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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

P7
2015

2/14/2015

ADVANCE AUDIT
& ASSURANCE
INTERNATIONAL STREAM

KASHIF KAMRAN- FCCA- P7 (C)2015

1

2

AN INTRO TO P7
2015 EXAMINATIONS

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
P7 Advanced Audit and Assurance is designed to enable
candidates to apply relevant knowledge and skills in evaluating
and concluding on audit and assurance engagements
...
If you have work experience in this area, or have ambitions to
work in audit and assurance, then this exam could be a good
choice for you
...
You should also think about how comfortable you are with the
fundamental areas of audit and assurance
...
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2

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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5

ILL ADVISE TO CHOOSE P7
 Lisa Weaver, examiner for P7 paper suggest that candidates are
ill-advised to choose Paper P7 as an Options paper if they:
1
...
Struggled with preceding audit exams
3
...
Are uncomfortable discussing arguments or reaching
opinions
...
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3

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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TRANSFER OF KNOWLEDGE FROM F8 TO P7
1
...

3
...

5
...

7
...

9
...


7

Professional ethics and ACCA’s Code of Ethics and Conduct
The scope of the internal audit function
Assessing the risks of material misstatement
Understanding the entity and its environment
Materiality, fraud, laws and regulations
Analytical procedures
Planning an audit
Communication on internal control
Audit procedures
The audit of specific items
KASHIF KAMRAN- FCCA- P7 (C)2015

TRANSFER OF KNOWLEDGE FROM F8 TO P7

8

11
...
Subsequent events
13
...
Audit finalization and the final review
15
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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TRANSFER FROM P2 TO P7
 IAS-12
 IAS-16
 IAS-17
 IAS-18
 IAS-19
 IAS-21
 IAS-23
 IAS-24
 IAS-36

 IAS-36
 IAS-37
 IAS-38
 IAS-40
 IFRS-2
 IFRS-3
 IFRS-5
 IFRS-7
 IFRS-8
 IFRS-9

 Group
accounting

KASHIF KAMRAN- FCCA- P7 (C)2015

Specific features of P7

10

1
...
P7 paper focus on audit procedures on accounting standards(P2
knowledge)
3
...

4
...
P7 exam question styles reflect email correspondence in Q1 of the paper
...
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5

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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11

Pass Rates
Dec Jun
-07 -08

Dec Jun
-08 -09

Dec Jun
-09 -10

Dec Jun
-10 -11

Dec Jun
-11 -12

Dec Jun
-12 -13

Dec Jun
-13 -14

33 33 39 37 39 32 34 31 31 32 32 31 33 36
•A number of common issues arose in candidates’ answers that
contributed to the disappointing pass rate:
1
...
Identifying issues but not explaining, evaluating or assessing the
issues as required in sufficient detail
...
Illegible handwriting and poor presentation
...
Lack of knowledge of certain fundamental syllabus areas
5
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
A thorough understanding of the relevant audit, assurance
and financial reporting regulations that fall within the syllabus
2
...
The ability to have an independent opinion, backed up by
reasoned argument
4
...
An appreciation of the fast-moving developments in audit
and assurance practices
...
I want candidates who

choose to attempt this paper to base their decision on an
understanding of the core components of the syllabus and how
they will be tested
...
”

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Key examinable areas
Planning and risk assessment
Evidence
Reporting
Ethics and professional issues
Other assignments
KASHIF KAMRAN- FCCA- P7 (C)2015

P7 HIGH ACHIEVER
PAKISTAN WIDE POSITION
JUNE 2011
CAMS PECHS Campus

 Quratulain Gul
 “I always did maximum past
paper practice as I could,
reading
of
articles
and
examiner comments are very
necessary through which I
came to know what examiner
actually wants
...
com

18

18

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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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 Uraiz Sheikh
P7 HIGH ACHIEVER
73 Marks
June 2014 Examinations
CAMS PECHS Campus

 “According to me the maximum
(80-90%) practice of past paper in
exam condition atmosphere and
then deep analysis of examiner’s
answer or (as for me) if you get
your answers checked by Sir
KASHIF KAMRAN, is a primary route
to get success and good marks in
P7 paper
...
In last I would say that work
hard as “Hard work is key to
success
...
So
for Success and achieving good marks in
P7 three things are most important
...
Practicing as much past
papers that will give the actual idea of
how the paper need to be tackled and
last but not the least time management in
the paper is too important if you don't
know the answer or forget something go
ahead but try to attempt as much paper
you can but don't compromise quality in
the end because quality in P7 is also
important
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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21

P7 COURSE
2015 EXAMINATIONS

KASHIF KAMRAN- FCCA- P7 (C)2015

22

Course
 This P7 presentation has been split into 16 topics and two
categories namely :
 Focused examinable areas
 Unfocused examinable areas

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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KAPLAN CHAPTER REFERENCE :

1

TOPIC 1
...
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13

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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International frameworks for quality controls

27

 International Standards on quality controls (ISQC) are
issued by IAASB as quality control framework for audit firms
to help them establish a quality control system within the firm
and ensure a quality of service is offered to the client
...


