Auditing and Assurance Quiz

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What makes an industry specialized?

Large workforce

Specific financial reporting standards or distinct accounting policies (correct)

International presence

High market capitalization

In the audit of a banking sector client, what may the audit firm produce guidance on?

Specific application of IFRS® Standards relating to financial instruments (correct)

Real estate investment strategies

Health maintenance organizations (HMO)

Construction and contracting standards

What is a transaction cycle in accounting?

A set of financial statements

A series of financial forecasts

An industry-specific financial reporting standard

An interlocking set of business transactions (correct)

What does ISQC 1 require the audit firm to consider when accepting an audit engagement involving a specialist industry?

Competence to perform the engagement Signup and view all the answers

What does ISA 620 deal with?

Using the work of an auditor’s expert Signup and view all the answers

What should the audit firm pay close attention to when accepting an audit engagement involving a specialist industry?

The competence of the audit firm to provide the service Signup and view all the answers

What should the audit staff refer to when performing the audit of a specialized industry client?

Internal technical guidance on financial reporting standards within the sector Signup and view all the answers

What is likely to be used in the audit of a specialized industry as the audit firm may not have the necessary specific expertise in some areas?

Auditor’s expert Signup and view all the answers

What is an example of a specialized industry?

Banking and financial institutions Signup and view all the answers

What should the audit firm consider when accepting an audit engagement involving a specialist industry according to ISQC 1?

Whether the firm is competent to perform the engagement Signup and view all the answers

What should the audit firm obtain to assist audit team members assigned to a specialized industry client?

Briefing notes or internal technical guidance on financial reporting standards within the sector Signup and view all the answers

What is the main focus when identifying the risk of material misstatement in a specialized industry?

Obtaining appropriate understanding of the business and its environment Signup and view all the answers

What is the purpose of auditing?

To obtain and evaluate evidence regarding economic actions and events Signup and view all the answers

What is the aim of limited assurance engagement (Review)?

To reduce engagement risk to an acceptable level with less extensive procedures Signup and view all the answers

What are the elements of an assurance engagement?

Three Party Relationship, Subject Matter, Suitable Criteria, Sufficient Appropriate Evidence, Written Report Signup and view all the answers

What is a specialized industry?

A distinct market with unique accounting and reporting practices Signup and view all the answers

What is the purpose of assurance?

To enhance the degree of confidence of the users on a subject matter Signup and view all the answers

What is the level of assurance provided by an audit?

Reasonable Assurance Signup and view all the answers

What is the purpose of limited assurance engagement (Review)?

To reduce engagement risk to an acceptable level with less extensive procedures Signup and view all the answers

What is the role of suitable criteria in an assurance engagement?

To measure the subject matter against established standards Signup and view all the answers

What is the purpose of obtaining and evaluating evidence in auditing?

To ascertain the degree of correspondence between assertions and established criteria Signup and view all the answers

What is the aim of reasonable assurance engagement (Audit)?

To reduce engagement risk to an acceptably low level Signup and view all the answers

What is the aim of limited assurance engagement (Review) in terms of engagement risk?

To reduce engagement risk to an acceptable level with higher risk than an audit Signup and view all the answers

What is the main difference between reasonable assurance and limited assurance engagements?

The level of engagement risk and the extent of procedures performed Signup and view all the answers