ACA - Assurance Topic 5-6 Questions With 100% Correct Answers.

what are audit documentations? - Answer-RECORD of procedures performed, relevant evidence obtained and conclusions reached why should assurance providers record their work? - Answer-- assist audit team to plan and perform audit - assist relevant members to direct and supervise work - enable audit team to be accountable (prove adherence to ISA) - retain record of matters to future audits - enable experienced auditor to carry out quality reviews - conduct external inspections in accordance with legal, regulatory and other requirements what factors can impact the form and content of working papers? - Answer-- size and complexity of entity - nature of audit procedures - identified risk of material misstatements - significance of audit evidence - nature and extent of problems + exceptions identified - audit methodology and tools what are the 2 types of audit files? - Answer-permanent audit files current audit files what is the difference between permanent and current audit files? - Answer-1. PERMANENT *continuing importance - engagement letters, client questionnaire, memorandum of association, legal documents - details of history of client's business- board minutes of continuing relevance 2. CURRENT *relevance to current year audit - financial statements - reconciliations - audit planning memorandum - management letters - sampling plans what does the document retention policy (ICAEW) say registered auditors should keep audit working papers for? - Answer-at least 6 years from end of accounting period *working papers are property of auditor what is audit evidence? - Answer-information used by auditor to ARRIVE AT CONCLUSIONS which auditor's opinion is based on what does 'sufficient appropriate' evidence mean? - Answer-SUFFICIENT *Quantity: enough to support audit opinion APPROPRIATE *Quality - Relevant = Must cover financial statement assertions - Reliable **Quality of evidence will affect quantity of evidence** what are financial statement assertions? - Answer-representation by management which are embodied by financial statements1. PERIOD UNDER AUDIT (about classes of transactions, related disclosures) (P+L) - Occurrence - Completeness - Accuracy - Cut-off - Classification - Presentation