KASHIF KAMRAN- FCCA- P7 (C)2015

International audit and practice statements

28

 IAASB also issues International audit and practice
statements (IAPS) as additional guidance is several areas to
help the audit firm to understand and apply the relevant
area in the conduct of audit
 1010- environmental matters in audit of financial
statements
 1013- Electronic commerce : effect on audit of financial
statements

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

30

TOPIC 1
...
[10] / 12/07 Nate & Co[5]

KAPLAN CHAPTER REFERENCE :

7

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Money laundering is defined as a process by which
criminal attempt to conceal the true origin and
ownership of the proceed of their criminal activities
...

KASHIF KAMRAN- FCCA- P7 (C)2015

32

Money laundering process

INTEGRATION

LAYERING
PLACEMENT
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ACCA technical factsheet

35

 ACCA has published several factsheets on the topic “ money
laundering”
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ACCA guidance
1
...
Staff training- money laundering legislations and internal
reporting procedures
3
...
Auditor should review client anti-money laundering procedures
5
...
Reporting of suspicion to SOCA should take precedence over
client confidentiality
7
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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39

Customer due diligence (CDD)
 Know your client procedures at acceptance stage (KYC)
 Do not accept client which are “too high risk”
 Taking details of
 Certificate of incorporation for business
 Details about their directors/ members
 Certificate of registered address

KASHIF KAMRAN- FCCA- P7 (C)2015

40

TOPIC 1
...
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20

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

Management
regulations

2/14/2015

responsibilities

for

laws

and

41

 To ensure that the entity complies with relevant laws and
regulations
 To establish effective arrangement for preventing and detecting
non-compliance

KASHIF KAMRAN- FCCA- P7 (C)2015

Auditor responsibilities
regulations

for

laws

and

42

 The auditor is and cannot be held liable for preventing noncompliance
...

 In order to plan audit the auditor should gather general
understanding of the legal and regulatory framework
applicable to the entity and the industry and how the entity is
complying with framework
 When an auditor become aware of any possible instance of noncompliance , the auditor should document and discuss the matter with
appropriate level of management
...
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21

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Step by step auditor responsibility
Obtain KOB
Enquire management and TCWG
Obtain sufficient and appropriate audit evidence
Remain alert
Obtain written representation

2015 EXAMINATIONS

PROFESSIONAL LIABILITY
KAPLAN CHAPTER REFERENCE
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

ISA 240 AUDITOR AND FRAUD
06/10 Mac Co
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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EXTENDED READING

47

 [APRIL 2009]
 LISA WEAVER ARTICLE : MASSAGING THE NUMBERS
 [MARCH 2009]
 MARTYN JONES : (F8 ASSESSOR ARTICLE) ISA 240 (REDRAFTED),
AUDITORS AND FRAUD

KASHIF KAMRAN- FCCA- P7 (C)2015

What is the auditor’s responsibility for fraud in an audit of financial
statements ?

48

 The primary responsibility for prevention and detection of fraud
rests with both those charged with governance of the entity and
management
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2

PROFESSIONAL LIABILITY

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
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26

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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53

Auditor liability for negligence

SHAREHOLDERS

LIABILITY IN
CONTRACT

THIRD PARTIES

LIABILITY IN TORT

AUDITOR
LIABILITY

KASHIF KAMRAN- FCCA- P7 (C)2015

ACCA Technical Factsheet 84

54

 U/S 495 of CA2006, the auditor of a company have a duty to
report to the company’s members whether in their opinion the
financial statements have been properly prepared and give a
true and fair view

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
3

HISTORICAL COURT CASES

KAPLAN CHAPTER REFERENCE :

8

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

60

Bannerman case

• Royal Bank of Scotland vs
...

