Chapter 1

Question 1

Elements of assurance

Answer 1

Criteria eg accounting standards
Report 
Evidence 
subject matter eg FS
Three party relationship

Question 2

Levels of assurance

Answer 2

Reasonable - high - engagement risk reduced to acceptably low level - conclusion expressed POSITIVELY

Evidence obtained by- understanding entity, assessing risk, responding to risk, further procedures

Eg statutory audit

Limited - meaningful - more than inconsequential, less than reasonable- eng risk rescued to acceptable level - Conclusion NEGATIVELY expressed

Limited evidence

Eg review of half year results

Question 3

Wording of conclusions

Answer 3

Positive - “FS present fairly in all material respects” “give a true and fair view of”

Negative - based on our work no evidence comes to our attention to believe…. is…. based on xyz criteria

Question 4

True and fair

Answer 4

True - info is factual, not false, conforms to required standards and laws, accounts correctly extracted from books

Fair - info free from discrimination and bias in compliance with expected standards and rules

Question 5

Companies act 2006

Answer 5

Auditors must :

Hold an appropriate qualification

Be a member of a recognised body Eg icaew

Person ineligible to audit a company if:

Officer/ employee of company
Partner
Partner in