1. Karnaphuli Garments Ltd's directors approved its accounts on 17 March 2026. Fieldwork ended on 10 March 2026, the opinion was signed and dated 19 March 2026, and shareholders received it on 2 April 2026. Under the ISA 230 guidance, by when should the engagement file ordinarily be fully assembled?

A) 1 June 2026, which is 60 days after the report reached shareholders, because the report takes effect on issue
B) 16 May 2026, which is 60 days after board approval of the statements, because approval fixes the evidence cut-off
C) 9 May 2026, which is 60 days after fieldwork was completed, because assembly follows completion of the procedures
D) 18 May 2026, which is 60 days after the date of the auditor's report, the event that starts the assembly period

Correct: D difficult ISA 230

ISA 230 requires the auditor to assemble the final audit file on a timely basis after the date of the auditor's report, and its guidance treats a limit of not more than 60 days from that date as ordinarily appropriate. 19 March plus 60 days is 18 May 2026. The other dates start the clock from fieldwork completion, board approval or delivery of the report, none of which is the trigger. The report date is the point at which the evidence gathering is formally closed, so the administrative assembly period is measured from it.

2. Padma Textiles Ltd is a subsidiary of Surma Holdings Ltd. Its separate component auditor signed the statutory audit report on 10 April 2026 (year-end 31 December 2025) and completed file assembly on 29 May 2026. The group auditor, relying on this work, signed the group audit report on 30 June 2026. Neither law nor firm policy sets a longer period. Under ISA 230 guidance, until when should the component auditor ordinarily retain the file?

A) 31 December 2030, because retention runs five years from the end of the financial year, which is when the engagement period ended
B) 10 April 2031, because retention runs five years from the component auditor's own report, as the group report is another firm's
C) 29 May 2031, because retention runs five years from completion of file assembly, which is when the file becomes final
D) 30 June 2031, because retention runs at least five years from the later group auditor's report, not the entity's own report

Correct: D difficult ISA 230

ISA 230 guidance says the retention period for audit engagements is ordinarily no shorter than five years from the date of the auditor's report or, if later, the date of the group auditor's report. The group report of 30 June 2026 is later than the component report of 10 April 2026, so the period ends no earlier than 30 June 2031. The year-end and file-assembly dates are not triggers for the retention clock, and using the component's own report date would shorten the period below the minimum. The firm may keep files longer if policy or law requires it.

3. Hasan & Co. dated its audit report on Meghna Foods Ltd 10 April 2026 and completed assembly of the final file on 8 June 2026. On 20 June 2026 a senior finds that a signed bank confirmation reply, received and evaluated on 2 April 2026, was never filed. What should the firm do?

A) File the reply as new procedures, perform the confirmation work again and reissue the auditor's report, as the file is now closed
B) Leave the file unchanged, because additions after assembly are prohibited, and mention the reply in a note held outside the file
C) File the reply, recording the specific reasons, when and by whom the addition was made and who reviewed it, without back-dating it
D) File the reply under its original 2 April 2026 date and initials, so the file shows how the work was actually performed at the time

Correct: C difficult ISA 230

Assembly was completed on day 59, within the ordinary 60-day limit. After assembly, ISA 230 does not forbid adding documentation, but whatever its nature the auditor must record the specific reasons, when and by whom the changes were made and who reviewed them. The reply evidences work already done before the report date, so no new procedures or reissue are needed. Back-dating would misrepresent the record and leaving it out would leave the file unable to support the work performed.

4. Surma Cement Ltd's lender sues Rahman & Co. for negligence, alleging inventory was never counted. The only record is a working paper stating 'Attended count at Chattogram warehouse - no problems noted'. The audit senior now says in detail that she tested 40 items to records and reperformed the count sheets. What is the correct assessment of the firm's position?

