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A client measures financial assets at amortised cost and expected credit losses under IFRS 9. Which feature of the IFRS 9 expected credit loss (ECL) model creates the greatest audit challenge?
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2026 Statistics
Key Facts: ACCA AAA Exam
3h 15m
Exam Duration
ACCA AAA Essentials
50 marks
Section A Case Study
ACCA AAA Exam Format
2 x 25
Section B Questions
ACCA AAA Exam Format
20 marks
Professional Skills
ACCA AAA Exam Format
50%
Pass Mark
ACCA
INT/UK
Exam Variants
ACCA Syllabus
ACCA AAA is a 3 hour 15 minute computer-based, constructed-response exam. Section A is one compulsory 50-mark case study set at the planning/risk stage of an audit; Section B is two compulsory 25-mark questions covering completion, reporting and current issues. 20 of the 100 marks are professional skills marks (analysis and evaluation, professional scepticism and judgement, commercial acumen, communication). The pass mark is 50%. The syllabus spans areas A-F, including ISQM 1, ISQM 2, ISA 220 (Revised), ISA 600 (Revised) group audits, ISA 570 going concern, ISA 701 key audit matters, and current developments such as ISSA 5000 sustainability assurance. These 100 practice questions are MCQ knowledge-prep for that ISA/ISQM content.
Sample ACCA AAA Practice Questions
Try these sample questions to test your ACCA AAA exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1An audit firm has been approached by a company to provide both the statutory audit and the bookkeeping/financial statement preparation service for the same listed entity. Under the IESBA Code of Ethics, which threat is most directly created and why is this prohibited for a public interest entity (PIE)?
A.Self-review threat, because the firm would later audit financial statements it had prepared
B.Intimidation threat, because management could pressure the audit team
C.Familiarity threat, because long association builds trust
D.Advocacy threat, because the firm promotes the client's position
Explanation: Preparing accounting records and then auditing them creates a self-review threat: the firm would evaluate its own prior work. For PIEs the IESBA Code prohibits providing accounting and bookkeeping services because no safeguards can reduce the threat to an acceptable level.
2During the audit of a manufacturing client, the engagement team identifies a transaction that appears designed to disguise the source of funds from an unrelated illegal activity. Under anti-money laundering (AML) requirements in many jurisdictions, what is the audit firm's appropriate primary response?
A.Resign from the engagement immediately and notify the client of the reason
B.Make a suspicious activity report (SAR) to the relevant authority and avoid tipping off the client
C.Disclose the suspicion to the client's audit committee and take no further action
D.Adjust the audit opinion to a qualified opinion for the suspected amount
Explanation: AML legislation requires a money laundering reporting officer to submit a suspicious activity report to the national financial intelligence unit and to avoid 'tipping off' the client, which is itself an offence. Reporting takes precedence over normal client confidentiality.
3Under ISA 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements, the auditor distinguishes two categories of laws and regulations. Which statement correctly describes the auditor's responsibility for laws that have a direct effect on the determination of material amounts and disclosures?
A.The auditor only needs to remain alert to possible non-compliance
B.The auditor has no responsibility because compliance is solely management's duty
C.The auditor must obtain sufficient appropriate audit evidence regarding compliance
D.The auditor must report all such laws to the regulator regardless of materiality
Explanation: ISA 250 requires the auditor to obtain sufficient appropriate evidence regarding compliance with laws and regulations generally recognised to have a direct effect on material amounts and disclosures, such as tax and pension legislation. For other laws the auditor performs limited procedures to identify non-compliance.
4A former audit partner left the firm and was appointed as the chief financial officer (CFO) of an audited listed client two months after the engagement concluded. Which ethical threat is created and what does the IESBA Code typically require for a key audit partner of a PIE in this situation?
A.No threat arises because employment after leaving the firm is unrelated to the audit
B.Advocacy threat; immediate resignation of the whole engagement team
C.Intimidation threat; rotation of the entire firm
D.Self-interest threat; a cooling-off period before the individual may take a key management position with the client
Explanation: A key audit partner moving to a key management or director role at the audited PIE creates self-interest, familiarity and intimidation threats. The IESBA Code requires a cooling-off period (for a key audit partner of a PIE, generally not until a defined period has elapsed) before such an appointment can be taken.
