ICAEW Audit and Assurance (EA&A)
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Assurance engagement - CORRECT ANSWERS✅✅practitioner expresses conclusion to
enhance degree of confidence of users other than responsible party of outcome of evaluation
or measurement of subject matter against criteria
Reasonable assurance - CORRECT ANSWERS✅✅- reasonable assurance
- high level of assurance
- positive opinion
- FS provides true and fair view of company affairs
Limited assurance - CORRECT ANSWERS✅✅- limited assurance
- moderate level of assurance
- negative opinion
- nothing comes to attention
Benefits of assurance - CORRECT ANSWERS✅✅- enhance creditability
- reduce risk of management bias, error, or fraud
- Draw attention of user of any deficiencies
Assurance benefits to wider market - CORRECT ANSWERS✅✅- ensures high quality,
reliable information in market
- give investors added faith in market
- improves reputation
Objective of an Audit - CORRECT ANSWERS✅✅to enable auditor to express an opinion if
FS are prepared, in all material respects, with an applicable framework. State whether true
and fair view.
,Audit Threshold - CORRECT ANSWERS✅✅Exempt from audit meeting 2 of the
following:
> 50 employees
> £10.2m Revenue
> £5.1m Gross Assets
Exempt companies must disclose in financial statements
Must have audits - CORRECT ANSWERS✅✅- involved in banking and insurance
- shareholders with 10% request for one
- company's articles of association require one
- non dormant public companies
- any company member of group including 1 of the above (subs exempt if parent guarantees
assets and liabs)
Rise in audit threshold - CORRECT ANSWERS✅✅- majority owner managed businesses
might not need audit
- very few companies using FRSSE (Financial Reporting for Smaller Entities) for disclosures
in FS need to be audited
- Few companies entitled to file small company abbreviated accounts need to be audited
ISA (UK) 500 - CORRECT ANSWERS✅✅- Inspection
- Observation
- Inquiry
- Reperformance
- Recalculation
- Analytical procedures
- External confirmation
ISRE 2400 - CORRECT ANSWERS✅✅- Inspection
- Analytical procedures
,ISAE 3400 - CORRECT ANSWERS✅✅- Assessment of assumptions
- Recomputation
- Written representation
Director's responsibilities (CA06) - CORRECT ANSWERS✅✅- Safeguarding assets
(documents, assets, authority levels, policies against F & E)
- Preping and delivering FS (policies, judgements, estimates, compliance, going concern)
- Company books and records
- failure to observe lead to criminal pens
SOX (Sarbanes-Oxley Act) - CORRECT ANSWERS✅✅- Passed into US law in 2002
- measures to attempt to improve quality of financial reporting
- CEOs and CFOs attest to veracity of FS
- greater disclosure of amendments to FS during audit
Sustainability - CORRECT ANSWERS✅✅meeting needs of present without compromising
ability of future generations to meet own needs
Environmental (ESG) - CORRECT ANSWERS✅✅- counter impact of climate change
- reduce impact on environment
Social (ESG) - CORRECT ANSWERS✅✅- consider well being and impact of operations on
society and stakeholders
- create good working environment
Governance (ESG) - CORRECT ANSWERS✅✅- implement good governance practices
from top down
- well positioned to meet environmental and social where goods and services sustainable and
good working environment
, ESG Risk Management - CORRECT ANSWERS✅✅- climate change impacting business
risks eg weather events or pushing for net zero
- risk to reputation if not integrating ESG
ESG Assurance - CORRECT ANSWERS✅✅- ESG requires creditability when disclosed in
stake holders
ESG laws & Regs - CORRECT ANSWERS✅✅- continuing commitment by UN to reduce
emissions and legislations implemented to help targets
International Sustainability Standards Board (ISSB) - CORRECT ANSWERS✅✅- created
in 2021 by IFRS
- aims to deliver a set of disclosure standards covering sustainability
- IFRS S1 general requirements for disclosure of sustainability related financial info - risks
and opportunities for decision making
- IFRS S2 climate-related disclosures looks at significant risks and opportunities and info to
disclose on impacts
Assurance provider responsibility determined by - CORRECT ANSWERS✅✅-
requirements of legislation of regulation
- terms of engagement specifying the service
- ethical and professional standards
- quality management standards
External auditor's responsibilities for statutory audit - CORRECT ANSWERS✅✅- form
opinion if true and fair view
- confirm accounts prepared properly in accordance with CA06
- State in audit report if opinion is consistent with FS
must ensure:
- audit planned properly
- sufficient appropriate audit evidence
- evidence properly reviewed and valid conclusions
ACTUAL QUESTIONS AND CORRECT
ANSWERS
Assurance engagement - CORRECT ANSWERS✅✅practitioner expresses conclusion to
enhance degree of confidence of users other than responsible party of outcome of evaluation
or measurement of subject matter against criteria
Reasonable assurance - CORRECT ANSWERS✅✅- reasonable assurance
- high level of assurance
- positive opinion
- FS provides true and fair view of company affairs
Limited assurance - CORRECT ANSWERS✅✅- limited assurance
- moderate level of assurance
- negative opinion
- nothing comes to attention
Benefits of assurance - CORRECT ANSWERS✅✅- enhance creditability
- reduce risk of management bias, error, or fraud
- Draw attention of user of any deficiencies
Assurance benefits to wider market - CORRECT ANSWERS✅✅- ensures high quality,
reliable information in market
- give investors added faith in market
- improves reputation
Objective of an Audit - CORRECT ANSWERS✅✅to enable auditor to express an opinion if
FS are prepared, in all material respects, with an applicable framework. State whether true
and fair view.
