Chapter 10

Question 1

What is the main requirement of ISA 330?

Answer 1

The auditors responses to assessed risks to reduce audit risk to an acceptably low level, auditor should determine overall responses to assessed Risks at FS level + should design + perform further audit procedures to respond to assessed risks at assertion level.

Question 2

What is ISA 501?

Hint - name the two areas it covers too

Answer 2

Audit evidence should be applied to certain items in the FS
2 areas it covers
-Attendance at physical inventory counting
-Litigation and claims

Question 3

What does ISA 610 define?

Answer 3

Using the work of internal auditors - during planning auditors will decide whether they wish to use the work of audit clients internal audit function

Question 4

What factors are considered when evaluating internal audit function?

Answer 4

Objectivity - who they report to, consider conflicting responsibilities/restrictions, consider extent management act on internal audit recommendations
Competence - have adequate resources, technical training and proficiency, auditors possess required knowledge of reporting
Systematic and discipline approach - was it properly planned, supervised, reviewed and documented, whether function appropriate quality control procedures, audit manuals, work programmes and documentation

Question 5

What is an auditors expert

Answer 5

individual or organisation possessing expertise in a field than accounting or auditing, whose work in that field is used by auditor to assist auditor in obtaining sufficient appropriate audit evidence.

Question 6

What Is managements expert?

Answer 6

Is an individual or organisation possessing expertise in a field other than accounting or auditing, whose file is used by entity to assist entity in preparing the FS

Question 7

What is ISA 620

Answer 7

Using work of an auditors expert defines an auditors expert as someone who has expertise in a field other than accounting or auditing including expertise in such matters as;
valuations of complex financial instruments and certain types of assets
actuarial calculations of insurance or employee benefit liabilities
estimation of oil and gas reserve
interpretation of contracts, laws and regulations
analysis of complex or unusual tax compliance issues

Question 8

What is ISA 600

Answer 8

audits of group FS provides guidance to auditor of a group where one or more of components of that group are audited by other auditors

Question 9

what is

• component
• component auditors
• group engagement team

Answer 9

entity whose financial information included in group FS
auditors who perform work on financial information related yo component of group audit
auditors responsibility for performing work on consolidation process, communicating with component auditors and reporting on group FS

Question 10

What are some sources of audit confidence?

Answer 10

test of controls
analytical procedures
test of details