5An audit firm is concerned about potential professional liability following a negligence claim by a third-party lender who relied on audited financial statements. Which principle, established in case law such as Caparo Industries v Dickman, most limits the auditor's exposure to third parties?
A.A duty of care requires proximity and that reliance was reasonably foreseeable for a known purpose
B.Auditors owe a duty of care to anyone who foreseeably might read the accounts
C.Auditors are strictly liable for any loss arising from a material misstatement
D.Liability can never be limited by any agreement or disclaimer
Explanation: Caparo established that auditors generally owe a duty of care to the company and shareholders as a body, not to individual investors or third parties, unless there is sufficient proximity and the auditor knew the statements would be used for a specific purpose by a specific party. This restricts the class of claimants.
6Total fees from a single audited public interest entity, including non-assurance services, represent 17% of the firm's total fees and have done so for two consecutive years. Under the IESBA Code, what does this fee dependency most strongly indicate and what response is appropriate?
A.No action is needed because the percentage is below 20%
B.A self-interest threat that may require disclosure to those charged with governance and a review by an external professional accountant
C.An advocacy threat requiring immediate resignation
D.A familiarity threat resolved by rotating the audit junior staff
Explanation: Where total fees from a PIE exceed 15% of the firm's total fees for two consecutive years, the IESBA Code requires the firm to disclose this to those charged with governance and to arrange a pre- or post-issuance review (engagement quality review) by an objective party, addressing the self-interest threat.
7ISQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, requires a firm to design and implement a system of quality management using a risk-based approach. Which of the following is one of the eight components of the firm's system of quality management under ISQM 1?
A.The component auditor's instructions
B.The auditor's report on the financial statements
C.The firm's risk assessment process
D.The management representation letter
Explanation: ISQM 1 specifies eight components: the firm's risk assessment process; governance and leadership; relevant ethical requirements; acceptance and continuance; engagement performance; resources; information and communication; and the monitoring and remediation process. The firm's risk assessment process is central to the risk-based approach.
8Under ISQM 2, Engagement Quality Reviews, when must an engagement quality review (EQR) be completed in relation to the dating of the auditor's report?
A.Within 60 days after the auditor's report is dated
B.The EQR may be completed at any time during the following financial year
C.An EQR is only required for engagements that received a modified opinion
D.The engagement partner must not date the auditor's report until the EQR is complete
Explanation: ISQM 2 requires that the engagement partner shall not date the auditor's report until notified by the engagement quality reviewer that the EQR is complete. This ensures the reviewer's significant judgements and conclusions are considered before the report is issued.
9ISA 220 (Revised), Quality Management for an Audit of Financial Statements, places overall responsibility for managing and achieving quality on which party?
A.The engagement partner
B.The engagement quality reviewer
C.The firm's monitoring function
D.Those charged with governance of the audited entity
Explanation: ISA 220 (Revised) makes the engagement partner responsible for managing and achieving quality on the engagement and for being sufficiently and appropriately involved throughout. The partner relies on the firm's system of quality management under ISQM 1 but retains engagement-level accountability.
10Before accepting a new audit engagement, the firm performs client and engagement acceptance procedures. Which of the following is the most important consideration specifically relating to the firm's ability to comply with relevant ethical and quality requirements?
A.Whether the proposed audit fee exceeds the prior auditor's fee
B.Whether the firm has the competence, capabilities, time and resources to perform the engagement
C.Whether the client uses the same accounting software as other clients
D.Whether the client is willing to pay in advance
Explanation: ISQM 1 and ISA 220 require the firm to consider its competence, capabilities (including industry expertise), and the availability of time and resources before accepting an engagement, alongside client integrity and the ability to comply with ethical requirements. Accepting work the firm cannot resource threatens quality.
About the ACCA AAA Practice Questions
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