ACCA Advanced Audit and Assurance (AAA) Practice Exam

What does a regulatory compliance audit assess?

1. The financial stability of the organization

2. The adherence to relevant laws and regulations

3. The progress of strategic initiatives

4. The effectiveness of internal marketing

The correct answer is: The adherence to relevant laws and regulations

A regulatory compliance audit focuses on evaluating how well an organization adheres to applicable laws, regulations, and standards relevant to its industry and operations. This type of audit is essential as it helps ensure that the organization is operating within the legal framework and is not at risk of non-compliance, which could lead to legal penalties, reputational damage, or financial loss. By examining documents, processes, and controls, a compliance auditor can identify areas where the organization may be falling short of required standards or regulations. This assessment is crucial for maintaining the integrity of an organization’s operations and supporting its overall risk management strategy. The other options address different aspects of organizational performance. Assessing financial stability pertains to financial audits, evaluating strategic initiatives relates to performance management, and reviewing internal marketing effectiveness deals with marketing audits, none of which specifically focus on compliance with laws and regulations.