Audit Firm: ACCA exams

Audit firms are interested to hire and retain qualified accountants. For example, Big4 firms provide support to their employees during their study in college to obtain qualification.  ACCA (The Association of Chartered Certified Accountants) is one of the professional accounting bodies certifying accountants through exams and experience. ACCA exams test the students very rigorously and they are not easy to pass if you are not well prepared ahead of time for it. Here are few tips about approaching the ACCA exams that will prove to be helpful in your preparations and to get you pass these exams.

Familiarity with Syllabus

Get yourself familiar with the syllabus of ACCA certification. ACCA has two levels; one is the Fundamental level that includes 9 papers from F1 to F9. And the other Level is called Professional level that include a total of 7 papers from P1 to P7 but you will be given a choice to attempt any two papers among P4 to P7. Choose among the papers from P4 to P7 wisely as you may get stuck in one or two papers in the end and it can waste your exam attempts, time and money.

Learning material

Choosing your books from which to study for the exams is a very major step as it can determine your success or failure from the start. ACCA's new Approved Content Providers are:

• Becker Professional Education
• BPP Learning Media
• Kaplan Publishing

Exam Paper Analysis

After when you have finished your course well at least once you are ready to take a look at the exam papers. Analyzing exam papers for trends is very important as it can give you clues about which topics to give more weightage and which topics demand less preparation. Try to attempt the full paper in actual time bounded exam pressure simulated scenario. This will give you a very good idea of where you are lacking. Do you need to concentrate more on few topics or you need to grasp the important topics well so as to finish the paper in time.

On Exam day

Sleep well before exam day is a cliché we hear from our seniors and teachers. This is actually very important for your performance on exam day. If you will feel relax you will perform and deliver in a much better way. ACCA exams have 15 minutes reading time for reading the question paper. Use this time efficiently. Plan the first question you have to answer when the reading time is over. Also you can arrange the questions in the in the order of difficulty during that time. Attempt the easy questions first and then go for the difficult ones. When answering questions, understand the requirements of the question and write only to the point answers. Remember DO NOT leave any question unanswered of you have time remaining. There is no negative marking in these exams and writing one or two important concepts well, even if you don’t know the complete answer will secure you the minimum marks that will help you to cross the minimum passing threshold for the whole paper.

After the exam

Try avoid discussing the paper if you are going to attempt another paper in a day or two as all you have in your hands now is to get ready for the next paper and try not to repeat the mistakes which you have committed in today’s paper.

In the end I would share this beautiful quote with you.

The reason why most people face the future with apprehension instead of anticipation is because they don't have it well designed." -- Jim Rohn.

Sources:

• http://www.accaglobal.com/gb/en/discover/about.html
• http://www.accaglobal.com/ca/en/student/your-study-options/alp-content.html
• http://www.accaglobal.com/us/en/student/exam-support-resources.html

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".

i-Monday: You Are Absolute Center of Universe

“Here is just one example of the total wrongness of something I tend to be automatically sure of: everything in my own immediate experience supports my deep belief that I am the absolute center of the universe; the realist, most vivid and important person in existence. We rarely think about this sort of natural, basic self-centeredness because it's so socially repulsive. But it's pretty much the same for all of us. It is our default setting, hard-wired into our boards at birth. Think about it: there is no experience you have had that you are not the absolute center of. The world as you experience it is there in front of YOU or behind YOU, to the left or right of YOU, on YOUR TV or YOUR monitor. And so on. Other people's thoughts and feelings have to be communicated to you somehow, but your own are so immediate, urgent, real.”

David Foster Wallace was an English and creative writing professor, as well as an influential author. His most famous works were Infinite Jest and The Pale King, a novel of his which was found unfinished, three years after Wallace committed suicide.

Despite the internal struggles Wallace faced, this quote of his reminds us that it’s okay to be egocentric, because that’s how we were created and that’s all we’ve ever know. By realizing this, we are encouraged to own that self-centeredness, utilizing ourselves to be the best we can be, and feeling okay about putting our own needs first.

From: Commencement address delivered by the late David Foster Wallace, professor at Pomona College, CA and author, for the 2005 graduating class of Kenyon College.

Picture reference:

https://en.wikipedia.org/wiki/David_Foster_Wallace_bibliography

Week-End: Accounting Jokes

Jokes that only accountants and auditors will love J

• What do you call a trial balance that doesn't balance? A late night.
• What do you call an accountant with an opinion? An auditor.
• A fine is a tax for doing wrong. A tax is a fine for doing well.
• Why did the accountant cross the road? Because she looked in the files and did what they did last year.
• It's accrual world.
• How can you tell when the chief accountant is getting soft? When he actually listens to marketing before saying no.
• An accountant is someone who solves a problem you didn't know you had in a way you don’t understand.

