Essay Questions in the Auditing Subject

Last verified: 31 October 2026. Sources: SOCPA's amendments to the Fellowship exam structure and weights (2025) and its practice questions for the auditing subject (September 2025). Check the Fellowship exam page before your exam, since the structure and weights can change.

The question bank and full mock exam on this site cover the multiple-choice part only. The essay questions are not in the bank, so practise them with this guide: how to answer, how to split your time, where candidates lose marks, and three worked examples with model answers.

The essay part in numbers

What the minimum means: a candidate with 60 marks in multiple choice and 3 in the essays has a total of 63 and still fails the subject, because the essay score is below 5. So do not skip the essay part, even if multiple choice is your strength.

What the essay questions look like in SOCPA's practice set

The practice questions SOCPA published in September 2025 include four essay questions. Here are their types; the questions and model answers are on SOCPA's page:

• An explanation question: how the internal audit function's work affects the external auditor, and how the external auditor takes it into account. You need organised paragraphs built on the standard (ISA 610, using the work of internal auditors).
• Choosing between evidence-gathering methods: four independent situations (a bank balance, a legal case, the existence of inventory, receivables), each with two methods, and you pick the stronger and more persuasive one. The idea is reliability of evidence: external or internal source, direct or indirect.
• Matching objectives to assertions: audit objectives on presentation and disclosure for one item (fixed assets), and you identify the right management assertion for each.
• Situations from a meeting with client management: several independent situations (such as a finance officer involved in embezzlement, investment assets the auditor cannot inspect, and management objecting to items in its representation letter), each asking for at least three procedures or considerations, some touching on the effect on the auditor's report.

If the exam follows this pattern, expect explanation questions and short cases without heavy numbers, where the marks come from correct points tied to the standard. SOCPA states that these practice questions are for learning and may not match the exam.

How to answer in five steps

1. Read the requirement first. Does it say "list", "explain" or "state the type of opinion"? How many points are asked (such as "at least 3 procedures")? Are the cases independent?
2. Write the basis from the standard. Name the standard and the paragraph or concept you build on: "ISA 705 paragraph 7(a)". You do not need the wording, only the standard and the idea.
3. Answer in numbered points. One or two lines each: the procedure or consideration, then the reason. The marker gives a mark per correct point, so a long running paragraph hides your points.
4. Tie each point to the case. Use the case letters and facts ("inventory is 45% of total assets"), not a general answer that fits any company.
5. Finish with a conclusion. For opinion questions: the type of opinion and the reason in one sentence. For procedures: what the auditor does if they are not enough (modify the opinion, or report to those charged with governance).

Splitting the 120 minutes

4 questions in 120 minutes is about 30 minutes each, including reading, thinking and writing. A suggested plan:

• 5 minutes: read all four questions, note the marks of each if printed, and order them from easiest to hardest.
• About 25 minutes per question, adjusted to its marks: do not give a low-mark question more time than a big one.
• 15 minutes in reserve for the question that needs more time, then a last check: did you answer every part, reach the number of points asked, and state the opinion type clearly?

If you run short, write your points as short headings rather than leaving a question blank: you need at least 5 of the 25 marks.

Where candidates lose marks

• Mixing a scope limitation with a material misstatement. Being unable to obtain evidence leads to a qualified opinion or a disclaimer; materially misstated statements lead to a qualified or adverse opinion (ISA 705 paragraphs 7 to 9 and the table in paragraph A1).
• Forgetting the pervasiveness test. What separates qualified from adverse, and qualified from disclaimer, is whether the effect is material and pervasive or only material (ISA 705 paragraph 5(a)).
• Jumping to a modified opinion before alternative procedures. Being unable to perform one procedure is not a scope limitation if you can get the evidence another way (ISA 705 paragraph A9 and ISA 501 paragraph 7).
• Forgetting to communicate with those charged with governance when management refuses to remove a limitation or correct a misstatement (ISA 705 paragraphs 12 and 30).
• Confusing an emphasis paragraph with a modified opinion on going concern. A material uncertainty with adequate disclosure means an unmodified opinion with a separate section, not a qualified opinion (ISA 570 paragraph 22).
• General points. "The auditor gathers sufficient evidence" earns nothing. You need a specific procedure: a confirmation, attending the count, or reading a support letter from the shareholder and testing their ability to honour it.
• In independence: treating every threat as fixable by a safeguard. Some cases are flatly prohibited by the Code with no safeguard, such as a direct financial interest in the client held by an audit team member (Section 510, paragraph R510.4).
• Leaving out the last sentence. Many marks in case questions come from the conclusion: the type of opinion, or the decision to accept or end the engagement.

