ICAN Advanced Audit, Assurance and Forensics 2023 past questions and answers

1. Adopt the checklist unchanged because a standardised system guarantees consistent quality.
2. Design and implement a risk-based system of quality management responsive to the firm's circumstances and quality risks.
3. Replace firm-wide quality management with a separate quality-control inspection for each audit file.
4. Wait until a regulator identifies a deficiency before documenting any quality responses.

Answer: B. Design and implement a risk-based system of quality management responsive to the firm's circumstances and quality risks.

ISQM 1 requires a proactive, risk-based system tailored to the firm's nature and circumstances, including quality objectives, risks, and responses. A generic checklist alone (A) does not establish that the firm's actual quality risks have been addressed.

1. Appoint the partner because seniority overrides participation in the engagement.
2. Allow the partner to review only the financial statements, not significant judgments.
3. Appoint a reviewer who is not a member of the engagement team and can perform an objective evaluation before the auditor's report is dated.
4. Omit the review if the audit team has already completed an internal consultation.

Answer: C. Appoint a reviewer who is not a member of the engagement team and can perform an objective evaluation before the auditor's report is dated.

An engagement quality reviewer must be outside the engagement team and objectively evaluate significant judgments and conclusions, with the review completed by the report date. The proposed partner's involvement creates a self-review threat that seniority does not cure (A).

1. Accept it if the partner promises to document the trip in the audit file.
2. Accept it because the offer came from the finance director rather than the chief executive.
3. Decline it and assess whether the offer has created a threat to compliance with the fundamental principles or independence, taking appropriate safeguards or action.
4. Accept it if the audit opinion is not yet drafted.

Answer: C. Decline it and assess whether the offer has created a threat to compliance with the fundamental principles or independence, taking appropriate safeguards or action.

An expensive hospitality offer may create self-interest, familiarity, or intimidation threats and may be an inducement; the auditor should decline it and evaluate the threat and any required action. Merely documenting or delaying acceptance (A/D) does not remove the threat.

1. The group engagement partner remains responsible for the group audit opinion and must direct, supervise, and review the group audit work as appropriate.
2. Responsibility is automatically divided whenever the component auditor is separately appointed.
3. The group engagement partner may rely on the component auditor's report without evaluating its work or communications.
4. Only the component auditor is responsible for the component's contribution to consolidated figures.

Answer: A. 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; using component auditors does not divide that responsibility. The group team must obtain sufficient appropriate evidence and appropriately involve and evaluate component auditors, so automatic reliance (C) is not justified.

1. Accept the valuation unchanged because the expert is employed by the audit firm.
2. Evaluate the expert's competence, capabilities, and objectivity; understand the expert's field; and evaluate whether the work is adequate for the audit purpose.
3. Transfer responsibility for the relevant audit opinion assertion to the expert.
4. Use the expert only if management agrees to sign the geologist's report.

Answer: B. Evaluate the expert's competence, capabilities, and objectivity; understand the expert's field; and evaluate whether the work is adequate for the audit purpose.

The auditor evaluates the expert's competence, capabilities and objectivity, understands the work, and assesses its adequacy and relevance to the audit evidence. Use of an expert does not transfer the auditor's responsibility for the opinion (C).