ICAN Audit & Assurance
Past Questions

23+ verified Audit & Assurance past questions for ICAN. Step-by-step worked answers in 5 Nigerian languages.

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Audit & Assurance topics (2)

Audit Planning
1 questions
Internal Controls
0 questions

Sample Audit & Assurance past questions

1. An auditor primarily provides:

  • A. Tax advice
  • B. Independent opinion on financial statements
  • C. Accounting services
  • D. Marketing advice

Answer: B

AI Explanation

**The reasoning** An auditor's **primary role** is to act as an independent watchdog. Think of them as a referee in a football match — they don't play for either team, they just ensure the game is fair. When a company prepares financial statements (balance sheets, income statements, etc.), stakeholders (investors, banks, JAMB candidates studying Commerce 😊) need to trust those numbers. The auditor examines these statements and gives an **independent opinion** on whether they show a "true and fair view" of the company's financial position. This is called an *audit report*. The key principle here: **Independence**. The auditor must be objective, not involved in running the business. **Why the wrong options tempt you** - **A (Tax advice)** — Some auditors offer this as an *additional service*, but it's not their primary function. - **C (Accounting services)** — Accountants *prepare* the books; auditors *review* them. Different jobs! - **D (Marketing advice)** — Completely unrelated to auditing. **Quick takeaway** An auditor doesn't do the cooking (accounting) or serve the food (marketing) — they **taste-test to confirm the meal is safe** (independent verification of financial statements).

2. An auditor who owns shares in the client lacks:

  • A. Skill
  • B. Independence
  • C. Time
  • D. Software

Answer: B

3. The audit opinion that signals serious problems is:

  • A. Unqualified
  • B. Adverse
  • C. Clean
  • D. Standard

Answer: B

4. Audit evidence should be sufficient and:

  • A. Cheap
  • B. Appropriate
  • C. Old
  • D. Secret

Answer: B

5. Internal control weaknesses increase audit:

  • A. Speed
  • B. Risk
  • C. Profit
  • D. Salary

Answer: B

6. An unqualified audit opinion means the accounts are:

  • A. Wrong
  • B. True and fair
  • C. Incomplete
  • D. Fraudulent

Answer: B

7. External audit's primary objective is to:

  • A. detect all fraud
  • B. express an opinion on whether financial statements give a true and fair view
  • C. prepare accounts
  • D. set internal controls

Answer: B

AI Explanation

ISA 200 — reasonable assurance and an opinion on free from material misstatement.

8. An unqualified audit opinion means:

  • A. accounts are wrong
  • B. FS give true and fair view in all material respects
  • C. audit not completed
  • D. auditor disagrees

Answer: B

AI Explanation

Unqualified (clean) opinion is the best outcome.

9. Materiality is judged by:

  • A. auditor fees
  • B. amounts/issues that could affect users' economic decisions
  • C. company size only
  • D. auditor preference

Answer: B

AI Explanation

Materiality has quantitative (size) and qualitative (nature) dimensions affecting user decisions.

10. Audit risk model:

  • A. AR = IR + CR + DR
  • B. AR = IR × CR × DR
  • C. AR = IR/DR
  • D. AR = IR × CR

Answer: B

AI Explanation

Audit risk = inherent × control × detection risk. Auditor manages DR via amount/timing of work.

11. Test of controls assesses:

  • A. account balances
  • B. operating effectiveness of internal controls
  • C. going concern only
  • D. fraud only

Answer: B

AI Explanation

Tests of controls support reliance on the entity's controls when they operate effectively.

12. External confirmation is an example of:

  • A. test of controls only
  • B. substantive procedure
  • C. inquiry only
  • D. analytical procedure

Answer: B

AI Explanation

Confirmations (e.g. of receivables) are substantive procedures providing direct external evidence.

13. An 'engagement letter' is signed:

  • A. after the audit
  • B. before commencement to formalise terms
  • C. by clients only
  • D. at the AGM

Answer: B

AI Explanation

ISA 210: engagement letter establishes scope, responsibilities, fees and timing BEFORE fieldwork.

14. Independence threats include:

  • A. nothing
  • B. self-interest, familiarity, advocacy, intimidation, self-review
  • C. auditing
  • D. professional ethics

Answer: B

AI Explanation

IESBA identifies these five threats — addressed by safeguards (rotation, recusal, partner review).

15. Going concern under ISA 570 requires:

  • A. ignoring concerns
  • B. evaluating management's assessment for at least 12 months
  • C. lifelong analysis
  • D. no review

Answer: B

AI Explanation

Auditor evaluates management's assessment of going concern over at least 12 months from the balance-sheet date.

16. ISA 700 covers:

  • A. forming the opinion and reporting
  • B. engagement letters
  • C. fraud
  • D. going concern

Answer: A

AI Explanation

ISA 700 — Forming an opinion and reporting on financial statements.

17. A 'qualified' opinion is issued when:

  • A. all material respects fair
  • B. misstatements are material but not pervasive
  • C. FS are completely unreliable
  • D. no evidence available

Answer: B

AI Explanation

ISA 705: qualified opinion ('except for...') for material but not pervasive issues.

18. An 'adverse' opinion is issued when:

  • A. all fair
  • B. misstatements are both material AND pervasive
  • C. no material issues
  • D. fees unpaid

Answer: B

AI Explanation

Adverse opinion: FS as a whole are misleading. Material AND pervasive misstatement.

19. A 'disclaimer of opinion' is issued when:

  • A. FS are perfect
  • B. auditor cannot obtain sufficient evidence and the possible effects are pervasive
  • C. auditor has all evidence
  • D. company is profitable

Answer: B

AI Explanation

Disclaimer: insufficient evidence AND possible effects pervasive — auditor declines to express an opinion.

20. Sampling under ISA 530 applies procedures to:

  • A. 100% of items
  • B. less than 100% so all items have a chance of selection
  • C. no items
  • D. subjective choice only

Answer: B

AI Explanation

Audit sampling allows conclusions from less than 100% while every item has a chance of selection.

21. Internal control component 'Control Environment' is part of:

  • A. COSO framework
  • B. GAAP
  • C. CAMA
  • D. Tax law

Answer: A

AI Explanation

COSO 2013 framework — 5 components: Control Environment, Risk Assessment, Control Activities, Information & Communication, Monitoring.

22. A walkthrough test is performed to:

  • A. confirm receivables
  • B. trace transactions through the system to verify understanding of controls
  • C. audit inventory
  • D. test sampling

Answer: B

AI Explanation

Walkthrough verifies that the documented controls match how transactions actually flow through the system.

23. Key Audit Matters (KAMs) per ISA 701 are reported in audit reports of:

  • A. all entities
  • B. listed (public-interest) entities
  • C. private companies only
  • D. non-profits only

Answer: B

AI Explanation

ISA 701 requires KAMs in listed-entity audit reports — significant matters in the auditor's professional judgement.

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