Example 1: the type of opinion in four independent cases

You are the auditor of four unlisted companies, each with a financial year ended 31 December 2025. State the type of opinion in each case, with reasons from the auditing standards:

1. Case A: inventory is overstated by about SAR 1.5 million because no allowance was made for slow-moving goods. Total assets are SAR 40 million and net profit SAR 4 million. Management refuses to adjust, and the rest of the statements are fine.
2. Case B: you were appointed after year end and did not attend the inventory count. Inventory is 45% of total assets, there are no reliable count records, and no alternative procedure can show that it exists.
3. Case C: a holding company did not consolidate subsidiaries that make up about 70% of the group's assets, and management refuses to consolidate although the reporting framework requires it.
4. Case D: management refused to let you send a confirmation to a customer whose balance is 2% of total assets, and its reasons were not convincing. You performed alternative procedures (reviewing invoices and later receipts) and they were not enough to support the balance.

Required: the type of opinion in each case and why, and what you do in cases B and D before issuing the report.

Model answer

General basis: two things decide the type of opinion: the nature of the matter (a material misstatement, or being unable to obtain sufficient appropriate evidence) and the auditor's judgment about how pervasive the effects or possible effects are (ISA 705, paragraph A1 and its table). Pervasive is defined in paragraph 5(a): effects not confined to specific items, or confined but representing or possibly representing a substantial proportion of the statements, or relating to disclosures fundamental to users' understanding.

Case B before issuing the report:

1. Assess whether a count is possible at all after the balance sheet date (ISA 501 paragraphs 6 and 7).
2. Try alternative procedures: a physical count now rolled back with inventory movements, matching purchase invoices, and confirmations from third parties if they hold the stock (ISA 501 paragraph 8).
3. Judge pervasiveness, then withdraw if possible, otherwise disclaim an opinion.
4. In the report: the heading "Basis for Disclaimer of Opinion", the reason for the inability (paragraphs 20 and 24), and leave out the paragraphs that describe the auditor's responsibilities (paragraph 26).

Case D before issuing the report: before modifying the opinion you asked management to remove the limitation (ISA 705 paragraph 11); when it refused, you communicate with those charged with governance and perform alternative procedures (paragraph 12); only if they are not enough do you qualify the opinion.

Conclusion: qualified in cases A and D because the effect is material but confined; disclaimer in case B because the possible effect is material and pervasive with no evidence; adverse in case C because the misstatement is material and pervasive.

Example 2: going concern in a company with a liquidity squeeze

Advanced Contracting Company (an unlisted closed joint stock company) has a financial year ended 31 December 2025, and its statements will be approved on 15 April 2026. Management prepared them on the going concern basis. Figures in SAR:

• Loss for the year 6 million (previous year's loss 1 million), and negative operating cash flow of 3 million.
• Current liabilities exceed current assets by 8 million.
• A bank loan of 10 million falls due on 30 June 2026; the bank has not yet agreed to renew it and talks continue.
• In November 2025 the company lost a main customer that made up 35% of its revenue.
• Management's going concern assessment covers only six months, to 30 June 2026.
• Management's plan: sell a building for about 5 million, a support letter from the main shareholder promising to fund 4 million if needed, and a twelve-month cash flow forecast.

Required: (a) the events and conditions that raise doubt, (b) the additional audit procedures, (c) the effect on the auditor's report in each of three cases: 1) the plan is feasible but a material uncertainty remains and disclosure is adequate, 2) the same but disclosure is inadequate, 3) the auditor concludes the going concern basis is inappropriate.

Model answer

(a) Events and conditions (ISA 570, paragraph A3):

• Net current liability position: current liabilities exceed current assets by 8 million.
• A fixed-term loan approaching maturity without realistic prospects of renewal or repayment.
• Negative operating cash flows and substantial operating losses.
• Loss of a key customer (an operating condition).