,Audit Threshold - CORRECT ANSWERS✅✅Exempt from audit meeting 2 of the
following:
> 50 employees
> £10.2m Revenue
> £5.1m Gross Assets
Exempt companies must disclose in financial statements
Must have audits - CORRECT ANSWERS✅✅- involved in banking and insurance
- shareholders with 10% request for one
- company's articles of association require one
- non dormant public companies
- any company member of group including 1 of the above (subs exempt if parent guarantees
assets and liabs)
Rise in audit threshold - CORRECT ANSWERS✅✅- majority owner managed businesses
might not need audit
- very few companies using FRSSE (Financial Reporting for Smaller Entities) for disclosures
in FS need to be audited
- Few companies entitled to file small company abbreviated accounts need to be audited
ISA (UK) 500 - CORRECT ANSWERS✅✅- Inspection
- Observation
- Inquiry
- Reperformance
- Recalculation
- Analytical procedures
- External confirmation
ISRE 2400 - CORRECT ANSWERS✅✅- Inspection
- Analytical procedures
,ISAE 3400 - CORRECT ANSWERS✅✅- Assessment of assumptions
- Recomputation
- Written representation
Director's responsibilities (CA06) - CORRECT ANSWERS✅✅- Safeguarding assets
(documents, assets, authority levels, policies against F & E)
- Preping and delivering FS (policies, judgements, estimates, compliance, going concern)
- Company books and records
- failure to observe lead to criminal pens
SOX (Sarbanes-Oxley Act) - CORRECT ANSWERS✅✅- Passed into US law in 2002
- measures to attempt to improve quality of financial reporting
- CEOs and CFOs attest to veracity of FS
- greater disclosure of amendments to FS during audit
Sustainability - CORRECT ANSWERS✅✅meeting needs of present without compromising
ability of future generations to meet own needs
Environmental (ESG) - CORRECT ANSWERS✅✅- counter impact of climate change
- reduce impact on environment
Social (ESG) - CORRECT ANSWERS✅✅- consider well being and impact of operations on
society and stakeholders
- create good working environment
Governance (ESG) - CORRECT ANSWERS✅✅- implement good governance practices
from top down
- well positioned to meet environmental and social where goods and services sustainable and
good working environment
, ESG Risk Management - CORRECT ANSWERS✅✅- climate change impacting business
risks eg weather events or pushing for net zero
- risk to reputation if not integrating ESG
ESG Assurance - CORRECT ANSWERS✅✅- ESG requires creditability when disclosed in
stake holders
ESG laws & Regs - CORRECT ANSWERS✅✅- continuing commitment by UN to reduce
emissions and legislations implemented to help targets
International Sustainability Standards Board (ISSB) - CORRECT ANSWERS✅✅- created
in 2021 by IFRS
- aims to deliver a set of disclosure standards covering sustainability
- IFRS S1 general requirements for disclosure of sustainability related financial info - risks
and opportunities for decision making
- IFRS S2 climate-related disclosures looks at significant risks and opportunities and info to
disclose on impacts
Assurance provider responsibility determined by - CORRECT ANSWERS✅✅-
requirements of legislation of regulation
- terms of engagement specifying the service
- ethical and professional standards
- quality management standards
External auditor's responsibilities for statutory audit - CORRECT ANSWERS✅✅- form
opinion if true and fair view
- confirm accounts prepared properly in accordance with CA06
- State in audit report if opinion is consistent with FS
must ensure:
- audit planned properly
- sufficient appropriate audit evidence
- evidence properly reviewed and valid conclusions
