ICAN Advanced Audit, Assurance and Forensics 2022 past questions and answers

1. Adopt the quality procedures used by the largest firm in the country without considering the firm's circumstances.
2. Identify and assess quality risks arising from the firm's circumstances, then design and implement responses proportionate to those risks.
3. Require every engagement to use identical procedures regardless of its nature or risk.
4. Wait until the next external inspection before changing any quality procedures.

Answer: B. Identify and assess quality risks arising from the firm's circumstances, then design and implement responses proportionate to those risks.

ISQM 1 requires a proactive, risk-based system: the firm identifies and assesses quality risks and designs responses to address them. Copying another firm's procedures or waiting for an inspection does not address the firm's own quality risks.

1. The engagement partner may issue the report and resolve the disagreement after filing the accounts.
2. The reviewer should prepare the impairment calculation and replace the engagement team's judgment.
3. The disagreement can be omitted from the file if management accepts the impairment amount.
4. The engagement team must resolve the matter and the reviewer must complete the engagement quality review before the report is dated.

Answer: D. The engagement team must resolve the matter and the reviewer must complete the engagement quality review before the report is dated.

An engagement quality review must be completed on or before the date of the auditor's report, including an objective evaluation of significant judgments and conclusions. The reviewer evaluates the engagement team's work but does not take over management's or the team's responsibilities.

1. Dispose of the direct financial interest and assess whether any breach requires further action; its small value does not make it acceptable.
2. Retain the shares because the amount is immaterial to the partner's personal wealth.
3. Transfer the shares to a family member and take no further action.
4. Disclose the investment in the audit report and continue unchanged.

Answer: A. Dispose of the direct financial interest and assess whether any breach requires further action; its small value does not make it acceptable.

A direct financial interest in an audit client creates an unacceptable independence threat for a covered person regardless of its relative size. The breach must be addressed, including disposing of the interest and evaluating its implications for independence.

1. The group engagement partner transfers responsibility for the group opinion to the component auditor for that subsidiary.
2. The group engagement partner may refer to the component auditor in the group report to limit responsibility automatically.
3. The group engagement partner remains responsible for the group audit opinion and must direct, supervise and review the group audit work as appropriate.
4. The group engagement partner need not evaluate the component auditor if the subsidiary's financial statements are audited.

Answer: C. The group engagement partner remains responsible for the group audit opinion and must direct, supervise and review the group audit work as appropriate.

The group engagement partner remains responsible for the group audit opinion; involvement of a component auditor does not transfer that responsibility. The group team determines and performs appropriate direction, supervision and review and considers the component auditor's work.

1. Accept the actuarial report without evaluation because the actuary is independent of the audit firm.
2. Evaluate the expert's competence, capabilities and objectivity, understand the expert's work, and assess whether it provides appropriate audit evidence.
3. Ask the actuary to decide whether the financial statements are fairly presented and use that conclusion as the audit opinion.
4. Exclude the liability from the audit because specialist estimates cannot be audited.

Answer: B. Evaluate the expert's competence, capabilities and objectivity, understand the expert's work, and assess whether it provides appropriate audit evidence.

When using an auditor's expert, the auditor evaluates the expert's competence, capabilities and objectivity, obtains an understanding of the work, and evaluates whether it is adequate for the audit purpose. The auditor retains responsibility for the audit opinion.