1. Reintroduction To Audit And Assurance

Question 1

2 Assurance types

Answer 1

1. Resaonable
2. Limited

Question 2

Assurance type: Reasonable: Assurance level

Answer 2

High

Question 3

Assurance type: Reasonable: Opinion/Conclusion

Answer 3

Positive

Question 4

Assurance type: Limited: Assurance Level

Answer 4

Moderate

Question 5

Assurance type: Limited: Opinion/Conclusion

Answer 5

Negative

Question 6

What are external audits governed by?

Answer 6

ISAs

Question 7

ISA 200: Main objectives of audit

Answer 7

1. Reasonably free from material misstatement
2. Properly prepared
3. Report FS
4. Communicate with TCWG

Question 8

Who are exempt from audit? (Jan 16)

Answer 8

Small private ltd Cs with 2 of:

1. Less than 50 empys
2. Less than 5.2m gross assets
3. Less than 10.2m turnover

OR

Subs where parent guarantees liabilities

Question 9

Companies exempt from audit: Notable exceptions

Answer 9

Insurance Cs
Banks
Plcs

+10% shareholders ask for audit

Question 10

Benefits of audit

Answer 10

Independent scrutiny
3rd party assurance (banks, tax authorities)
Promotes accounting discipline (good for statutory compliance)
Reports to management (efficiencies)

Question 11

Statutory audit: Scope determined by

Answer 11

CA and ISAs

E.g.
Observation
Confirmation
Recalculation
Re-performance
Analytical procedures
Inquiry

Question 12

Statutory audit: Scope determined by

Answer 12

Terms of engagement and relevant international standards

Usually requiring:
a. Inquiry
b. Analytical proceds
c. Management representations

Question 13

Statutory audit: Level of assurance

Answer 13

Reasonable

Question 14

Other assurance: Level of assurance

Answer 14

Usually limited

Question 15

Other assurance: Level of assurance

Answer 15

Usually limited

Question 16

Statutory audit: Reports to

Answer 16

Shareholders

Question 17

Other assurance: Reports to

Answer 17

Usually management

Question 18

Statutory audit: Reports on

Answer 18

FS and some other matters (e.g. DR and SR consistent with FS)

Question 19

Other assurance: reports on

Answer 19

Conclusion depending on nature of work

Question 20

Statutory audit: How report circulated

Answer 20

In public domain once FS filed

Question 21

Other assurance: Extent of circulation

Answer 21

Likely restricted