ACCA Advanced Audit and Assurance (AAA) Practice Exam

What is a peer review in the context of auditing?

1. A comparison of client accounts

2. A review by another partner in the firm

3. An evaluation of external audit firms

4. Assessment of the audit team's performance

The correct answer is: A review by another partner in the firm

A peer review in the context of auditing refers specifically to a review conducted by another partner within the same firm. This process involves evaluating the work completed by peers to ensure adherence to required auditing standards and regulations. The primary purpose of such a review is to maintain quality control within the firm, providing an additional layer of oversight on audit assignments to confirm that all procedures have been properly followed and that the judgments made in the auditing process are valid. This internal review mechanism helps foster a culture of accountability and continuous improvement among auditors, as it encourages discussion and feedback regarding the audit process, findings, and methodologies employed. It also serves to identify any areas where further training may be needed, ensuring that all auditors maintain a high level of professional competence. Through peer reviews, firms can also enhance their reputation and credibility, as a robust internal review process signifies a commitment to high-quality auditing practices. Such evaluations are a fundamental aspect of the overall quality management systems typically found in auditing firms. The other options do not accurately capture the essence of a peer review. For instance, a comparison of client accounts does not involve the evaluative process of reviewing audit work. Evaluations of external audit firms pertain to different assessments and do not represent internal peer reviews. Finally, while assessing the