Exam focus notes

Question 1

Elements of an assurance engagement - CREST - what is C

Answer 1

Criteria
- audits use ISAs, IFRSs, UK Companies Act 2006 and are required by law
- Assurance or review ISAES and ISRES

Question 2

Elements of an assurance engagement - CREST - what is R

Answer 2

Report
- Audit opinion - reasonable assurance, expressed positively, ‘true and fair view’
- Assurance conclusion gives limited assurance expressed negatively ‘nothing has come to our attention

Question 3

Elements of an assurance engagement - CREST - what is E

Answer 3

Audit - more evidence - higher level of assurance
- review or assurance - standard of evidence lower e.g. analytical procedures and enquiries

Question 4

Elements of an assurance engagement - CREST - what is S

Answer 4

Subject matter
- assurance - format of document bespoke. Actual events may vary from forecast

Question 5

Elements of an assurance engagement - CREST - what is T

Answer 5

Three party relationship
Audit - shareholders and publicly available
- assurance may have different users or confiendtial

Question 6

Audit threshold

Answer 6

• 2 of 3
• no more than 50 employees
• revenue no more £10.2m
• gross assets - £5.1m

Question 7

General auditor responsibility

Answer 7

Follow CA2006
Set out terms in engagement letter
follow ethical standards
perform quality management procedures

Question 8

Auditor responsibilities on audit and internal controls

Answer 8

• express opinion
• detect material errors
• test internal controls which address audit risks
• communicate weaknesses to those charged with governance

Question 9

Fraud - auditor responsibilities - ISA240

Answer 9

• detect material frauds in financial statements
• not responsible for prevention of fraud
• obtain written representation from directors acknowledging responsibilities

Question 10

Fraud - auditor responsibility - who to communicate with

Answer 10

1. management
2. those charged with governance
   3 . regulatory authorities

Question 11

Related Parties ISA550 - auditor responsibility

Answer 11

Audit disclosures relating to related parties

Question 12

ISA570 going concern - auditor responsibilities

Answer 12

• audit going concern assumption
  -establish uncertainties relating to going concern

Question 13

Money laundering - auditor responsibilities

Answer 13

• appoint MLRO
• MLRO reports
• staff training
• client identification procedures
• keep records
• don’t tip off

Question 14

Bribery - auditor responsibilities

Answer 14

consider risks of non-compliance

Question 15

General safeguards

Answer 15

• consult ethics partner
• engagement quality review - all listed clients must have one
• communicate with those charged with governance/audit committee

Question 16

Listed companies - audit partner - how long?

Answer 16

5 years and then break for 5 years. Could continue for an extra 2 years if necessary to safeguard audit quality if disclosed to shareholders

Question 17

ECQR Reviewer - time period allowed?

Answer 17

act for seven years then break for 5 years

Question 18

other audit partners time limit?

Answer 18

act for 7 yrs

Question 19

Non-listed clients rotation?

Answer 19

Consider after 10 years