A) Weak, because documentation prepared after the dispute began is inadmissible, so the senior's account must be disregarded
B) Weak, because an oral explanation alone cannot support the work done; it can only clarify what the file already records
C) Strong, because ISA 230 allows work to be proved by any reliable source and the report itself evidences the count was done
D) Strong, because the senior was present at the count and her detailed testimony is direct evidence of the work performed

Correct: B difficult ISA 230

One reason for keeping working papers is to let the auditor demonstrate that the audit was planned and performed in accordance with ISAs, which matters in a negligence claim. ISA 230 states that an oral explanation on its own does not adequately support the work performed or the conclusions, though it may clarify information that is documented. The file must enable an experienced auditor with no previous connection to understand the procedures, evidence and results. The unsupported entry does not do so, and testimony cannot cure that gap.

5. Meghna Foods Ltd's inventory provision is CU 12.4 million, which the team concluded was reasonable and documented. Materiality is CU 1.8 million. Before the report date a lender's independent valuer reports CU 15.0 million. After discussion with management and extra work, the team still concludes the estimate is within an acceptable range. What must the file contain?

A) No further entry, because the conclusion was reviewed and documented before the valuer's report arrived, so it stands as it is
B) Management's explanation only, because the file need not record external information that differs from the auditor's own conclusion
C) A record of how the inconsistent valuer information was addressed, with the further work done and the reasons for the conclusion
D) The CU 2.6 million difference entered as a misstatement, because it exceeds materiality of CU 1.8 million, whatever the conclusion

Correct: C difficult ISA 230

ISA 230 requires that if the auditor identifies information inconsistent with the final conclusion on a significant matter, the auditor documents how the inconsistency was addressed. The CU 2.6 million gap (15.0 less 12.4) exceeds materiality, which is why the matter is significant and the judgement must be explained, including the extra procedures and the reasoning. Recording the gap automatically as a misstatement is wrong because the auditor concluded the estimate lies within an acceptable range. Leaving the earlier entry unchanged would hide the contradictory evidence from a later reviewer.

6. Karnaphuli Garments Ltd is in its fourth year as a recurring audit client, and Rahman & Co. splits its working papers between permanent and current files. Which of the following would ordinarily be placed in the permanent file?

A) The written representations signed by management this year, because they remain valid until they are formally withdrawn
B) The audit planning memorandum for this year, because the risk assessment and strategy normally repeat without change each year
C) The summary of unadjusted misstatements for the year, because uncorrected errors carry forward and affect each later audit
D) A copy of the 10-year factory lease signed in 2023, because its terms are of continuing importance to several future audits

Correct: D difficult ISA 230

The permanent file holds information of continuing importance to the audit, such as legal documents, leases, constitutional documents and engagement letters, and previous years' signed accounts. The current file holds the matters relevant to this year's audit, including the summary of unadjusted errors, written representations and the planning memorandum. These year-specific items are tempting because some information is reused, but each is re-prepared or re-evaluated annually. With electronic files the distinction is fading, but the classification principle remains.

7. A reviewer finds that a working paper on Surma Cement Ltd's payments says: 'Selected 25 payment vouchers from the payments register and agreed each to invoice and approval; no exceptions.' It shows the preparer, date, reviewer and date, but gives no voucher numbers, no stated objective, no lead-schedule cross-reference and no tick-mark key. Which omission breaches a specific requirement of ISA 230 itself?

A) The absence of voucher numbers, because the auditor must record identifying characteristics of the specific items tested
B) The absence of a tick-mark key, because ISA 230 requires every symbol used on a working paper to be explained on that page
C) The absence of a cross-reference to the lead schedule, because ISA 230 requires each paper to be linked to the financial statements
D) The absence of a stated objective, because ISA 230 requires every working paper to state the objective of the work performed

Correct: A difficult ISA 230

ISA 230 requires the auditor to record the identifying characteristics of the specific items or matters tested, for example voucher numbers and dates, together with who performed the work and when and who reviewed it and when. Without voucher numbers an experienced auditor cannot trace which items were examined. Objectives, cross-referencing and tick-mark keys are standard firm practice that makes files easier to review, but ISA 230 does not itself prescribe them. The preparer and reviewer details are already present.

