Planning and performing engagements SFQ QB

Question 1

Planned procedures for a review engagement

Answer 1

Limited to inquiries of company personnel and analytical procedures

Question 2

Does a review engagement plan to obtain less evidence than an external audit engagement?

Answer 2

yes

Question 3

Difference on how bank reconciliations are reviewed in a review vs external audit

Answer 3

Review: inquiries on old or unusual reconciling items
External: trace a sample of reconciling items to supporting documentation

Question 4

What would an external audit do with a bank reconciliaition?

Answer 4

obtain evidence of items that should be included to ensure they are

Question 5

What would a review engagement do with bank reconciliation

Answer 5

make inquiries regarding transfers between bank accounts

Question 6

Is a bank confirmation letter obtained for an external or review engagement?

Answer 6

External audit

Question 7

Audit procedures to address the risk of management override of internal control:

Answer 7

Substantiate journal entries
Investigate reconciling items
Review significant accounting estimates and judgement for bias
investigate transactions outside the normal course of business
review internal auditor report
interview management to assess attitude
review minutes

Question 8

ISA UK240 management override … procedures

Answer 8

testing journal entries to ensure appropriate
review of accounting estimates
scrutinising significant and unusual transactions

Question 9

How can going concern impact the financial statements

Answer 9

• appropriate basis of preparation?
• is there disclosure of uncertainty?

Question 10

Sale product contaminated - financial statement impact

Answer 10

refunds for returns
irrecoverable trade receivables
inventory written off

Question 11

Anti-malware not updated: possible consequences

Answer 11

• hackers
• deliberate sabotage
• malicious programs
• reputational damage

Question 12

What should an audit committee consider to internal audit function:

Answer 12

• planned programme of work
• arrangement for direction and supervision
• completed reports
• independence and objectivity

Question 13

Audit committee: performance indicators to use on internal audit

Answer 13

• actual time compared to budget
• actual work compared to planned
• number of recommendations accepted
• no. of qualified staff

Question 14

Five benefits of using data analytics software

Answer 14

• enhances quality
• up to 100% review, minimises risk
• timing
• trends and patterns
  -outlying transactions
• comparison of ratios to industry benchmarks to identify unusual trans.