考前抱佛脚ACCAF8AAAuditandAssurance(AA)简答题练习

1、考前抱佛脚| ACCA F8 AA Audit and Assurance(AA)简答题练习ps：答案由考官答案整理。1.2014 Dec Q3 (a) 4m benefits Audit committeeAppointing an audit committee will benefit Bluebird in the followingways:-Bluebird does not currently have any non-executive directors, hence once appointed, they will bring considerable external

2、experience to the board as well as challenging the decisions of executive directors and contributingtondependentjudgements.一The finance director will benefit in that he will be able to raise concerns and discuss accounting issues with the audit committee. -It will help to improve the quality of the

3、financial reporting of Bluebird; whilst the company already has a finance director, the audit committee will assist by reviewing the financialstatements.-The establishment of an audit committee can help to improve the internal control environment of the company. The audit committee is able to devote

4、 more time and attention to areas such as internal controls. 一The audit committee will assume responsibility for appointing and liaising with the external audit firm, thusensuring the indof the external auditor especiallyin cases of dispute with management.2.2014 Dec Q3 (b) 6m Factors to consider wh

5、en appointing NEDAdvantages :(i) Antony Goldfinch already has experience of being a NED for another company and he has sat on an audit committee, hence he will be familiar with what the role entails and will be able to bring experience of being a NED to Bluebird.In addition, Antony Goldfinch has ind

6、icated he is agreeable to being paid a fixed fee which is not profit related; this is important as an independent NED ' s remuneration should be unrelated to the performance of the company.possessesrecent and relevant financial experiencewhich is(ii) Jacob Mallard is currently a finance director

7、 and so herequired for at least one member of the audit committee.like Bluebird andIn addition, he operates in the retail industry and so wouldbe aware of key issues facing companiessowouldhave an appropriate mix ofexperienceandknowledgeDisadvantages(i) Appointing Antony Goldfinch as a NED has disad

8、vantagesas he works for a banking company and so would relevant experience of companies such as Bluebird; hence he could lack the critical skills and relevant experiencenot haveneededto provide meaningful advice to the executive directors. In addition, Antony Goldfinch is already director for a larg

9、e multinational company another company; it might be difficult foran executiveand a NED for him to devotesufficienttimetohisroleatBluebird.(iii) Jacob Mallard is the brother of the chief executive and therefore he is not an independent NED. He might be inclined to agree with the chief executive as h

10、e is his brother rather than providing the level of objective judgement required from a NED.Also he wants a contract as a NED for a period of seven years; all directors including NEDs must be subject to reelection at regular intervals not exceeding three years.3.2013 June Q1 (a) 5m why communication

11、 is importance/ three matters In accordancewith ISA 260 Communication withThoseCharged with Governance, it is important for the auditors to report to those charged with governance as it helps in the followingways:(1) It assists the auditor and those charged with governance in understanding matters r

12、elated to the audit, and in developing a constructive working relationship. This relationship is developed while maintaining the auditor ' s independenceandobjectivity.(2) It helps the auditor in obtaining, from those charged with governance, information relevant to the audit. For example, those

13、 charged with governance may assist the auditor in understanding the entity and its environment, in identifying appropriate sources of audit evidence and in providing information about specific transactions or events.(3) It helps those charged with governance in fulfilling their responsibility to ov

14、ersee the financial reporting process,thereby reducing the risks of material misstatement of the financial statements.4.2012 Dec Q2 (a) 3m State THREE rights of an auditorAuditors 'rights- Right of access at all times to the company ' s books, accountsandvouchers.- Right to require from an o

15、fficer of the company such nformation or explanations as they think necessary for the performanceof their duties as auditors.- Right to receive all communications relating to written resolutions.- Right to attend any general meeting of the company.5.2012 Dec Q2 (c) 3m THREE limitations of external a

16、udits.Limitations of external auditsSampling - it is not practical for an auditor to test 100% of transactions and so they have to apply sampling methodologies in selecting balances/transactions to test. Therefore, there could be an error in an item not selected for testing by the auditor.use the fi

17、nancialthe opinion ison Auditing.is not usuallySubjectivity - financial statements include judgemental and subjective areas and therefore the auditor is required to their judgement in assessing whether statements are true and fair.Audit report format - the format of determined by International Stand

18、ards However, the terminology 术语 usedunderstood by non-accountants.This means that users maynot actually understand the audit opinion given.Historic information - the audit report is often issued some time after the year end, and so the financial information can be quite different to the current pos

19、ition. In the current marketplace where companies ' financial positions can change quite quickly, the audit opinion may no longer be relevant as it is out of date.6.2013 June Q5 (a) 5m Elements of an assurance serviceThree separate parties:requires the anisation-The intended user who i