8. On the Surma Cement Ltd audit, the engagement partner reviewed the revenue, going concern and related party sections, the key judgements, the financial statements and the draft report at planning, interim and completion stages, all before the report date. Managers reviewed the other 55 sections, and the partner did not open payroll or prepayments. An inspector says the partner under-reviewed. What is the correct view?

A) A breach, because the partner is responsible for quality and must personally review every working paper before signing the report
B) Not a breach, because the partner's review duty is met by reviewing the financial statements and the draft report once at completion
C) A breach, because partner review of work already reviewed by managers must be repeated for sections that support the financial statements
D) Not a breach, as the partner must review critical areas and significant judgements at suitable times, evidenced on file, not all papers

Correct: D difficult ISA 220 (Revised)

Under ISA 220 (Revised) the engagement partner takes overall responsibility for quality and reviews documentation at appropriate points during the audit, focusing on significant matters, significant judgements and other matters relevant to the partner's responsibilities. Reviewing every paper is not required, since the partner may rely on direction, supervision and review by managers for lower-risk areas. A single review at completion would be too late to influence the work, and the review must be evidenced on file.

9. Meghna Foods Ltd is a listed entity, so an engagement quality review is required. The manager cleared review notes on 18 March 2026 and the partner completed the file review on 20 March. Management signed written representations on 23 March, the board approved the financial statements on 24 March and the engagement quality reviewer notified completion on 26 March. All other work is complete. What is the earliest date on which the auditor's report may be dated?

A) 24 March 2026, because the report is dated once the board has approved the financial statements and sufficient evidence exists
B) 26 March 2026, because the report cannot be dated before the quality reviewer notifies completion, the last of these events
C) 23 March 2026, because the report is dated once management has signed the written representations covering the statements
D) 20 March 2026, because the report is dated once the engagement partner has completed the review of the whole audit file

Correct: B difficult ISQM 2

Under ISQM 2 the engagement partner does not date the auditor's report until the engagement quality reviewer has notified that the review is complete. The report date must also be no earlier than board approval of the statements and the date sufficient evidence was obtained, but the quality review notification on 26 March is the latest event in the sequence. Dating the report on any earlier date would breach the ISQM 2 requirement. Written representations are dated at or before the report date, so 23 March is acceptable and does not drive the date.

10. Hasan & Co. audited Padma Textiles Ltd and also wrote up its accounting records from the client's source documents and prepared draft financial statements. The client has changed firms and demands 'everything'. Under the ICAB ownership guidance, which item belongs to the client?

A) The firm's office copy of the draft financial statements, because the client commissioned the statements and funded their preparation
B) The firm's internal review notes and file memoranda on its judgements about the accounts, because they concern the client's affairs
C) The accounting records the firm wrote up from the client's documents, because they are the client's records and not firm working papers
D) The audit working papers supporting the report, because they were created for the client's statements and the client paid for the audit

Correct: C difficult ISA 230 and ICAB ownership guidance

The ICAB guidance makes accounting records prepared for the client, and the issued auditor's report, the client's property. Audit working papers, internal review notes and memoranda, and the draft or office copy of financial statements belong to the member. Working papers are the firm's evidence of its own work and are not part of the client's accounting records. Payment of fees or the fact that the client commissioned the work does not change this classification.

11. Surma Cement Ltd engaged Rahman & Co. to give limited assurance on its energy-use and emissions KPIs. A team member proposes a brief file stating only the conclusion, because limited assurance involves fewer procedures and a negative form of conclusion. What is the correct view of the documentation needed?

