Last summer I successfully passed ACCA exam, P7 “Advanced Audit & Assurance”. While preparing for the exam, I designed succinct and universal “question tackling plan”, which helped to structure my ideas on auditing. In this post I would like to share my knowledge just before coming ACCA examination session.
I believe it would be useful for all exams related with financial audit. So the candidates for qualifications like CPA or ICAEW are welcomed to utilize it as well. J
The logic is simple: the plan consists of common subjects/questions and points suggested to be addressed.
Question Tackling Plan
1. Ethics area question
1.1. Technical competence;
1.2.Objectivity/Independence (possible threats: self-review, familiarity, intimidation, self-interest, advocacy)
1.3. Professional behavior;
1.4. Integrity;
1.5. Confidentiality.
Mnemonic: TOPIC
2. Professional (audit business) area question
2.1. Competence;
2.2. Resources/costs;
2.3. Reputation;
2.4. Staff quality;
2.5. Quality control: Acceptance; Directorship; Supervision; Review; Consulting; Disputes.
3. Audit Opinion related question
3.1. Clarity;
3.2. Details (standards, amounts, scope);
3.3. Structure (is heading on the right place?) of opinion and its Consistency (starts like “except for” and finishes like adverse opinion);
3.4. Types of appropriate opinions. This depends on evidences (sufficient, mistake material and pervasive?);
3.5. Prior year opinion.
4. Audit Matters (audit evidence/process) question
4.1. Materiality;
4.2. Standard breached (IFRS, recognition, valuation criteria etc.);
4.3. Risks of misstatement;
4.4. Impact on Audit Opinion;
4.5. Reliability (source of evidence).
5. Audit Evidence question
Mnemonics:
Sources of evidence - DADA3: Document Asset Director (interview/representations) Accounting record 3rd Party | Procedures AE IOU: Analytical (plausibility/predictability) Enquiry & Confirm (written/verbal) Inspection (documents/assets) Observation (assets, process) RecalcUlation (opening balance check) |
Elements of evidence:
5.1. General: budgets/plans, accounting policy;
5.2. Calculations: rates, models, risks, probabilities, impairment reviews, useful lives, assumptions reasonableness explanation;
5.3. Disclosure: draft notes;
5.4. Documents types:
5.4.1. Bank statements, invoice, bill, dispatch/delivery note;
5.4.2. Contract, agreement, insurance policy, title deed;
5.4.3. Claim litigation copy, insurance claim;
5.4.4. Log books, time-sheets;
5.4.5. Minutes, orders, policies;
5.4.6. Correspondence, letters;
5.4.7. Tax returns;
5.5. Reconciliations (with tax authority, debtor), confirmations;
5.6. Record of discussion, interview, talk with employees;
5.7. Valuation reports, surveys;
5.8. Breakdowns (check for misclassification), samples.
Golden Rule:
Your answer should be always close to the question scenario: (1) the answer should be relevant; (2) the question text contains hint for answer.
You are welcomed to share your tips for audit exams. Good Luck! J
Disclaimer:
"This group is not associated with or approved by ACCA and the views expressed on this page do not necessarily reflect the views of ACCA".