 See more at: http://www.businessinsider.com/jokes-for-accountants-2014-5

Audit News Briefing: 27 November 2015

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:

November 24, 2015

CFO Daily News

Auditors scrutinized by regulators when companies face fraud allegations

Three powerful regulatory entities were highlighted in the Internal Controls segment of CFO Daily last Tuesday (Nov 24) –

·         the Department of Justice (DOJ)

·         the Securities and Exchange Commission (SEC) and

·         the Public Company Accounting Oversight Board (PCAOB).

One of these three formidable entities could get attention whenever financial fraud allegations arise at any public company. DOJ leads the pack by receiving complaints and commencing criminal investigation. Collaboratively, the SEC carries out two federal initiatives aimed at detecting and prosecuting financial fraud:  the Financial Reporting and Audit Task Force and Operation Broken Gate. PCAOB investigations originate from several sources, including the PCAOB’s own investigations, information disclosed in SEC or other agency investigations, or other public sources.  The PCAOB has authority to investigate accounting firms and associated persons primarily to ensure compliance with professional responsibilities.

Strong compliance program determines what action or sanction may necessarily be imposed. Strong internal controls is said to be the key to enable auditors to do their jobs more effectively and efficiently.

Please follow link for details:

http://www.cfodailynews.com/auditors-scrutinized-by-regulators-when-companies-face-fraud-allegations/

November 20, 2015

Accounting Today

U.S.: CPA Pleads Guilty in Accounting Fraud Scheme

Last Wednesday (Nov 18), a New York CPA firm partner pleaded guilty to participating in a multimillion-dollar accounting fraud scheme. He performed year-end audits of the financial statements for an unidentified Florida-based cosmetics company.

“Marc Wieselthier has admitted to lying about the financial condition of a company to induce banks to lend the company millions of dollars,” said Manhattan U.S. Attorney Preet Bharara in a statement. “Relying on false information, the banks made loans that ended up defaulting with nearly $5 million still owed. Wieselthier now joins his co-conspirators in awaiting sentencing for his crime.”

Please follow link for details: http://www.accountingtoday.com/news/audit-accounting/cpa-pleads-guilty-in-accounting-fraud-scheme-76480-1.html

November 16, 2015

Accounting Today

PwC Transforms Audit Practice with Data Analytics

PricewaterhouseCoopers audit practice is becoming more sophisticated as the firm is leveraging data analytics technology. The transformation includes documentation or evidence management as well as audit process automation.

Bill Brennan, managing partner of assurance transformation at PwC – said:

·         “We’d like to think that we have been transforming the way we audit for decades, especially in light of everything that’s been going on in the marketplace, particularly with the regulatory changes that have impacted us,”

·         “Starting north of 10 years ago, we introduced to our auditors worldwide Aura. It’s basically the way we execute the documentation and where our evidence resides for our audit efforts. Aura is used by almost 100,000 people all around the world.”

·         “We automate certain processes that we’ve been doing manually for decades, maybe even a century,”

·         “The second piece is process. How can we improve the process by which we execute the audits, the approach, if you will. We have a tagline called ‘Engagement, Performance and Quality.’ It takes project management process improvement and injects it into the equation. You can have the greatest technology in the world, but if you don’t have good processes, it’s going to be useless. Then the last thing is people. How do we develop our people? How do we train them? How do we equip their skills such that they can adapt to the changes in not only the regulatory environment, but our own audit approach. How can we teach them to leverage data and analyze data in a wholesome way? You can have a great tool, but if the people are not equipped to do it, then it’s useless.”

Please follow link for details: http://www.accountingtoday.com/blogs/debits-credits/news/pwc-transforms-audit-practice-data-analytics-76435-1.html

Audit Method: Accounting Estimates

Accounting estimate as defined in ISA 540 – “An approximation of a monetary amount in the absence of a precise means of measurement. This term is used for an amount measured at fair value where there is estimation uncertainty, as well as for other amounts that require estimation. Where this ISA addresses only accounting estimates involving measurement at fair value, the term “fair value accounting estimates” is used.”

Some financial statement items cannot be measured precisely, but can only be estimated. For purposes of this discussion, such financial statement items are referred to as accounting estimates. The nature and reliability of information available to management to support the making of an accounting estimate varies widely, which thereby affects the degree of estimation uncertainty associated with accounting estimates. The degree of estimation uncertainty affects, in turn, the risks of material misstatement of accounting estimates, including their susceptibility to unintentional or intentional management bias.