A) The file need only list the KPIs reviewed, because documentation depth under ISAE 3000 rises only for reasonable assurance
B) The file must still let an experienced practitioner with no connection to the work understand procedures, evidence, results and judgements
C) The conclusion and the management representation suffice, because a negative-form conclusion needs no record of procedures performed
D) The file should hold the audit-level record of every procedure, because ISAE 3000 adopts the ISA 230 requirements without scaling them

Correct: B difficult ISAE 3000 (Revised)

ISAE 3000 (Revised) requires engagement documentation sufficient to enable an experienced practitioner, having no previous connection with the engagement, to understand the nature, timing and extent of procedures, the results and evidence obtained, and the significant matters, conclusions and judgements. Fewer procedures mean less to record, but the same standard of sufficiency applies, and a negative-form conclusion still needs support. The standard does not demand an audit-level record for a limited assurance engagement.

12. Surma Cement Ltd has appointed Rahman & Co. to replace Hasan & Co. as auditor. Rahman & Co. writes to Hasan & Co. asking for copies of last year's working papers on opening balances and states that, as the new auditor, it is entitled to the whole file. What is the correct position for Hasan & Co.?

A) Hasan & Co. may release the working papers freely, because both firms are ICAB members and professional courtesy overrides confidentiality
B) Hasan & Co. may release information with the client's permission and decides which working papers to provide, as the file is its property
C) Hasan & Co. must refuse every request, because working papers are confidential and cannot be shown to anyone outside the firm
D) Hasan & Co. must hand over the entire file, because ISA 510 gives a successor an automatic right to inspect the predecessor's working papers

Correct: B difficult IESBA Code Section 320

Working papers belong to the audit firm and are confidential to the client. A successor auditor has no right of access, but the predecessor can allow it, with the client's permission, and chooses which working papers or extracts to provide so long as the audit process is not prejudiced. The Code (Section 320) contemplates the successor asking, not demanding. Refusing every request is also wrong, since the client can authorise release, and sharing without consent would breach the duty of confidentiality.

13. The Financial Reporting Council of Bangladesh, acting under its statutory powers, asks Hasan & Co. for the audit working papers on Padma Textiles Ltd as part of an inspection. The client's chief financial officer objects, citing confidentiality and refusing consent. What should the firm do?

A) Provide the papers, because disclosure required by law or in response to a regulator's inquiry is an exception to confidentiality
B) Decline until the client agrees, because confidentiality belongs to the client and can be waived by the client's consent alone
C) Provide only the signed financial statements and report, because working papers are the firm's private property and cannot be compelled
D) Provide a summary memorandum from the engagement partner instead, because a summary protects client confidentiality and meets the request

Correct: A difficult IESBA Code Section 114

The IESBA Code, as adopted by ICAB, permits disclosure of confidential information without client consent where law or regulation requires it and where a professional duty or right exists to respond to an inquiry or investigation by a regulatory body. The firm should still disclose only what is requested and keep a record of what it provided. Declining until the client agrees would breach the law, and substituting a summary would not satisfy a request for working papers.

14. To speed up work at remote factory sites, the team leader on Meghna Foods Ltd's audit stores scanned working papers in a personal cloud account and shares them through a messaging group. The partner finds out. Which response is consistent with ISQM 1 and the duty of confidentiality?

A) Move the files to firm-controlled secure systems, because the firm must keep documentation confidential, intact, accessible and retrievable
B) Allow it if the client consents in writing, because confidentiality of working papers is the client's right and not the firm's
C) Allow it if the accounts are password-protected and the personal copies are deleted once the final audit file has been assembled
D) Allow it because the duty of confidentiality applies to paper files, while electronic copies are covered by the firm's own back-ups

Correct: A difficult ISQM 1

ISQM 1 requires a firm to establish policies and procedures so that engagement documentation is assembled on time and its confidentiality, safe custody, integrity, accessibility and retrievability are maintained. Personal accounts and messaging groups sit outside the firm's controls over access, back-up and retention, so the data should be moved to firm systems. Passwords do not give the firm control or an audit trail, and deleting copies afterwards does not cure the exposure. Client consent does not relieve the firm of its own quality management and ethical duties.

