ACCA AA — Audit and Assurance Practice Exam 5

SECTION A - CASE 1: NEUROCLOUD ANALYTICS CO

NeuroCloud Analytics Co is a fast-growing tech startup providing AI-driven data analytics to the healthcare sector. You are an audit manager at Turing & Co, planning the audit for the year ended 31 December 20X5. NeuroCloud is not a public interest entity (PIE).

During the planning phase, you note the following:

1. The projected audit fee from NeuroCloud represents 18% of Turing & Co's total fee income for the year.
2. NeuroCloud has requested Turing & Co to design and implement a new IT system for their financial reporting.
3. NeuroCloud's CEO also acts as the Chairman of the Board.
4. An audit junior overheard confidential discussions about a revolutionary unreleased AI model and subsequently purchased shares in NeuroCloud.

Question:
Regarding the projected audit fee representing 18% of Turing & Co's total fee income, which of the following is the most appropriate action in accordance with the ACCA Code of Ethics and Conduct?

SECTION A - CASE 1: NEUROCLOUD ANALYTICS CO

NeuroCloud Analytics Co is a fast-growing tech startup providing AI-driven data analytics to the healthcare sector. You are an audit manager at Turing & Co, planning the audit for the year ended 31 December 20X5. NeuroCloud is not a public interest entity (PIE).

During the planning phase, you note the following:

1. The projected audit fee from NeuroCloud represents 18% of Turing & Co's total fee income for the year.
2. NeuroCloud has requested Turing & Co to design and implement a new IT system for their financial reporting.
3. NeuroCloud's CEO also acts as the Chairman of the Board.
4. An audit junior overheard confidential discussions about a revolutionary unreleased AI model and subsequently purchased shares in NeuroCloud.

Question:
NeuroCloud has requested Turing & Co to design and implement a new IT system for their financial reporting. What is the primary ethical threat this creates, and can Turing & Co accept this non-audit engagement?

SECTION A - CASE 1: NEUROCLOUD ANALYTICS CO

NeuroCloud Analytics Co is a fast-growing tech startup providing AI-driven data analytics to the healthcare sector. You are an audit manager at Turing & Co, planning the audit for the year ended 31 December 20X5. NeuroCloud is not a public interest entity (PIE).

During the planning phase, you note the following:

1. The projected audit fee from NeuroCloud represents 18% of Turing & Co's total fee income for the year.
2. NeuroCloud has requested Turing & Co to design and implement a new IT system for their financial reporting.
3. NeuroCloud's CEO also acts as the Chairman of the Board.
4. An audit junior overheard confidential discussions about a revolutionary unreleased AI model and subsequently purchased shares in NeuroCloud.

Question:
NeuroCloud's CEO also acting as the Chairman of the Board represents a deficiency in corporate governance. Which of the following best describes the audit risk associated with this deficiency?

SECTION A - CASE 1: NEUROCLOUD ANALYTICS CO

NeuroCloud Analytics Co is a fast-growing tech startup providing AI-driven data analytics to the healthcare sector. You are an audit manager at Turing & Co, planning the audit for the year ended 31 December 20X5. NeuroCloud is not a public interest entity (PIE).

During the planning phase, you note the following:

1. The projected audit fee from NeuroCloud represents 18% of Turing & Co's total fee income for the year.
2. NeuroCloud has requested Turing & Co to design and implement a new IT system for their financial reporting.
3. NeuroCloud's CEO also acts as the Chairman of the Board.
4. An audit junior overheard confidential discussions about a revolutionary unreleased AI model and subsequently purchased shares in NeuroCloud.

Question:
The audit junior's action of purchasing shares based on unreleased information breaches which fundamental ethical principles?

SECTION A - CASE 1: NEUROCLOUD ANALYTICS CO

NeuroCloud Analytics Co is a fast-growing tech startup providing AI-driven data analytics to the healthcare sector. You are an audit manager at Turing & Co, planning the audit for the year ended 31 December 20X5. NeuroCloud is not a public interest entity (PIE).

During the planning phase, you note the following:

1. The projected audit fee from NeuroCloud represents 18% of Turing & Co's total fee income for the year.
2. NeuroCloud has requested Turing & Co to design and implement a new IT system for their financial reporting.
3. NeuroCloud's CEO also acts as the Chairman of the Board.
4. An audit junior overheard confidential discussions about a revolutionary unreleased AI model and subsequently purchased shares in NeuroCloud.

Question:
Before accepting the audit engagement for NeuroCloud, Turing & Co must establish whether the preconditions for an audit are present. Which TWO of the following are preconditions for an audit according to ISA 210 Agreeing the Terms of Audit Engagements?