ICAN Advanced Audit, Assurance and Forensics 2025 past questions and answers

1. Wait for the next annual evaluation, since the firm already has a written quality manual.
2. Assess the quality risk, design and implement a targeted response, then monitor whether it works and address any deficiencies.
3. Require every engagement to use the same checklist without considering the identified causes.
4. Treat the findings as individual staff errors and exclude them from the firm’s system of quality management.

Answer: B. Assess the quality risk, design and implement a targeted response, then monitor whether it works and address any deficiencies.

ISQM 1 requires the firm to identify and assess quality risks and design responsive actions, followed by monitoring and remediation. A manual or checklist alone does not establish that the response addresses the cause or is operating effectively.

1. The engagement partner, because that partner has the greatest knowledge of the audit.
2. A senior team member who prepared the bank’s impairment testing, provided that the partner reviews their work.
3. The bank’s finance director, who is independent of the audit firm and understands the business.
4. A suitably competent and capable person with sufficient time and appropriate objectivity who is not a member of the engagement team.

Answer: D. A suitably competent and capable person with sufficient time and appropriate objectivity who is not a member of the engagement team.

ISQM 2 requires an engagement quality reviewer to have appropriate competence, capability, authority and time, and to comply with relevant ethical requirements, including objectivity. The reviewer cannot be a member of the engagement team or assume management responsibility for the client.

1. Decline the offer and promptly inform the engagement partner so the threat to compliance with the fundamental principles can be evaluated.
2. Accept it if the senior promises not to discuss audit matters during the weekend.
3. Accept it and disclose it only if the client later asks for a change to the audit opinion.
4. Ask the CFO to offer the package to the whole audit team instead, which removes any ethical threat.

Answer: A. Decline the offer and promptly inform the engagement partner so the threat to compliance with the fundamental principles can be evaluated.

A valuable gift from an audit client can create self-interest, familiarity or intimidation threats. Declining it and reporting it allows the firm to assess the circumstances; sharing the gift does not automatically eliminate the threats.

1. The group auditor may transfer responsibility for the group opinion to the component auditor if the component is material.
2. The group auditor is responsible only for consolidating the component figures once a separate audit opinion is received.
3. The group auditor remains responsible for the group audit opinion and must obtain sufficient appropriate evidence, including evaluating the component auditor’s work as relevant.
4. A separate component audit opinion automatically constitutes sufficient appropriate evidence for every group assertion.

Answer: C. The group auditor remains responsible for the group audit opinion and must obtain sufficient appropriate evidence, including evaluating the component auditor’s work as relevant.

The group engagement partner and group auditor retain responsibility for the group audit opinion. They must understand and direct the group audit as needed and evaluate whether evidence, including work of component auditors, is sufficient and appropriate.

1. Accept the report without further work because the actuary is external to the insurer.
2. Evaluate the actuary’s competence, capabilities and objectivity, understand the work, and assess whether it is appropriate evidence for the relevant assertions.
3. Re-perform every actuarial calculation personally, regardless of the auditor’s expertise or materiality.
4. Treat the report as management representation and exclude it from audit evidence.

Answer: B. Evaluate the actuary’s competence, capabilities and objectivity, understand the work, and assess whether it is appropriate evidence for the relevant assertions.

When using an auditor’s expert, the auditor evaluates the expert’s competence, capabilities and objectivity, obtains an understanding of the work, and evaluates its adequacy for audit purposes. External status alone does not establish reliability.