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ICAN Audit, Assurance and Forensics 2025 past questions and answers

This 2025 ICAN Audit, Assurance and Forensics set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2025 set with instant marking.

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Sample ICAN Audit, Assurance and Forensics 2025 questions

1. A newly appointed auditor of Koru Ltd is asked by the board to certify that the financial statements are completely accurate. Under the ISA audit framework, which response best describes the auditor's objective?
  1. Guarantee that no fraud or error exists in the financial statements
  2. Obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error, and report accordingly
  3. Confirm that every transaction complies with all applicable laws, regardless of financial statement effect
  4. Prepare the financial statements and then independently approve them

Answer: B. Obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error, and report accordingly

An audit provides reasonable, not absolute, assurance that the financial statements as a whole are free from material misstatement. A guarantee of complete accuracy is impossible because of inherent limitations such as sampling and judgment.

2. At planning for Nera Ltd, the auditor learns that the company introduced a complex revenue-bundling system this year and staff have not been trained. Which action best meets the ISA risk-assessment requirement?
  1. Assume the system is effective because management selected it
  2. Reduce substantive work because the system is new
  3. Wait until the final audit to consider revenue risk
  4. Understand the new system and its relevant controls, identify where revenue could be misstated, and assess the risks of material misstatement

Answer: D. Understand the new system and its relevant controls, identify where revenue could be misstated, and assess the risks of material misstatement

The auditor obtains an understanding of the entity, its systems and relevant controls to identify and assess risks of material misstatement. Deferring assessment or assuming effectiveness would not support a risk-responsive audit.

3. Bex Manufacturing reports a sharp fall in profit while its loan covenant is based on a minimum profit level. Management's bonus also depends on meeting that covenant. Which audit-planning conclusion is most appropriate?
  1. There is an increased risk of intentional bias or fraud in estimates and classification, so the auditor should treat the incentives as a risk factor and plan responsive procedures
  2. The covenant makes the financial statements automatically unreliable, so an adverse opinion is required before testing
  3. The bonus arrangement is irrelevant unless a fraud has already been proven
  4. The auditor should accept management's explanations without corroboration because the covenant is disclosed

Answer: A. There is an increased risk of intentional bias or fraud in estimates and classification, so the auditor should treat the incentives as a risk factor and plan responsive procedures

Pressure to meet a covenant and earn a bonus creates an incentive that may increase fraud risk, requiring professional skepticism and targeted responses. A risk indicator alone does not prove fraud or determine the audit opinion.

4. Aster Ltd has profit before tax of N6,000,000. The engagement team sets overall materiality at 5% of profit before tax and planning materiality at 75% of overall materiality. What is planning materiality?
  1. N450,000
  2. N300,000
  3. N225,000
  4. N75,000

Answer: C. N225,000

Overall materiality is N6,000,000 × 5% = N300,000. Planning materiality is N300,000 × 75% = N225,000; N300,000 is overall materiality, not the requested lower planning amount.

5. At Tola Ltd, one clerk creates supplier records, enters invoices, and prepares payment files; the finance manager reviews only the monthly bank reconciliation. Which control weakness is most directly present?
  1. Excessive physical safeguarding of cash
  2. Over-reliance on external confirmations
  3. A lack of independent inventory observation
  4. Inadequate segregation of incompatible duties, creating an opportunity to establish fictitious suppliers and make payments

Answer: D. Inadequate segregation of incompatible duties, creating an opportunity to establish fictitious suppliers and make payments

Supplier creation, invoice processing and payment preparation should not all be controlled by one person without effective independent review. A monthly bank reconciliation may detect some errors but does not remove the underlying incompatible-duty risk.

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