ISA 701 Communicating key audit matters MCQs

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The purpose of communicating key audit matters is to enhance the communicative value of the auditor’s report by providing greater transparency about the
ISA 701, Communicating key audit matters in the independent auditor’s report MCQs

ISA 701, Communicating key audit matters in the independent auditor’s report

The purpose of communicating key audit matters is to enhance the communicative value of the auditor’s report by providing greater transparency about the audit that was performed. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on ISA 701 revised IFAC that fully cover the ISA 701 summary and definition, ISA 701 MCQs with answers, these MCQs are a basis of conclusions. These MCQ on SA 701 are helpful for Competitive exams, Professional Accountancy exams and Business management exams.

  1. The purpose of communicating key audit matters is to enhance the communicative value of the auditor’s report by providing greater transparency about the audit that was performed.
    1. True
    2. False
  1. Key Audit Matters –
    1. Those matters that, in the auditor’s professional judgment, were of most significance in the audit of the financial statements of the current period.
    2. Key audit matters are selected from matters communicated with those charged with governance.
    3. Both A&B
    4. None
  1. Auditor shall communicate key audit matters in the auditor’s report for audits of:
    1. Listed entities
    2. Entities other than listed entities, if required by law or regulation of any area
    3. Other entities decided by the auditor using his professional judgment, including those that may be of significant public interest.
    4. All of the above
  1. Considerations that may be relevant to determining the relative significance of a matter communicated with those charged with governance and whether such a matter is a key audit matter include:
    1. The complexity or subjectivity involved in management’s selection of an appropriate policy compared to other entities within its industry.
    2. The nature and materiality (quantitatively or qualitatively) of the misstatements due to fraud or error related to the matter, if any.
    3. The severity of any control deficiencies identified relevant to the matter.
    4. All of the above
  1. The description of each key audit matter in the Key Audit Matters section of the auditor’s report shall:
    1. Include a reference to the related disclosure(s), if any, in the financial statements
    2. State that why the matter was considered to be one of most significance in the audit
    3. Specify how the matter was addressed in the audit
    4. All of the above
  1. Communicating key audit matters in the auditor’s report is not:
    1. A substitute for disclosures in the financial statements that the applicable financial reporting framework requires management to make, or that are otherwise necessary to achieve fair presentation
    2. A substitute for the auditor expressing a modified opinion when required by the circumstances of a specific audit engagement in accordance with ISA 705 (Revised)
    3. Both A&B
    4. None
  1. The auditor shall determine, from the matters communicated with those charged with governance, those matters that required significant auditor attention in performing the audit. In making this determination, the auditor shall take into account:
    1. Areas of higher assessed risk of material misstatement, or significant risks identified in accordance with ISA 315 (Revised).
    2. Significant auditor judgments relating to areas in the financial statements that involved significant management judgment.
    3. The effect on the audit of significant events or transactions that occurred during the period.
    4. All of the above

  1. The description of each key audit matter in the Key Audit Matters section of the auditor’s report shall include a reference to the related disclosure(s), if any, in the financial statements and shall address:
    1. Why the matter was considered to be one of most significance in the audit and therefore determined to be a key audit matter
    2. How the matter was addressed in the audit.
    3. Both A&B
    4. None
  1. The auditor shall describe each key audit matter in the auditor’s report unless:
    1. Law or regulation precludes public disclosure about the matter.
    2. In extremely rare circumstances, the auditor determines that the matter should not be communicated in the auditor’s report.
    3. Both A&B
    4. None

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