ICAP CAF-8 Finalization and reporting: practice questions with answers

Answer: D. ISA 560, facts that become known after the financial statements have been issued:

1. The auditor has no obligation to perform procedures after issue, but if a fact becomes known that, had it been known at the report date, might have caused the report to be amended, the auditor discusses it with management (and TCWG), decides whether amendment is needed and asks how management intends to address it (para 14).
2. If management amends the statements, the auditor performs procedures on the amendment, reviews the steps taken by management to inform anyone who received the original statements and report, and issues a new auditor's report on the amended statements (para 15).
3. The new report includes an Emphasis of Matter or Other Matter paragraph referring to the note that explains the reason for the amendment and to the earlier report (para 16).
4. If management does not take the necessary steps, the auditor notifies management and TCWG and takes action to seek to prevent future reliance on the report (para 17).

Answer: A. ISA 580 para 14: the date of the written representations shall be as near as practicable to, but not after, the date of the auditor's report on the financial statements, and they cover all financial statements and periods referred to in the report.

Because written representations are necessary audit evidence, the auditor's opinion cannot be expressed, and the report cannot be dated, before the date of the representations. Dating them close to the report date ensures they cover events up to that date, including subsequent events considered under ISA 560.

Answer: C. ISA 570 (Revised) (extant text) para 13: in evaluating management's assessment, the auditor covers the same period as management, and if management's assessment covers less than twelve months from the date of the financial statements, the auditor requests management to extend its assessment period to at least twelve months from that date.

Date of the financial statements: 30 June 2026. Twelve months from that date: 30 June 2027. Management's assessment ends on 31 March 2027, only nine months, so the auditor asks management to extend it to at least 30 June 2027.

If management is unwilling to make or extend its assessment, the auditor considers the implications for the auditor's report (para 24).

Answer: D. ISRE 2400 (Revised) governs reviews of historical financial statements. The practitioner obtains limited assurance, mainly through inquiry and analytical procedures, and expresses the conclusion in negative form: nothing has come to the practitioner's attention that causes the practitioner to believe that the financial statements are not prepared, in all material respects, in accordance with the applicable framework (or, for a fair presentation framework, do not present fairly / give a true and fair view).

By contrast, an audit gives reasonable assurance and a positive-form opinion ("In our opinion ..."), and an agreed-upon procedures engagement reports factual findings with no conclusion.

Answer: B. Under the assurance framework, and as reflected in ISSA 5000 (the IAASB's standard for sustainability assurance, introductory level only for CAF-8):

| | Limited assurance | Reasonable assurance |
|---|---|---|
| Procedures | Less extensive; mainly inquiry and analytical procedures, with more work only where a matter suggests misstatement | Wider: risk assessment, tests of controls where relevant, and detailed substantive procedures |
| Conclusion | Negative form: "nothing has come to our attention that causes us to believe ..." | Positive form: "in our opinion, ... prepared, in all material respects, in accordance with ..." |

ISSA 5000 (General Requirements for Sustainability Assurance Engagements) applies to both levels and requires the practitioner to state which level of assurance is given. The same disclosures can be covered at either level; the difference lies in the evidence obtained and how the conclusion is expressed.

Answer: A. ICAP Code (Revised 2024), s 120.6 A3: a self-review threat is the threat that an accountant will not appropriately evaluate the results of a previous judgement made or activity performed by the accountant, or by another individual in the firm, on which the accountant will rely in forming a judgement as part of a current activity.

If Mehran Zaidi & Co. calculates the emissions figures, it would then be giving assurance on its own work, threatening objectivity (s 112). The fundamental principles apply to sustainability assurance as they do to audits; the IESBA's International Ethics Standards for Sustainability Assurance (Part 5 of the IESBA Code), used alongside ISSA 5000, likewise treat preparing sustainability information that the firm will then assure as creating a self-review threat. Under s 120.10 the firm should consider whether the threat can be reduced to an acceptable level, for example by the client calculating the figures itself with the firm's work limited to assurance; otherwise the firm should decline the additional service.