ACCA Strategic Professional · Advanced Audit and Assurance (International) · International regulatory frameworks for audit and assurance services
Harbor & Quill, a firm of auditors, is reviewing an ISA to understand how it is organised. The engagement partner notes that each ISA following the clarity structure contains separate sections, including an objective of the auditor, requirements, and application and other explanatory material. Which statement about how the auditor must treat these sections is correct?
The auditor must comply with the requirements of each relevant ISA and must understand the application and other explanatory material, because it explains how the requirements are meant to be applied. The application material is not itself a set of extra mandatory requirements.
- AThe auditor must comply with the requirements, and must understand the application material to apply the requirements properlyCorrect
- BThe auditor need only comply with the objective, as the requirements are guidance
- CThe application material contains additional mandatory requirements that override the main requirements
- DThe auditor may ignore the requirements if the objective is met by another approach in every case
Explanation
Under the clarity structure, the requirements are mandatory ('shall') and the application material explains how to apply them. The auditor must understand the entire text of an ISA. Application material does not create extra requirements, so the second and third options are wrong.
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