15. Hasan & Co.'s annual inspection of completed engagements covered 25 audit files. In 6 of them (24 percent) final assembly was completed 75 to 110 days after the report date. All 6 were Chattogram branch audits, and the branch's archiving server had been out of service for six weeks. What is the most appropriate first response under the firm's ISQM 1 monitoring process?

A) Take disciplinary action against the six engagement partners, because late assembly is individual non-compliance and not a firm-level matter
B) Reperform the six audits at the branch, because late assembly shows the original evidence may have been altered or incomplete
C) Investigate root causes and evaluate the severity and pervasiveness of the finding, then design remedial action for the branch process
D) Take no action, because the 60-day limit is application guidance only and 19 of the 25 files inspected were assembled on time

Correct: C difficult ISQM 1

ISQM 1 requires the firm to evaluate monitoring findings to determine whether deficiencies exist, to investigate root causes and to evaluate severity and pervasiveness before designing remedial actions. Here 6 of 25 files (24 percent) fell outside the 60-day guidance, all at one branch and linked to a server outage, which points to a process cause that can be fixed. Disciplining partners ignores the root cause, ignoring the finding because most files complied misunderstands monitoring, and reperforming audits is not proportionate.

16. An assurance team at Chattogram Marine Ltd is asked to list the reasons for preparing documentation on an engagement. Which one of the following is NOT a valid reason?

A) To facilitate review of the work by the senior members of the engagement team
B) To provide a record of matters of continuing significance to future audits
C) Because the law requires working papers to be prepared on every engagement
D) To prove adherence to the ISA Standards in a litigious situation

Correct: C difficult ISA 230

Documentation facilitates review by senior staff, provides a record of matters of continuing significance to future audits, and enables the team to prove adherence to ISA Standards if it is sued. The workbook states that it is not a legal requirement for the auditor to prepare working papers, so complying with the law is not a valid reason.

17. Which of the following correctly defines audit documentation (working papers)?

A) The record of procedures performed, evidence obtained and conclusions reached by the auditor
B) The copies of the financial statements and of the auditor report that are issued to the members
C) The accounting records of the entity that the auditor reviews at the year end for the audit work
D) A summary of the matters that were discussed in the board minutes during the financial year

Correct: A difficult ISA 230

Audit documentation, or working papers, is the record of procedures performed, relevant evidence obtained and conclusions the auditor reached. It is the tangible evidence of the work done in support of the conclusion. It is distinct from the entity's accounting records, and the financial statements and report are only some of its contents.

18. The audit senior at Khulna Shipyard Ltd asks how much detail the working papers should contain. Which statement reflects the general rule in ISA 230?

A) Enough to record every matter that the auditor considered, so that nothing at all is left out
B) Enough for the audit partner alone to understand the work, since the partner signs the report
C) Enough to satisfy the client management that the audit fee for the year is fully justified
D) Enough for an experienced auditor with no prior connection to understand the work and conclusions

Correct: D difficult ISA 230

Documentation should be sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing and extent of the procedures performed, the results and evidence obtained, significant matters, the conclusions reached and significant professional judgements. Auditors cannot record everything they consider, so judgement is used.

19. A junior at Gazipur Fabrics Ltd completes her working papers a month after the fieldwork finished. Why should working papers be prepared on a timely basis?

A) Because the law fixes a date by which all working papers must be signed and dated
B) Because documentation prepared after the work is performed is likely to be less accurate
C) Because the client is entitled to inspect them as soon as each area is completed
D) Because working papers must be handed to the client together with the audit report

Correct: B difficult ISA 230

Working papers must be prepared on a timely basis because documentation prepared after the audit work has been performed is likely to be less accurate than timely documentation. The client has no automatic right to inspect working papers, which belong to the firm, and no law fixes a signing date for each paper.

20. Which of the following does NOT affect the form and content of the working papers on an audit of Sylhet Tea Estates Ltd?