 RBS claimed that due to fraud the accounts of the previous
years had misstated the true financial position of the company
(APC limited) and the defendant had been negligent in not
detecting it
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Bannerman Johnstone McLay (1998)
• The court held in favor of RBS on the basis that the auditor knew
the identify of third party, the use to which information would be
put and that the bank intended to rely on the information for a
known purpose
...
Touche Ross ( 1990)
 Perhaps the most significant case as far as auditors are
concerned came via the House of Lords decision in Caparo
Industries v Touche Ross & Co ( 1990)
...

 Before takeover bid Caparo has minority shareholding in
Fidelity PLC
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
4

LIMITING AUDITOR LIABILITY
06/08 Blod [5]

KAPLAN CHAPTER REFERENCE :

8

KASHIF KAMRAN- FCCA- P7 (C)2015

64

Limiting auditor liability

OVERVIEW

QUALITY OF
AUDIT WORK

DISCLAIMER OF
LIABILITY

INSURANCE

INCORPORATION/
LLPS/ CAPPING
LIABILITY

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
This is done by way of a liability
limitation agreement (LLA)

KASHIF KAMRAN- FCCA- P7 (C)2015

Disclaimer of liability paragraph in audit report

66

 “ This report is solely made to the company’s members
...

 To the fullest extent permitted by law , we do not accept
responsibility to anyone other than the company and company’s
members for our audit work , for this report, or for the opinions we
have performed
...
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33

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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67

Incorporation
 Incorporation would protect the partners from personal
bankruptcy
...
Further there could be adverse tax implication and
the firm would need to publish accounts and be subject to audit

KASHIF KAMRAN- FCCA- P7 (C)2015

Limited Liability Partnerships (LLPs)

68

 LLPs permit the partners not to be personally liable for liabilities of
the firm
...
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34

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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69

Capping Liability
 Capping liability allows the auditor to limit their liability for an
individual audit
...

 In Germany where this cap is effective limit auditor liability in case
of non –quoted companies at €1,022,500 and for quoted
companies € 4,090,000
...
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35

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Professional indemnity insurance (PII)

71

 PII is insurance taken out by an accountant against claims by
clients and third parties arising from the work that the accountant
has carried out
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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73

KAPLAN CHAPTER REFERENCE :

8

TOPIC 2
...


74

 UK COMPANIES ACT 2006

 “Section-534 allows auditor to contractually agree the LLA with the
client”

 ACCA PERSPECTIVE

 “ Does not encourage use of disclaimer of liability paragraph on a regular
basis, nor does ACCA believe that, where an audit is properly carried out ,
such clauses are necessary in order to protect auditor interest”

 US PERSPECTIVE

 “ US believe in enhancing quality as a solution to reduce auditor
liability”
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
AUDITOR LIABILITY FOR
NEGLIGENCE

75

 Expectation Gap : Auditor responsibilities vs
...


KASHIF KAMRAN- FCCA- P7 (C)2015

DEBATE : MANAGEMENT VS
...
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38

2/14/2015

2014 EXAMINATIONS

QUALITY CONTROL
4

KAPLAN CHAPTER REFERENCE :
KASHIF KAMRAN- FCCA- P7 (C)2015

Focused examinable area

TOPIC 3

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

77

78

Overview

QUALITY
CONTROL AT
FIRM LEVEL
(ISQC-1)

QUALITY
CONTROL FOR
INDIVIDUAL
AUDIT (ISA-220)

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

ISQC-1 Quality control for firms that perform audit and
review of historical financial information and other
assurance services engagement

KAPLAN CHAPTER REFERENCE :

4

KASHIF KAMRAN- FCCA- P7 (C)2015

Elements of a firm quality control system

80

Leadership responsibilities for quality
Ethics
Acceptance and continuation of client relationship
Human resources
Engagement performance
Monitoring
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

LEADERSHIP RESPNSIBILITIES FOR QUALITY

82

 Policies and procedures should be established in the
following areas:
1
...
Performance evaluation and promotion
3
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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83

ETHICS
 The firm’s policies and procedures should emphasize the
fundamental principles of the IFAC code of ethics and reinforce
them through:
1
...
Education and training
3
...
Process of dealing with non-compliance

KASHIF KAMRAN- FCCA- P7 (C)2015

84

ETHICS
 At least annually the firm should obtain written confirmation of
compliance with its policies and procedures on independence
from all firm personnel required to be independent by the IFAC
code and national ethical requirements

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Client integrity
2
...
Ethical requirements

KASHIF KAMRAN- FCCA- P7 (C)2015

HUMAN RESOURCES

86

Performance evaluation
Career development
Promotions
Estimation of personnel needs
Assignment of personnel to engagements
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

