ICAN Audit, Assurance and Forensics 2024 past questions and answers

1. The auditor guarantees that every transaction is correct if the accounts are audited.
2. The auditor obtains reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error.
3. The auditor is responsible for preparing the financial statements and preventing all fraud.
4. The auditor provides absolute assurance that no immaterial misstatement exists.

Answer: B. The auditor obtains reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error.

ISA 200 sets the objective of obtaining reasonable, not absolute, assurance that the financial statements as a whole are free from material misstatement. Management remains responsible for preparing the statements and preventing and detecting fraud.

1. Treat the new product as a proven fraud and issue a disclaimer immediately.
2. Ignore the changes until substantive testing identifies an error.
3. Ask management to choose which audit procedures will be performed.
4. Use the understanding of the entity and its environment to identify and assess risks of material misstatement.

Answer: D. Use the understanding of the entity and its environment to identify and assess risks of material misstatement.

ISA 315 requires the auditor to understand the entity and its environment, including relevant business and regulatory changes, to identify and assess risks of material misstatement. A risk assessment is not itself proof of fraud or a reason to predetermine the opinion.

1. Establish the overall audit strategy and develop the audit plan before beginning detailed fieldwork, updating them as necessary.
2. Wait until all substantive tests are complete before deciding the audit approach.
3. Ask management to prepare the audit plan and select the locations to test.
4. Use the same procedures and sample sizes as last year without reconsideration.

Answer: A. Establish the overall audit strategy and develop the audit plan before beginning detailed fieldwork, updating them as necessary.

ISA 300 requires planning that establishes an overall strategy and a detailed audit plan, helping the auditor organise and direct the engagement. Prior-year work can inform planning but must be reconsidered in light of current circumstances.

1. Any difference between the ledger and a supporting document, regardless of size or context.
2. The amount management is willing to correct before the auditor issues a report.
3. A misstatement or omission that could reasonably be expected to influence users' economic decisions, individually or in aggregate.
4. The largest error that can be found without changing the audit opinion in every circumstance.

Answer: C. A misstatement or omission that could reasonably be expected to influence users' economic decisions, individually or in aggregate.

Materiality concerns whether a misstatement or omission could reasonably influence users' decisions, considering its size, nature, and context. It is not merely a threshold chosen by management or a guarantee that smaller errors never matter.

1. Conclude that revenue is complete because customers use a portal.
2. Assess the related risk of material misstatement and design appropriate procedures, including testing revenue completeness and relevant controls if reliance is planned.
3. Remove revenue from the audit because it is processed electronically.
4. Assume the portal control operated effectively because it was recently introduced.

Answer: B. Assess the related risk of material misstatement and design appropriate procedures, including testing revenue completeness and relevant controls if reliance is planned.

The new system and unreconciled exceptions indicate risk relevant to revenue completeness and possibly control operation. The auditor should assess that risk and design responsive procedures rather than assume the system is reliable.