A) The amount of the audit fee that has been agreed with the client's management
B) The size and complexity of the entity that is being audited by the team
C) The identified risks of material misstatement that the team has assessed
D) The audit methodology and tools that the firm uses on its engagements

Correct: A difficult ISA 230

The form and content of working papers are affected by the size and complexity of the entity, the nature of the procedures, the identified risks of material misstatement, the significance of the evidence obtained, the nature and extent of exceptions, the need to document a conclusion not readily determinable, and the audit methodology and tools used. The audit fee is not a factor.

21. The firm is reviewing a sampling working paper prepared at Narsingdi Garments Ltd. Which of the following items should the working paper show?

A) The partner billing rate and the number of budgeted hours for the file
B) The client bank account number and the names of all cheque signatories
C) How any sample was chosen, the sample size and the results obtained
D) The audit firm staff salary scales and the training record of the preparer

Correct: C difficult ISA 230

Working papers should show the name of the client, reporting date, file reference, preparer and reviewer with dates, subject and objective, source of information, how any sample was selected, the sample size, the work done, a key to ticks or symbols, cross-references, results, analysis of errors, other observations and conclusions drawn. Fees, bank details and staff salary information have no place in the working paper.

22. An audit firm uses automated working paper software, not just a database of scanned electronic documents. Which feature distinguishes automated working papers?

A) They are a database of scanned documents with no calculations, signed off by the team electronically
B) They are paper files kept in locked premises and referenced by hand by each member of the team
C) They remove the need for any senior review, because the computer checks all of the work performed
D) They cross-reference, adjust and balance the lead schedules, trial balance and statements automatically

Correct: D difficult ISA 230

Automated working paper packages aid preparation of working papers, lead schedules, the trial balance and the financial statements, which are automatically cross-referenced, adjusted and balanced by the computer. This reduces the risk of errors and saves time. Electronic working papers, by contrast, do not involve automatic calculations and are typically a database of documents signed off electronically.

23. Most files at Rangamati Assurance & Co are electronic and the engagement partner wants to avoid the loss of working papers. What should the firm do?

A) Print every electronic working paper so that a paper copy exists on each file
B) Issue instructions to team members to ensure that backups are made regularly
C) Keep only the final signed versions and delete the drafts after each review
D) Store the files on the audit senior's own laptop for the duration of the audit

Correct: B difficult ISA 230

Electronic working papers are easily backed up, and audit firms should have procedures in place and issue instructions to audit team members to make sure backups occur regularly to avoid any loss of work. This is a strength of electronic files compared with physical files, which can be lost or damaged. Printing everything or keeping files on one laptop adds risk and cost.

24. Which classification of working papers between the permanent audit file (P) and the current audit file (C) is correct?

A) Engagement letter (P); board minutes of continuing relevance (P); audit planning memo (C); written representations (C)
B) Engagement letter (P); audit planning memo (P); board minutes of continuing relevance (C); written representations (C)
C) Memorandum and articles (C); time budget (P); written representations (C); accounting systems notes (C)
D) Previous years' signed accounts (C); engagement letter (C); audit planning memo (P); review notes (P)

Correct: A complex ISA 230

The permanent file holds information of continuing importance, such as engagement letters, the new client questionnaire, the memorandum and articles, board minutes of continuing relevance, previous years' signed accounts and accounting systems notes. The current file holds information for this year's audit, such as the financial statements, accounts checklists, the audit planning memorandum, time budgets, review notes and written representations.

25. The partner of an audit firm asks how long working papers must be kept. What does the workbook say about the retention of working papers?

A) Until the next audit report is signed, after which they must be destroyed straight away by the firm
B) For one year from the date of the report, and no longer retention is permitted under the rules
C) For a reasonable period after the period end, under the firm retention policy
D) Until the client asks for them to be returned to the company registered office after the audit

Correct: C difficult ISA 230

All firms should have a document retention policy, and auditors should keep all working papers required by auditing standards for a reasonable period of time from the end of the accounting period to which they relate. Judgement may be needed on the duration, and further consideration should be given before destruction. The documents must be kept secure during this period.