44

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

ENGAGEMENT QUALITY CONTROL REVIEW

89

Types
Hot review

Cold review

Compulsory for public
interest entities

QCP Review one to two files
each year for each partner

Conducted before signing of
an audit report

Closed engagement

KASHIF KAMRAN- FCCA- P7 (C)2015

90

MONITORING
 The firm should on a regular basis monitor the system of
quality control to ensure it is operating effectively
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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91

TOPIC 3
...
[4] / 06/08 Pulp Co[3] /12/07
Island Co [12] / 12/11 Maple Co [6]/ Pilot Paper Ingot Co
...
com

46

2/14/2015

2014 EXAMINATIONS

Obtaining and accepting
professional appointment
KAPLAN CHAPTER REFERENCE :
KASHIF KAMRAN- FCCA- P7 (C)2015

3

5

6

Focused examinable areas

TOPIC 4

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

93

EXTENDED READING

94

 [MARCH 2011]
 LISA WEAVER ARTICLE : ACCEPTANCE DECISION FOR AUDIT AND
ASSURANCE ENGAGEMENTS

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

CHANGE OF AUDITORS
06/09 Dragon Co [6]

KAPLAN CHAPTER REFERENCE :

6

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Relationship ( b/w auditor & client )
2
...
Size of firm ( client look for a big firm to conduct audit)

KASHIF KAMRAN- FCCA- P7 (C)2015

Why step down as auditor?

98

1
...
Doubts regarding client integrity
3
...
com

49

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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99

TOPIC 4
...
[10] / 06/08 Medix Co
...
”

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

51

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Information required to make proposal document

103

Client expectation ( service / time)
Need for interim audit
Known third parties
Problems with existing auditor
KASHIF KAMRAN- FCCA- P7 (C)2015

Contents of Proposal document

104

Fees and basis of fees
Responsibility of an auditor
Outline of the firm / personnel
How firm will meet client deadline / expectation ?

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
3

ADVERTISING AND FEES
12/10 Neeson Co
...
[6]

KAPLAN CHAPTER REFERENCE :

5

KASHIF KAMRAN- FCCA- P7 (C)2015

ACCA guidance on important aspects of proposal
document

Proposal
document

106

Firm outline
(advertisement
& publicity)
Fees
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Fees should be fair/ reasonable ( based upon staff seniority /
time spend/ service required)
2
...
Fees should not be on contingent basis
4
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ACCA guidance on fees

109

 Assuming there are no dramatic changes in the size or complexity of
an audit client it is reasonable to expect that the audit fee should fall
over time
...

 The client's systems and procedures should be fully documented
in the first year, this is very time consuming; in subsequent years
this information only needs updating if there has been any
major changes
 The first year of an audit is generally high risk due to a lack of
knowledge of the business; the firm is likely to respond to this risk by
assigning more senior staff to the audit, which will drive the fee up
...

 Ethical implication
 Because the fee is set low the audit firm needs to retain the client
for a number of years in order to recover its initial losses; therefore,
independence will be impaired as the audit firm will not wish to
lose the client in the short term
...
com

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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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111

TOPIC 4
...
The firm has suffered a reduction
in fee income due to increasing restrictions on the provision of
non-audit service to audit clients
...
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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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113

Proposal 1
 Cold calling (i
...
approaching directly to seek new business) the
CEO of local businesses and offering them free second opinion

KASHIF KAMRAN- FCCA- P7 (C)2015

114

Proposal 2
 Placing an advertisement in the national accountancy magazine
that includes the following :
 “ if you have an asset on which a large chargeable gain is
expected when you dispose it of , you should be interested in
best tax planning advice
...
Hawk Associates can ensure that
you consider all the alternative fact presentations so that you
minimize the amount of tax you might have to pay
...
com

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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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115

Proposal 3
 Displaying business cards alongside those of local tradesman
and service providers in supermarkets and libraries
...
Competitive rates
...
com

58

2/14/2015

2014 EXAMINATIONS

PLANNING AND RISK ASSESSMENT
KAPLAN CHAPTER REFERENCE

9

KASHIF KAMRAN- FCCA- P7 (C)2015

Focused examinable
area

TOPIC 5

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

EXTENDED READING

117

118

 [APRIL 2009]

 LISA WEAVER ARTICLE : MASSAGING THE FIGURES

 [SEPTEMBER 2010]

 CHARLES FUNG : ANALYTICAL PROCEDURES (F8/P7)

