ACA Assurance Exam Questions With
Correct Answers
What |are |the |5 |key |elements |of |an |assurance |engagement?
CREST
Criteria
Report
Evidence
Subject |matter |(the |thing |being |checked)
Three |party |relationship
What |are |the |auditor |appointment |considerations |before |acceptance |of |an |engagement?
MANICS
Management |Integrity
Adequate |Resources
Nature |of |Engagement |(level |of |risk)
Identification
Communicate |with |previous |auditor
Stability
What |is |the |letter |of |engagement?
Sets |out |the |objectives, |scopes |and |responsibilities |of |the |audit. |It |outlines |the |reporting
|framework |and |the |form |of |any |reports |or |opinions |which |may |be |given.
,What |are |the |key |contents |of |the |engagement |letter?
ADDS |TO |FIRMS |Fees
Auditors' |responsibilities
Directors' |responsibilities
Directors' |representations
Scope |and |objectives
Terms |agreed
Other |services
Fraud |(clarifying |that |directors |are |responsible |for |detecting |fraud)
Irregularities
Report |to |management
Management |of |the |audit |(timings)
Specialists |(may |be |required |to |value |large |or |unusual |assets)
Fees
Define |audit |risk
The |risk |that |the |auditor |expresses |an |inappropriate |audit |opinion |when |the |financial
|statements |are |materially |misstated.
AR |= |IR |X |CR |X |DR
What |are |examples |of |inherent |risk?
,- |Complex |calculations
- |Estimates |in |transactions
- |The |business |may |be |under |pressure |to |produce |good |results |e.g., |directors' |bonuses
- |External |circumstances |giving |rise |to |business |risks
What |is |included |in |the |audit |strategy?
- |Information |about |the |client's |industry
- |Scope |of |the |audit
- |Identification |of |specific |audit |risks
- |Size |of |the |audit |team, |requirement |to |use |specialists
- |Management, |direction |and |supervision |of |the |audit |team |(timing |of |briefing |meetings,
|partner |reviews, |manager |visits)
What |is |included |in |the |audit |plan?
- |More |detailed |than |the |audit |strategy
- |Nature, |timing |and |extent |of |the |specific |audit |procedures |required |for |each |material |class |of
|transactions, |account |balance |or |disclosure
Under |ISA |315 |(Identifying |and |assessing |the |risks |of |material |misstatement), |what |are |the |key
|components |of |internal |control?
CRIME
Control |activities
Risk |assessment |process |of |the |entity
Information |systems
, Monitoring |of |controls
Control |environment
Define |control |environment
The |governance |and |management |functions |of |the |organisation.
What |are |the |responsibilities |of |the |Audit |Committee?
- |To |assess |the |effectiveness |of |the |internal |audit |department
- |To |monitor |the |independence |of |the |external |auditor
- |To |make |recommendations |to |the |board |in |relation |to |the |external |auditor
According |to |ISA |315, |which |3 |aspects |are |part |of |an |entity's |control |environment?
1. |Attitude |of |the |directors |to |internal |control
2. |The |awareness |of |internal |control |issues |in |the |company
3. |The |actions |of |senior |management |in |relation |to |internal |controls
What |are |some |examples |of |physical |controls |within |a |company's |internal |controls?
1. |The |finance |controller |counts |petty |cash |on |a |monthly |basis.
2. |There |are |2 |keys |to |the |locked |safe |- |one |held |by |the |finance |director |and |one |held |by |the
|managing |director.
Correct Answers
What |are |the |5 |key |elements |of |an |assurance |engagement?
CREST
Criteria
Report
Evidence
Subject |matter |(the |thing |being |checked)
Three |party |relationship
What |are |the |auditor |appointment |considerations |before |acceptance |of |an |engagement?
MANICS
Management |Integrity
Adequate |Resources
Nature |of |Engagement |(level |of |risk)
Identification
Communicate |with |previous |auditor
Stability
What |is |the |letter |of |engagement?
Sets |out |the |objectives, |scopes |and |responsibilities |of |the |audit. |It |outlines |the |reporting
|framework |and |the |form |of |any |reports |or |opinions |which |may |be |given.
,What |are |the |key |contents |of |the |engagement |letter?
ADDS |TO |FIRMS |Fees
Auditors' |responsibilities
Directors' |responsibilities
Directors' |representations
Scope |and |objectives
Terms |agreed
Other |services
Fraud |(clarifying |that |directors |are |responsible |for |detecting |fraud)
Irregularities
Report |to |management
Management |of |the |audit |(timings)
Specialists |(may |be |required |to |value |large |or |unusual |assets)
Fees
Define |audit |risk
The |risk |that |the |auditor |expresses |an |inappropriate |audit |opinion |when |the |financial
|statements |are |materially |misstated.
AR |= |IR |X |CR |X |DR
What |are |examples |of |inherent |risk?
,- |Complex |calculations
- |Estimates |in |transactions
- |The |business |may |be |under |pressure |to |produce |good |results |e.g., |directors' |bonuses
- |External |circumstances |giving |rise |to |business |risks
What |is |included |in |the |audit |strategy?
- |Information |about |the |client's |industry
- |Scope |of |the |audit
- |Identification |of |specific |audit |risks
- |Size |of |the |audit |team, |requirement |to |use |specialists
- |Management, |direction |and |supervision |of |the |audit |team |(timing |of |briefing |meetings,
|partner |reviews, |manager |visits)
What |is |included |in |the |audit |plan?
- |More |detailed |than |the |audit |strategy
- |Nature, |timing |and |extent |of |the |specific |audit |procedures |required |for |each |material |class |of
|transactions, |account |balance |or |disclosure
Under |ISA |315 |(Identifying |and |assessing |the |risks |of |material |misstatement), |what |are |the |key
|components |of |internal |control?
CRIME
Control |activities
Risk |assessment |process |of |the |entity
Information |systems
, Monitoring |of |controls
Control |environment
Define |control |environment
The |governance |and |management |functions |of |the |organisation.
What |are |the |responsibilities |of |the |Audit |Committee?
- |To |assess |the |effectiveness |of |the |internal |audit |department
- |To |monitor |the |independence |of |the |external |auditor
- |To |make |recommendations |to |the |board |in |relation |to |the |external |auditor
According |to |ISA |315, |which |3 |aspects |are |part |of |an |entity's |control |environment?
1. |Attitude |of |the |directors |to |internal |control
2. |The |awareness |of |internal |control |issues |in |the |company
3. |The |actions |of |senior |management |in |relation |to |internal |controls
What |are |some |examples |of |physical |controls |within |a |company's |internal |controls?
1. |The |finance |controller |counts |petty |cash |on |a |monthly |basis.
2. |There |are |2 |keys |to |the |locked |safe |- |one |held |by |the |finance |director |and |one |held |by |the
|managing |director.
