ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which of the following is an advantage of conducting a non-statutory audit?

1. It is mandated by law

2. It can help in settling disputes among partners

3. It significantly decreases auditing costs

4. It is a requirement for public companies

The correct answer is: It can help in settling disputes among partners

Conducting a non-statutory audit offers several advantages, one of which is its ability to help in settling disputes among partners. In a partnership or similar business structure, differences may arise regarding financial performance, profit distribution, or general operations. A non-statutory audit provides an independent evaluation of the financial statements and operations, which can serve to clarify issues, verify figures, and foster transparency among partners. This can lead to better trust and understanding, ultimately assisting in resolving disagreements amicably. While the other options reflect important considerations in the context of statutory audits or requirements for public companies, they do not highlight the intrinsic benefits of a non-statutory audit. For instance, a non-statutory audit is not mandated by law, nor is it a requirement for public companies; rather, it is typically undertaken voluntarily for internal purposes. Additionally, while it may potentially reduce costs compared to statutory audits, cost reduction is not guaranteed and depends on various factors, including the complexity of the business and the scope of the audit.