ACCA Advanced Audit and Assurance (AAA) Practice Exam

What is a hot review in audit terminology?

1. A post-issuance audit file review

2. A pre-issuance audit file review

3. A review focusing on compliance

4. A comprehensive analysis of client history

The correct answer is: A pre-issuance audit file review

In audit terminology, a hot review refers specifically to a pre-issuance audit file review. This type of review occurs before the finalization and issuance of audit reports. The purpose of a hot review is to ensure that the audit has been conducted in accordance with applicable auditing standards and that there are no significant issues that could affect the report's conclusions. During a hot review, reviewers may assess the sufficiency and appropriateness of audit evidence, the work performed by the audit team, and any significant judgments made throughout the audit process. This proactive approach helps to identify any potential problems before the completion of the audit, allowing the audit firm to address them promptly. While post-issuance reviews, reviews focusing on compliance, and comprehensive analyses of client history may all serve various purposes within the audit process, they do not align with the definition of a hot review, which is specifically concerned with the process prior to issuing the audit report.