner of above qualified auditors: -
membership of recognised supervisory body Money laundering check (client due
1
Page
diligence) - answer✔✔- req. per. Money Laundering Regulations 2007 - client id
, docs retained 5 yrs ISA 210: mandatory contents of engagement letter (6) -
answer✔✔- 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) - answer✔✔- 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 -
answer✔✔- understanding the entity and its environment - materiality - risk
assessment - nature, extent & timing of audit procedures - direction, supervision &
review of work ISA 315 - what 6 things are important in understanding the entity and
its environment? - answer✔✔- 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) - answer✔✔- enquires of management & client staff - analytical
procedures - observation - inspection Risk assessment - answer✔✔-> audit risk =
inherent risk x control risk x detection risk Audit risk - answer✔✔= risk auditor
gives inappropriate opinion on f/s Inherent risk - answer✔✔= risk of misstatement
in a transaction irregardless of internal controls Control risk - answer✔✔= risk of
2
material misstatement not prevented, detected or corrected by internal controls
Page
