ExpertACCA · Question 14 · Audit Evidence
SECTION A - CASE 3: AQUAPURE UTILITIES
AquaPure Utilities is a highly regulated public utility company managing water and waste services. You are auditing the financial statements for the year ended 31 March 20X6.
During the audit, you note the following:
- AquaPure has a large internal audit (IA) department that recently completed a review of the procurement controls.
- The billing system is highly automated, generating millions of micro-invoices based on smart meter readings.
- The company owns a vast network of underground water pipes, which are difficult to physically verify.
- You plan to use substantive analytical procedures to audit water revenue.
Question:
Regarding the existence of the underground water pipes, which of the following provides the most reliable audit evidence?
SECTION A - CASE 3: AQUAPURE UTILITIES
AquaPure Utilities is a highly regulated public utility company managing water and waste services. You are auditing the financial statements for the year ended 31 March 20X6.
During the audit, you note the following:
- AquaPure has a large internal audit (IA) department that recently completed a review of the procurement controls.
- The billing system is highly automated, generating millions of micro-invoices based on smart meter readings.
- The company owns a vast network of underground water pipes, which are difficult to physically verify.
- You plan to use substantive analytical procedures to audit water revenue.
Question:
Regarding the existence of the underground water pipes, which of the following provides the most reliable audit evidence?
Answer options:
A written representation from the Chief Engineer confirming the pipes exist.
Invoices from the construction companies that originally laid the pipes 15 years ago.
Video footage from maintenance cameras operated by an independent third-party surveyor.
The fixed asset register showing the capitalized value of the pipes.
How to approach this question
Full Answer
Common mistakes
Practice the full ACCA AA — Audit and Assurance Practice Exam 5
18 questions · hints · full answers · grading