Test of accounting estimates for bias

First perform a retrospective review of significant accounting estimates reflected in the financial statements of the prior year to determine whether management judgments and assumptions relating to the estimates indicate a possible bias on the part of management.

The significant accounting estimates selected for testing should include those that are based on highly sensitive assumptions or are otherwise significantly affected by judgments made by management. Consider the results of this retrospective review in evaluating the current-year estimates. If we identify a possible bias on the part of management in making prior-year accounting estimates, we should evaluate whether circumstances producing such a bias represent a risk of a material misstatement due to fraud.

Secondly, consider whether differences between estimates best supported by the audit evidence and the estimates included in the financial statements, even if they are individually reasonable, indicate a possible bias on the part of the entity's management. If so, reconsider estimates taken as a whole.

Practice

For accounting estimates (e.g., liabilities for certain employee benefits plans and legal contingencies), evaluate the reasonableness of the methods and assumptions management used to make the estimates. If management's methods and assumptions were reasonable, test the data and assumptions underlying the estimates, and re-compute the estimates. If management's methods and assumptions were not reasonable, develop an independent range of reasonable estimates and determine whether management's estimates fall within that range. 

Audit Firm: Big4 Financial Performance 2015

The Big Four firms have recently announced their results for the fiscal year 2015. PwC has retaken number one spot from Deloitte as the world’s largest firm by revenue. KPMG is yet to announce its results.

A brief overview of the performance of these firms in comparison with the previous year is as follows.

PwC

PwC has recorded a global annual revenue increase of 10% to $35.4bn (£23.34bn), which represents its strongest growth in 10 years. Consulting now accounts for more than 30% of PwC’s total revenues after growing 18% to $11.2bn during the 2015 fiscal year. This was boosted by the acquisition of Strategy& (formerly Booz & Company) in April 2014. Revenues in PwC’s auditing division grew more slowly, rising 6.2 per cent to $15.2bn in a year marred by the profit misstatement scandal at Tesco, a PwC audit client.

According to Dennis Nally, Chairman of PricewaterhouseCoopers International Limited,

“As we look at the results for the last 12 months, all of our lines of service showed really positive growth – led by Advisory which is up 18%, Tax up 7% and our Assurance business notwithstanding some really difficult competitive market pressures – up 6%.”

DELOITTE

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries.

Deloitte member firms (Deloitte) reported aggregate revenues of US$35.2 billion for the fiscal year ended 31 May 2015 (FY15), representing 7.6 percent growth in local currency terms.

EY

EY announced combined global revenues of US$28.7b for its financial year ended 30 June 2015. This represents an 11.6% increase over financial year (FY) 2014 revenues in local currency, outpacing FY14 growth (which had increased by 6.8% over FY13).

All of EY’s service lines continued to grow in FY15 ahead of their FY14 growth: Advisory grew 17.6% (vs. 14.4% growth in FY14); Assurance 8.1% (vs. 4.5% in FY14); Transaction Advisory Services (TAS) 15.5% (vs. 6.5% in FY14); and Tax 10.3% (vs. 4.3% in FY14).

In FY15, EY headcount reached 212,000 globally – an all-time high.

A graphical representation of the performance of these three firms is shown for comparison purpose.

Head Count Graph

 Revenue Graph

KPMG

KPMG is due to report its 2015 results in December. KPMG International Cooperative ("KPMG International") is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. We are presenting here KPMG’s 2014 and 2013 performance comparison.

The KPMG network delivered strong growth and recorded-high revenues of USD24.8 billion for the 2014 fiscal year, an increase of 6.3 percent in local currency terms over the prior year (2013), recording growth across Audit, Tax and Advisory.

Head Count Graph

Revenue Graph

References:

• http://www.pwc.com/gx/en/about-pwc/global-annual-review-2015/campaign-site/pwc-global-annual-review-2015.pdf
• http://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-gr15-summary-final.pdf
• http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-reports-2015-global-revenues-up-eleven-point-six-percent
• https://home.kpmg.com/xx/en/home/media/press-releases/2014/12/kpmg-delivers-strong-growth.html

i-Monday: From Amateur Photographer to Inspiration

Brandon Stanton grew up in a suburb of Atlanta. He had got degree of history from the University of Georgia. His first job was serving as a bond trader in Chicago back in 2006. After few years, he was totally sliding away off his career. He decided to try something different. He bought professional camera at first and wandered the streets to catch exquisite moments. He is now author of 3 Best Selling books.

