Audit and Assurance
What the exam tests
ISA-based audit work: risk assessment, materiality, evidence, subsequent events, going concern and reporting, within Kazakhstan's audit law and audit chamber oversight. Questions test application to practical scenarios rather than memorised definitions.
Core rules
- Audit risk = inherent risk × control risk × detection risk.
- Materiality is a matter of professional judgment; common benchmarks are 5% of profit before tax, 1% of revenue or 2% of total assets. It is not a fixed formula.
- Evidence must be sufficient and appropriate. External evidence is generally stronger; procedures include inspection, observation, inquiry, confirmation, recalculation and analytical procedures.
- Subsequent events: adjusting events provide evidence of conditions at the reporting date; non-adjusting events are disclosed if material.
- Going concern: evaluate management's assessment covering at least 12 months.
Worked example
Profit before tax is KZT 80m and revenue is KZT 900m. The auditor sets overall materiality at 5% of PBT = KZT 4m and performance materiality at 75% = KZT 3m. An uncorrected misstatement of KZT 2.5m is accumulated; it is below overall materiality but must be evaluated with other misstatements and qualitative factors. A misstatement of KZT 4.5m exceeds overall materiality and requires correction or a modified opinion if uncorrected.
Traps
Treating materiality as a fixed percentage; relying only on management representations; failing to adjust for subsequent events; issuing an unmodified opinion despite a scope limitation; ignoring related-party disclosures.