20、s the person who assurance一The responsible party, which is the responsible for preparing the subject matter to be reviewed.一The practitioner (i.e. an accountant) who is the professional who will review the subject matter and provide the assurance.A second element is a suitable subject matter. The su

21、bject matter is the data that the responsible party has prepared andwhichrequiresverification.Suitable criteria are required in an assurance engagement. The subject matter is compared to the criteria in order for it to be assessed and an opinion provided. Sufficient appropriateevidence hasto beobtai

22、nedbythepractitioner in order to give the required level of assurance.An assurance reportis the opinion thatis givenbythepractitioner to the intended user and the responsible party.7.2012 Dec Q4 (a) 5m Five fundamental principlesFundamentalIntegrityprinciplestobestraightforwardand honestin allprofes

23、sionalandbusinessrelationships.Objectivityinfluence-to not allow bias, conflict of interest or undue of others to override professional or businessudgements.Professional Competence and Due Care - to maintain professional knowledge and skill at the level required toensure that a client receives compe

24、tent professional services,and to act diligently 勤奋地 and in accordance with applicable technical and professional standards. Confidentiality to respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not to disclose any such informat

25、ion to third parties without proper authority, nor use the information for personal advantage. Professional Behaviour - to comply with relevant laws and regulations and avoid any action that discredits theprofession.8. 2013 June Q2 (a) 5m(i) Self-interestTive independence ethical threats-Contingent

26、fee arrangements.-Close personal or business relationships.(ii) Self-review-Member of assurance team being or recently having been employed by the client in a position to influence the subject matterbeingreviewed.一Involvement in implementationof financial system andsubsequently reporting on the oper

27、ation of said system.(iii)Advocacy-Acting as an advocate on behalf of a client in litigation ordisputes.Familiarity-Promoting shares in a listed audit client.(iv)一Long association with a client.- Former partner of firm being employed by client.(v) Intimidation一 Threat of removal as assurance firm.-T

28、hreat of not being disagree with directorsifawarded non-audit engagements 'accounting treatment.9.2012 Dec Q3 (c) 5m Factors to consider before establishing an internal audit department- The costs of establishing an IA department will be significant, therefore prior to committing to these costs

29、and management time, a cost benefit analysis should be performed.- The size and complexity of Sunflower should be considered.The larger, more complex and diverse a company is, then the greater the need for an IA department. At Sunflower there are 25 supermarkets and a head office and therefore it wo

30、uld seem that the company is diverse enough to gain benefit from an IA department.- The role of any IA department should be considered. The finance director should consider what tasks he would envisage IA performing. He should consider whether he wishes them to undertake inventory counts at the stor

31、es, or whether hewouldwant them to undertake such roles as internal controls reviews.一Having identified the role of any IA department, the finance director should consider whether there are existing managers oremployees who could perform these tasks, therefore reducing the need to establish a separa

32、te IA department一Thefinance director should assess the current controlenvironment and determine whether there are departments or stores with a history of control deficiencies. If this is the case, then it increases the need for an IA department.10. 2013 June Q4 (b)(c)10m How IA prevent fraud/limitat

33、ion of establish and maintain an IA(b) Preventing and detecting fraud and error The directors of Bush-Baby Hotels Co (Bush-Baby) are responsible for the prevention and detection of fraud and error.However, the new internal audit department can help directors by assessing the main areas of fraud risk

34、, assessing the adequacy and effectiveness of control systemstheandhelping to developHaving developed the reviews of compliancecontrols to mitigate key risks.Wherefurthernon-compliance is identified, training if necessary or reportthey can instigatesuspected frauds tocontrols, they can undertake reg

35、ular by each hotel of these controls.seniormanagement.Where fraud is suspected, the internal audit department canundertake a detailed fraud investigation to identify who is involved, likely sums stolen and gather evidence for any subsequentpoliceinvestigation.(c) Limitations of establishing and main

36、taining an internalauditdepartmentThe internal auditors of Bush-Baby will be employees of the company and so this can impair their independence, as theymay not report issues to those charged with governance for fearoflosingtheirjob.Although some internal auditors are professionally qualified, there

37、is no requirement to be qualified, as there is for external auditors. Hence, there may be gaps in the experience and technical knowledge of the internal audit department.The cost of establishing an internal audit department can be significant; hence prior to recruiting a team, the management of Bush

38、-Baby should consider carefully the roles the team can performand whetherthis will generatesufficientvalueformoney.As Bush-Baby has not previously had any form of internal audit, there may be some resistance from employees of the company. They may be uncomfortable with the idea of their work being r