 “Humans of New York” is an amazing story, and it’s a story that could not have happened ten years ago. Without social media, I’d probably just be a quirky amateur photographer with a hard drive full of photos. I’d be cold-calling respected publications, begging for a feature. I may have even quit by now. Instead, I’ve discovered a daily audience of nearly a million people. Or should I say they discovered me.I don’t want to “cash out” or “monetize” HONY [Humans of New York]. I like to say it publicly because I want my audience to keep me on mission. HONY print sales have raised nearly $500,000 for charity in the past six months. I want to further monetize the site for nonprofit ventures. I honestly want to “give” HONY to New York in some way”.

“I Just Have Changed the World’s Sight”, 

Brandon Stanton

Information reference: This was excerpted from the taken blog “30 Under 30” from “Times Magazine” and an online interview taken in 2013.

Picture reference: www.johnstepper.com

Week-End: Work Smart

They say you can do anything if you just work hard. Well, they’re wrong.

Here are seven tips to help you work more efficiently and more productively without expending any additional effort—here’s how to work smarter, not harder:

• Walk away - Breaks can actually make you more productive.
•  Recognize and eliminate distractions.
• Ignore low-priority items.
• Create routine habits.
• Work in chunks.
• “Multitask” - Try to fill the empty spaces with productive work.
• Work around your strengths and weaknesses.

By: Larry Alton

http://www.success.com/article/7-shortcuts-to-work-smarter-not-harder

Audit News Briefing: 19 November 2015

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:

November 18, 2015

SBWire

Global IT Spending by Audit Firms Is Expected to Reach over USD 5 Billion Dollars in Revenues by 2019: ResearchMoz

Press Release: Technavios market research analysts predict the global IT spending by audit firms will witness a steady growth face, reaching over USD 5 billion dollars in revenues by 2019. The audit market is highly concentrated and dominated by the big four firms, including Deloitte, E&Y, KPMG, and PwC. But, mandatory auditor tendering and rotation reforms by various regulators across the globe had led to the entry of several audit firms in this market. Big Four firms are slowly losing their market share as these firms further intensify the competition. Also, audit services are highly regulated and commoditized, thereby reducing differentiation opportunities for audit firms. It is leading to the increased adoption of information technology by audit firms to provide differentiation in their offerings. Please follow link for details: http://www.sbwire.com/press-releases/industry-analysis/global-it-spending-by-audit-fi/release-642397.htm?utm_source=djournal&utm_medium=feed&utm_campaign=distribution

ResearchMoz latest research report is entitled "Global IT Spending by Audit Firms 2015-2019: Industry Research, Analysis, Shares, Size, Trends, Growth, Survey, Forecast".

November 17, 2015

CivilSociety.co.uk Finance

Audit firms 'missed fundamental risks' of Kids Company model, say MPs

Bernard Jenkin MP, chair of the Public Administration and Constitutional Affairs Committee said: The auditors missed the “fundamental risk” that Kids Company operated a “high risk model” of committing almost all its funding to helping its client. This should have been “taken more seriously”. This was the major issue pointed out when MPs have criticised auditors PwC, PKF Littlejohn and Kingston Smith for not scrutinising Kids Company properly and missing key indicators during their dealings with the charity before it folded. Please follow link for details: http://www.civilsociety.co.uk/finance/news/content/20782/audit_firms_missed_fundemental_risks_at_kids_company_say_mps

November 17, 2015

MarketWatch

Big Four audit quality can differ widely — even at the same firm

Board member, Lewis H. Ferguson of the Public Company Accounting Oversight Board (PCAOB) and chair of the global public policy committee working group of the International Forum of Independent Audit Regulators (IFIAR) – at MarketWatch – recently discussed about the significant roles of PCAOB as projected by the U.S. Congress and IFIAR in determining cross-border aspects of audits.

He emphasized that: “It would be a mistake to presume that an audit firm’s inspection results in the United States necessarily speak to the quality of its global network. There can be a real difference among audit deficiency findings for the firms in the United States and what we see at their affiliates around the globe.” In conclusion, “While these inspection results are not a scorecard or a stand-alone measure of audit quality, they do reflect differences in the inspection results among audit firms and in different countries. They may well represent differences in audit quality among firms. At the least, they reflect that each firm’s global network also faces different auditing challenges.”

Please follow link for details: http://www.marketwatch.com/story/big-four-audit-quality-can-differ-widely-even-at-the-same-firm-2015-11-17

Audit Method: Testing Revenue

Audit-is-cool continues to supply auditors with information on different topics of audit methodology. This week we provide most popular procedures to provide assurance on financial statement line "Revenue".

