ACCA Applied Skills Practice Questions — All Questions

An external audit provides:

• a.Tax advice only
• b.Absolute assurance of no fraud
• c.A guarantee of future profits
• d.Reasonable assurance that statements are free of material misstatement✓

An audit gives reasonable (not absolute) assurance about material misstatement.

Auditor independence is important because it:

• a.Supports objectivity and credibility of the audit opinion✓
• b.Speeds up the audit
• c.Guarantees a clean opinion
• d.Increases audit fees

Independence underpins objectivity and the value of the opinion.

Materiality in auditing refers to:

• a.The audit fee
• b.Whether a misstatement could influence users' decisions✓
• c.The physical size of documents
• d.The number of staff

An item is material if it could influence the economic decisions of users.

A modified (qualified) audit opinion is issued when:

• a.No evidence exists at all
• b.Everything is perfect
• c.There is a material but not pervasive misstatement or scope limitation✓
• d.The auditor is paid late

A qualified opinion reflects a material-but-not-pervasive issue.