These events raise significant doubt, but do not by themselves mean a material uncertainty exists, since management's plans may mitigate them (the same paragraph A3).

(b) Additional procedures (paragraphs 13 to 16 and 25):

1. Ask management to extend its assessment to at least 12 months from the date of the financial statements, which is 31 December 2026 (paragraph 13), and inquire about any events it knows of beyond the assessment period (paragraph 15).
2. Evaluate management's plans, whether they will improve the situation and whether they are feasible (paragraph 16(b)): evidence that the building sale is actually agreed at a reasonable price, and that the proceeds arrive before the loan falls due (paragraph A17).
3. Test the cash flow forecast: the reliability of the underlying data and whether the assumptions have adequate support (paragraph 16(c)), for example by comparing them with recent months and current contracts.
4. Shareholder support: obtain written confirmation of its terms and evidence of the shareholder's ability to provide it (paragraph A19).
5. Write to the bank or read the minutes of the renewal talks, and consider any new information since management made its assessment (paragraph 16(d)).
6. Obtain written representations from management about its plans and their feasibility (paragraph 16(e)).
7. Communicate with those charged with governance: the events, whether they are a material uncertainty, whether the basis is appropriate, the adequacy of disclosure and the effect on the report (paragraph 25).

(c) Effect on the report:

Conclusion: if the evidence settles that there is no material uncertainty once the plans are considered, the auditor still checks that the events are adequately disclosed (paragraph 20) and issues an unmodified opinion without the separate section. If the uncertainty remains, adequate disclosure is what separates the unmodified opinion with a separate section (case 1) from a modified opinion (case 2).

Note: the paragraph numbers are from ISA 570 as in the 2023-2024 handbook. The revised standard applies to periods beginning on or after 15 December 2026, so check the version in force for your exam.

Example 3: independence threats in an audit firm

An audit firm audits Modern Pharmacy Company (an unlisted limited liability company that is not a public interest entity). You find the following:

1. A team from the firm, separate from the audit team, posts each month into the company's general ledger transactions the company itself has coded, and then prepares the annual financial statements from a trial balance the company has approved.
2. The company's finance manager asked the firm to "decide" the useful lives of assets and the doubtful-debt allowance rate; the firm did so and recorded the entries.
3. The wife of a senior auditor on the audit team bought shares in the company (a direct holding of small value).

Required: for each case: what type of threat arises, is the service or position permitted, and how does the firm deal with it?

Model answer

Framework: the firm applies the conceptual framework in Section 120 of the Code of Ethics: identify the threats, evaluate whether they are at an acceptable level, and address them by eliminating the circumstance, applying safeguards, or declining or ending the activity (paragraph R120.10). The threat categories are five: self-interest, self-review, advocacy, familiarity and intimidation (paragraph 120.6 A3).

When a breach occurs (case 3 before the shares are sold), the firm applies paragraph R400.80: end the interest that caused the breach and address its consequences, tell the engagement partner and the person responsible for independence compliance, evaluate the effect of the breach on its objectivity and its ability to issue an audit report, and decide whether to end the engagement or whether action can address the consequences in a way a reasonable and informed third party would accept.

Conclusion: case 1 is permitted with conditions and safeguards. Cases 2 and 3 are not: the first because the firm went beyond a routine service into a management responsibility, the second because the Code bars a direct holding for audit team members and their immediate family.

How to use this guide alongside the question bank

• Solve each example on paper before reading the answer, against the clock: 25 minutes each. Then compare your points with the model answer one by one, and mark the ones you missed.
• Change one fact in a case (such as inventory as a share of assets, or the assessment period) and decide the opinion type again.
• Read SOCPA's four essay questions and model answers in the practice questions file, and write your own answers before comparing.
• The ideas needed for the essays are the same ones tested in multiple choice. Practise the auditor's report, independence and evidence topics in the bank, and read the subject content and weights and the study plan.

To see what you would score today on the multiple-choice part, start the 10 free questions, no sign-up. You will see your score against the pass mark and which topics cost you points.

This study guide is from an independent website with no link to the Saudi Organization for Chartered and Professional Accountants (SOCPA) or any government body. The worked examples are our own, written for practice; always rely on the standards in force and on what the official bodies announce.