 [NOVEMBER 2009]

 MARTYN JONES : AUDIT RISK ( F8)

 [APRIL 2012]

 LISA WEAVER ARTICLE: SYLLABUS AND STUDY GUIDE(CHANGES IN RISK ASSESSMENT )

 [MAY 2012]

 LISA WEAVER ARTICLE: EXAM TECHNIQUES FOR PAPER P7

 [OCT 2012]

 LISA WEAVER ARTICLE: PLANNING AN AUDIT OF FINANCIAL STATEMENTS
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

RISK ASSESSMENT TECHNIQUES

KAPLAN CHAPTER REFERENCE :

9

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 According to the Paper P7 syllabus, there are three
different categories of risk assessment that can feature in
a requirement – business risk, audit risk, and risk of material
misstatement
...
com

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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Risk assessment techniques in P7 paper

123

TYPES

AUDIT
RISK

RISK OF
MATERIAL
MISSTATEMENTS

BUSINESS RISK

KASHIF KAMRAN- FCCA- P7 (C)2015

124

F8: Audit risk
 Audit risk is the broadest level of risk, as it includes not only
inherent and control risks, but also detection risks
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Therefore, if a requirement relates to the risk of material
misstatement, candidates are advised to focus on
inherent and control risks arising from the question
scenario
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

Risk of material misstatements approach

128

Risk of material
misstatement

Inherent risk

Control risk

EXAM QUESTION: MAGPIE &CO – JUNE 2012
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Auditors assess business risk in order to develop business
understanding, and as part of forming a view on the
overall risk of the audit assignment
...
For example, for a company
operating in a high-tech industry, technological
developments might make a particular product obsolete,
thereby causing inventory to be more susceptible to
overstatement
...
com

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131

Business risk
 However, if a question requirement in the exam involves
the specific assessment or evaluation of business risk only,
candidates should focus their attention on the specific
business risks identified from the scenario, and not develop
their answer to include other types of risk, or discuss the
impact of the risk on the financial statements
...
com

66

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Typical external risk

133

 Examples
 Changing legislation
 Changing interest rates
 Changing exchange rates
 Public opinions , attitudes, fashions
 Price wars initiated by competitors
 Import competition
 Political hazards

KASHIF KAMRAN- FCCA- P7 (C)2015

Typical internal risk

134

 Examples:
 Employees
 Failure to modernize products
 Excessive reliance on dominant CEO
 Cash flow difficulties
 Rapidly increasing gearing
 Inappropriate acquisitions
 Fraud
 Excessive reliance on few customers, suppliers etc
 System failures
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2

AUDIT METHODOLIGIES

KAPLAN CHAPTER REFERENCE :

9

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Auditor assess the system of controls put in place by directors and
ascertain whether they believe it is effective enough to be able
to rely on it for the purpose of audit
...
com

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139

F8: System audit
Believe
System is effective

System is ineffective

Auditor will carry test of
controls to ensure
control operates as it is
supposed to be

Auditor will assess the
control risk as high
Auditor will perform detailed
level of substantive testing

Auditor will perform low
level of substantive testing
KASHIF KAMRAN- FCCA- P7 (C)2015

Substantive testing approaches

140

 There are three substantive testing approaches:
1
...
Balance sheet approach
3
...
com

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Transaction cycle approach

141

 Cycle testing in some ways closely linked to the system testing
approach
 When the auditor takes a cycle approach , the auditor test the
transaction which have occurred resulting in entries in the
financial statements ( e
...
sales transactions, inventory purchase,
asset purchase, wage payments etc)
 Auditor would select a sample of transaction and test each
transaction was valid & complete and processed correctly
through relevant cycle ( trail of the transaction)
KASHIF KAMRAN- FCCA- P7 (C)2015

F8: Balance sheet approach

142

 Typical and the most common used substantive testing
approach
 Focus on balance sheet assertions and testing items around
assertions
 The auditor also verifies the opening balances

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 The auditor need to consider that in most of the cases the
management would be :
 Overstating- Assets / Income
 Understating-Liabilities/ Expenses

KASHIF KAMRAN- FCCA- P7 (C)2015

F8: Directional testing

144

 The direction is also based on the risk assessment at the
planning stage of the audit
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
3

PLANNING AND MATERIALITY
12/09 Papaya Co
...
com

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P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Planning an initial audit engagement
1
...

3
...

5
...

7
...


