End of Day 2 Quiz

What two 'other services' do we need to disclose in the engagement letter?

• Tax compliance

• Accounts Prep

• iXBRL

• Payroll services

What does a relevant assertion relate to?

• Relates to a SCOT+ or significant risk

• Not directly linked to a risk of material misstatement

What materiality benchmark would likely be used for a trading entity with strong profit margins?

• Revenue

• PBT

• Total assets

Multiple misstatements were identified in the prior year audit. What threshold would this impact?

• Materiality

• Performance materiality

What TWO elements of the Financial Reporting Process must we understanding as part of our business process notes?

• Going concern

• Journals

• Consolidation process

In which THREE of the below scenarios are we required to document our understanding of controls?

• When we intend to test the operating effectiveness of controls

• For all significant risks

• Going concern

• Journal entries

Risk factors can be categorised into three categories. What are these?

• Fraud

• Going concern

• Management override of controls

• Error

Payroll is material, however we have agreed that this is little risk of material misstatement due to the simplicity of the employee structure. How would we scope this?

• Significant risk

• SCOT+

• Material only

• Other

Answer explanation

There is little risk of material misstatement therefore it is NOT a SCOT+.

It is NOT a financial statement line item, therefore is NOT material only

Therefore, it would be scoped as other.