Evidence and Reporting

Question 1

On what does the sufficiency of evidence depend?

Answer 1

Risk, materiality, and level of assurance to be given.

Question 2

On what does the appropriateness of evidence depend?

Answer 2

Reliability (source and format) and relevance (proves at least one financial statement assertion).

Question 3

What are the assertions about classes of transactions?

Answer 3

Occurrence, accuracy, cut-off, completeness, classification, and presentation.

Question 4

What are the assertions about account balances?

Answer 4

Existence, rights and obligations, accuracy/valuation/allocation, completeness, classification, and presentation.

Question 5

Describe the test of control approach

Answer 5

Test of the system including enquiry, observation, reperformance, and data analytics. Appropriate if the control risk is low. CANNOT carry out ONLY tests of controls.

Question 6

Describe the substantive testing approach

Answer 6

Test of the numbers in the financial statements including analytical procedures and tests of detail. Substantive testing must always be carried out on material items.

Question 7

Statutory audit opinion

Answer 7

An audit report (reasonable assurance) is always expressed positively, but the opinion might be modified.

Question 8

Implied opinions

Answer 8

Reported under Companies Act 2006 if any of the following arise:
Returns adequate
Accounts not in agreement
Proper records
Information not received
Directors' disclosures not made