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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional appointments

Orchard Components Ltd has asked Vantage LLP to audit its financial statements. Management says it will prepare the statements under IFRS, but refuses to acknowledge responsibility for providing the auditor with unrestricted access to all records and personnel needed. Which statement best reflects ISA 210?

The auditor should not accept the engagement as an audit. Management's acknowledgement of its responsibility to provide unrestricted access to records, information and personnel is a precondition under ISA 210. Without it, the auditor should decline rather than accept and later disclaim an opinion.

  1. AThe auditor may accept the engagement because the access issue can be solved by relying on analytical procedures
  2. BThe auditor should accept, and disclose the limitation in the engagement letter only
  3. CThe auditor should not accept the engagement as an audit, because management's acknowledgement of its responsibilities is a precondition for an auditCorrect
  4. DThe auditor should accept and issue a disclaimer of opinion at the end of the audit

Explanation

ISA 210 requires preconditions for an audit, including management's agreement that it acknowledges and understands its responsibility for providing the auditor with access to all relevant information, additional information requested and unrestricted access to persons within the entity. If management does not agree, the auditor should not accept the engagement as an audit. Accepting and later disclaiming an opinion is not the standard's approach.

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