Auditing and Assurance
What the exam tests
Auditing and Assurance tests risk-based audit planning, evidence, internal control, materiality, audit reporting and ethical independence under the Myanmar Standards on Auditing (MSA), which are based on ISA. Expect scenario questions on going concern, subsequent events and modifications.
Core rules
- Audit risk = inherent risk × control risk × detection risk.
- Obtain sufficient appropriate evidence; external evidence is generally stronger than internal evidence.
- Tests of controls support reliance on controls; substantive procedures address material misstatement.
- The auditor expresses reasonable, not absolute, assurance.
- Modify the opinion when misstatements are material or evidence is insufficient.
Worked example
Profit before tax is 800 million. Using a 5% benchmark, overall materiality is 40 million. Performance materiality at 75% is 30 million. The clearly trivial threshold at 5% of overall materiality is 2 million. The auditor plans substantive work to detect misstatements above 30 million in aggregate, investigates misstatements above 2 million, and evaluates uncorrected misstatements against 40 million at completion.
Traps that cost marks
Testing controls when there is no intention to rely on them; treating materiality as a fixed rule rather than a judgement; missing subsequent events between year-end and report date; concluding going concern is fine because the client says so; and issuing an unmodified opinion when a material uncertainty is inadequately disclosed.