ACCA Advanced Audit and Assurance (AAA) Practice Exam

What characteristic defines Internal Control Evaluation Questionnaires (ICEQs)?

1. They focus exclusively on all potential controls.

2. They concentrate on significant errors or omissions.

3. They are mainly used for financial comparisons.

4. They document the subjective views of stakeholders.

The correct answer is: They concentrate on significant errors or omissions.

Internal Control Evaluation Questionnaires (ICEQs) are specifically designed to assess the effectiveness of internal controls within an organization. The primary focus of these questionnaires is on identifying significant errors or omissions that could impact the reliability of financial reporting and the safeguarding of assets. By concentrating on these critical areas, ICEQs help auditors and management to evaluate and enhance the risk management framework of the organization. This approach ensures that the most significant risk areas are prioritized, enabling a more effective assessment of internal controls. The other options do not accurately represent the primary function of ICEQs. While they might touch on other aspects of control, such as documenting stakeholder opinions or reviewing all potential controls, their main objective is to identify and concentrate on those errors or omissions that pose the greatest risk to the organization's objectives.