39、eviewed, especially if the first role of the department is to undertake fraud investigations.of the11.2012 Dec Q3 (a) 5m List FIVE sources of information that would be of use in gaining an understanding audit client and for each source describe what you would expect to obtain-Prior year audit file:I

40、dentification of issues that arose in theprioryearaudit andhow these were resolved. Also whetheranypointsbrought's audit.Provides informationin relation to thesizeof theentity asforward were noted for consideration for this year -Prior year financial statements: well as the key accounting polici

41、es and disclosure notes.一Discussions with management:Provides information in relation to any important issues which have arisen or changes to the company during the year- Accounting systems notes:Provides information on how each of the key accounting systems operates.- Permanent audit file:Provides

42、information in relation to matters of continuing importance for the company and the audit team, such as statutory books information or important agreements.12.2014 Dec Q1(a) 5m importance of audit planningImportanceofauditplanning一It helps the auditor to devote appropriate attention to mportantareas

43、oftheaudit.一It helps the auditor to identify and resolve potential problemsonatimelybasis.- It helps the auditor to properly organise and manage the audit engagement so that it is performed in an effective and efficientmanner.一It facilitates the direction and supervision of engagement team members a

44、nd the review of their work. 一It assists, where applicable, in the coordination of work done by experts.13.2013 June Q3 (a) 5m explain “ materiality and performance materiality”- Auditors need to establish the materiality level for the financial statements as a whole, as well as assessperformance ma

45、terialitylevels, which arelower than theoverall materiality.- Materiality is defined in ISA 320 as follows:'Misstatements, including omissions, are considered to be material if they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users taken

46、 on the basis of the financial statements.一First the auditor must consider both the amount (quantity) and the nature (quality) of any misstatements, or a combination of both- As per ISA 320, materialityis often calculated usingbenchmarkssuch as 5% of profit before tax or 1% of total revenue or total

47、 expenses.- In calculating materiality, the auditor should also set the performance materiality level. Performance materiality is normally set at a level lower than overall materiality. It is used for testing individual transactions, account balances and disclosures.risk that-The aim of performance

48、materiality is to reduce the the total of errors in balances, transactions and disclosures does not in total exceed overall materialityaudit procedures usingCAAT' s advantage andtechniques(CAATS)software to calculateto compare against the14. 2012 Dec Q1(c)12m FOURCAAT on inventoryandusingdisadva

49、ntage Computer-assistedaudit(i) Audit procedures using CAATS-The audit team can use audit inventory days for the year-to-dateprior year to identify whether inventory is turning over slower, as this may be an indication that it is overvalued.一Audit software can be used d to produce an aged inventoryg

50、oods, which mayanalysis to identify any slow moving require write down or an allowance.-Cast the inventory listing to confirm the completeness andaccuracy of inventoryrecalculate cost and net-Audit software can be utilised to realisable value for a sample of inventory.(ii) Advantages of using CAATS-

51、 CAATs enable the audit team to test a large volume of inventory data accurately and quickly.一CAATs can test program controls within the inventory system as well as general IT controls, such as passwords.一CAATs reduce the level of human error in testing and hence provide a better quality of audit ev

52、idence.一CAATs results can be compared with traditional audit testing; if these two sources agree, then overall audit confidence will increase.(iii) Disadvantages of using CAATS-The cost of using CAATs in this firstyearthere will be significant set up costs, it consuming process which increases costs

53、.willwillalsobe high as be a time- As this is the first time that CAATs will be used on Lily audit, then the team may require training on the specificCAATs to be utilised.- If testing is performed over the live inventory system, then there is a risk that the data could be corrupted or lost.一The inve

54、ntorysystem may not be compatiblewith theaudit firm's CAATs, in which case bespoke 定做的 CAATs may be required, which will increase the audit costs.15.2013 June Q1 (c) 4 m FOUR application controlsDocument counts - the number of invoices to be input are counted, the invoices are then entered one b

55、y one, at the end the number of invoices input is checked against the document count. This helps to ensure completeness of input.Existence checks- the system is set up so that certain keydata must be entered, such as supplier name, otherwise the invoice is rejected. This helps to ensure accuracy of

56、input.One for one checking the invoices entered into the systemare manually agreed back one purchase invoices. This helps toby one to the originalensurecompletenessandaccuracy of input.Review of output to expected valuean independentassessment is made of the value of purchase invoicesto beinput, thi

57、s is the expected value. The invoices are input andthe total value of invoices is comparedto the expectedvalue. This helps to ensure completeness of input.16. 2014Dec Q6 (a) 5mISA 620 using the work of anexpertRelianceon the workofan independentvaluer-ISA 500Audit Evidencerequiresauditors to evaluate thecompetence, capabilitiesincludingexpertise and objectivityofmanagementexpert.一This would include considerationof theualificationsofself