ACCA Audit and Assurance (F8) Practice Exam

Which of the following is an example of an Implicit Assumption in auditing?

1. Directors' Emoluments disclosed

2. All necessary information received

3. Directors' Reports audited

4. Financial statements certified

The correct answer is: All necessary information received

An implicit assumption in auditing refers to a belief or understanding that is taken for granted by the auditor, even if it is not explicitly stated. The selected answer, which concerns the assumption that all necessary information has been received, exemplifies this concept. In the context of an audit, auditors often operate under the implicit assumption that the management of the entity has provided all relevant information needed to conduct a thorough examination of the financial statements. This means that auditors presume they have received complete and accurate documentation necessary for forming their opinion, thus facilitating the audit process. If this assumption is incorrect, it could significantly impact the reliability of the audit conclusions drawn. The other options listed do not represent implicit assumptions. For instance, the disclosure of directors' emoluments, conducting audits of directors' reports, and certifying financial statements are all explicit actions or requirements during the audit process. These activities are tangible and documented, leading to specific audit procedures and do not embody the underlying assumptions inherent in the auditing process as does the receipt of all necessary information.