TEST OF CONTROLS

• Make a selection of sales transactions from independent source records e.g. shipping records, delivery orders, purchase orders etc.
• Test the completeness of source records by ensuring their numerical sequences.
• Check that sales data is input only once and is subject to validation.
• Access to sales system is restricted by user ID and password.
• Check that prices are charged in accordance with the approved price list.
• Check that the quantity discounts are in accordance with the approved limits.

ANALYTICAL PROCEDURES

• Have the client prepare a comparative monthly analysis of sales by product line, division or other business segment, including gross sales, returns and allowances and discounts. Verify the clerical accuracy of the analysis.
• Perform analytical procedures on sales by developing an expected amount of sales based on prior year’s figures or current period economic conditions and then comparing it with actual amount. Any significant differences should be enquired into and corroborated.

TEST OF DETAILS

• Have the client reconcile totals for gross sales and sales deductions to the general ledger control accounts.
• Verify the sales invoices and check that the customer name, product description and quantities and price are mentioned on the invoice and compare it with the description of sales order.
• Review applicable sales invoices and shipping documents to determine the accuracy and validity of each selected sales transaction and sales tax charged thereof, if applicable.
• Document the criteria for selection of sales invoices for verification purposes and ensure that sample is representative both for volume and amount of transaction.
• Scan the sales journal to check whether there is any duplication of sales invoice numbers or gap in the sequence of invoice numbers to identify invoices cancelled, if any.
• Review significant sales returns and credit memos issued during the period as well as subsequent to the balance sheet date to determine whether they were properly authorized and recorded in the proper period.
• Discuss with appropriate client’s personnel the existence of significant uncertainties at the time
• of sales, if any, like recoverability, warranty and other obligations, price protection agreement or revenue limitation.
• Make a selection of transactions from recorded sales and shipping records for prior and after period-end and ensure proper cut-off.
• Ensure that all sales in foreign currencies are translated using exchange rate prevailing at the date of sale (a rate that approximates the actual rate for example, weekly / monthly average is also acceptable).
• Consider reasonableness of revenue by multiplying the number of units with the average selling price.
• Determine that the accounting policies and methods of revenue recognition are appropriate and are applied consistently.

Audit Firm: FIFA scandal

The Fédération Internationale de Football Association (FIFA) is an association governed by Swiss law founded in 1904 and based in Zurich. It has 209 member associations and its goal, enshrined in its Statutes, is the constant improvement of football.

KPMG was appointed as the auditor of FIFA in 1999; a year after Sepp Blatter (the ex-president of FIFA) took charge of the FIFA president office. KPMG began auditing FIFA’s accounts and they have had the contract ever since.

Recently a scandal of corruption and bribery emerged in the Football Body. The US Department of Justice has indicted a total of 14 current and former FIFA officials and associates on charges of "rampant, systemic, and deep-rooted" corruption following a major inquiry by the Federal Bureau of Investigation (FBI).The US indictment alleged that US and South American sports marketing executives paid and agreed to pay "well over $150m" in bribes and other illegal payments to obtain lucrative media and marketing rights to international football tournaments. That does not include other possible alleged corruption around the world.

According to FIFA 2014 Annual Report, all member associations and confederations have to provide FIFA with an audited financial statement every year. Additionally, FIFA arranges a central audit of 40 member associations and one confederation each year through its statutory auditors KPMG to verify that all financial assistance payments are in compliance with the FAP (Financial Assistance Programme) Regulation.

The question arise that why the auditor of FIFA, KPMG Switzerland not been able to ask pertinent questions about the corruption and bribery issues going on in the football body. After when the issue became public, a review of the audit work performed by KPMG Switzerland has begun and it is going to be conducted in consultation with KPMG International.

Additional Thoughts

Audit firms should stay skeptical about any mismanagement going on in the organization which they are auditing. If the detection of fraud doesn’t come under the purview of a statutory audit they can still ask the organization for conducting a forensic audit if they consider any allege fraud matter material enough. Management letter of weakness can be used as an effective tool for communicating with those charged with governance and advising them of any particular control weaknesses the auditors have identified during the audit, and suggestions to remedy these.

Week-End: Work-Life Balance

Achieving an optimal work life balance is something every professional look up to and auditors are no different. It is important for improving productivity, building and maintaining strong relationships and stress management for a lasting life.

Here are few tips from some of the busy executives about achieving work life balance. Enjoy these tips for a better work life balance.