Advanced Audit and Assurance
Advanced Audit and Assurance tests the application of ISAs and Nigerian regulatory requirements to complex engagements: group audits, estimates, going concern, modified opinions, quality management and professional scepticism. Answers must link risk to evidence and to the report's wording.
Core rules
- ISA 700/701: the auditor's report contains opinion, basis, going concern and KAM sections; KAMs are reported for listed entities and are not a substitute for a modified opinion.
- ISA 705: modify for material misstatement or inability to obtain evidence; material but not pervasive = qualified; pervasive = adverse (misstatement) or disclaimer (scope).
- ISA 570: evaluate going concern; if a material uncertainty exists but disclosure is adequate, include a separate Material Uncertainty section, not a modification.
- ISA 540 (Revised): risk assessment for accounting estimates, including complexity, subjectivity and data.
- ISA 600: group audits require component materiality, scoping, instructions, evaluation of component auditor work and access.
- ISQM 1 and ISA 220: firm-level quality management, engagement quality reviews and direction/supervision/review.
- ISA 560 subsequent events, ISA 580 written representations, ISA 620 expert reliance.
Worked example: A group auditor cannot obtain access to a component auditor's working papers covering 35% of group assets. Alternative procedures provide some evidence but not enough. The limitation is material and pervasive because it affects a significant portion of the group financial statements. The opinion is a disclaimer, not a qualified opinion, and a KAM cannot cure it.
Traps: calling a material uncertainty a qualified opinion; issuing an adverse opinion for a scope limitation; accepting management representations as sufficient evidence; ignoring component auditor independence; treating a KAM as a substitute for modification.