147

Client acceptance procedures
Professional clearance
ISA-510 initial audit engagement – opening balances
Making arrangement to review predecessor auditor’s working
papers
Holding discussion with management (KOB)
Involvement of another partner in the overall review of audit
strategy and audit plan
Additional time and resources for performing system review
and documentation
Detailed substantive testing (more appropriate than
performing analytical procedures in first year audit )
KASHIF KAMRAN- FCCA- P7 (C)2015

148

F8: Materiality
 ISA 320 “ information is material if its omission could influence the
economic decisions of user taken on the basis of the financial
statements”
 Materiality should be decided for the:
 Financial statements as a whole
 Account balances

 Level of materiality is the judgment of the auditor however some
international practices exist for determining the level of materiality

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
For that reason, questions involving audit planning
and risk assessment may contain extracts from financial
statements, either complete elements of the financial
statements or shorter components, which candidates are
expected to use as a means of identifying potential risks
...


KASHIF KAMRAN- FCCA- P7 (C)2015

F8:Analytical procedures

150

 According to ISA 520, Analytical procedures may involve
ratio analysis, the calculation of simple trends, or
comparisons of figures
...

 It is important that calculations are not performed in
isolation, but are used in a discussion of the specific risk as
required
...
com

75

2/14/2015

2014 EXAMINATIONS

AUDIT EVIDENCE
KAPLAN CHAPTER REFERENCE :

11

KASHIF KAMRAN- FCCA- P7 (C)2015

Un-focused examinable area

TOPIC 6

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

151

152

Audit evidence

OVERVIEW

ISA-500 AUDIT EVIDENCE
ISA-540 AUDITING ACCOUNTING ESTIMATES
ISA-550 RELATED PARTIES
ISA-580 MANAGEMENT REPRESENTATION LETTER
ISA-610 USING THE WORK OF INTERNAL AUDITORS
ISA-620 USING THE WORK OF AN EXPERT
ISA-230 AUDIT DOCUMENTATION
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

ISA 500: AUDIT EVIDENCE

KASHIF KAMRAN- FCCA- P7 (C)2015

154

F8: Audit evidence [ISA-500]

Audit
evidence
should be
Sufficient

Audit evidence
is gathered
through

Appropriate

Test of controls

Substantive
procedures

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2

ISA 540 AUDITING ACCOUNTING ESTIMATES

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
knowledge of business)
 Changes since prior year
 How management assess uncertainty
 Determining event up to the date of audit report which could
provide additional evidence regarding appropriateness of
estimates made
...
com

79

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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159

TOPIC 6
...
com

80

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F8:Specific auditing standards which covers
written representation

161

 ISA 240
 ISA 550
 ISA 560
 ISA 570

KASHIF KAMRAN- FCCA- P7 (C)2015

Refusal

F8: Management refusal and impact on audit
report

General

Disclaimer

Specific

162

Judgment

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
4

USING THE WORK OF OTHERS

KASHIF KAMRAN- FCCA- P7 (C)2015

OVERVIEW

F8: Using the work of others

164

INTERNAL
AUDITOR
EXPERT

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
5

ISA 610 USING THE WORK OF AN INTERNAL AUDITOR

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 It may well therefore reduce control risk
...

 The auditor cannot devolve responsibility for the audit opinion
onto the internal audit department
...
audit work on which
they wish to rely
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
6

ISA 620 USING THE WORK OF AN EXPERT
12/08 Poppy Co
...
com

85

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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171

Types

F8:Types of experts

Auditor’s expert
Management’s
expert

KASHIF KAMRAN- FCCA- P7 (C)2015

F8: ISA 620: Using the work of an expert

172

 The auditor is expected to exercise due professional care and skill
and to act within his own area of competence
...

 The auditor is required to gather sufficient, appropriate audit
evidence
...
com

86

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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F8: ISA 620: Using the work of an expert

173

It follows from this that the auditor may make use of
the work of an expert in two sets of circumstances
...


Where the expert possesses
technical knowledge or skill
that makes his evidence
more reliable than
evidence gathered directly
by the auditor
...
This will involve an evaluation of the objectivity and
professional competence of the expert
...
com

87

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA 620: Reference of an expert in the audit
report
Reference

Un-modified
report

No reference because it could
be misunderstood
in the context of
responsibility

Modified report

Yes- prior
permission from
an expert is
necessary

175

If permission is
NOT given then
take a legal
advice

KASHIF KAMRAN- FCCA- P7 (C)2015

176

TOPIC 6
...
[8] / 12/08 Pulp Co
...
com

88

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA 550: Related parties

177

 There is a basic assumption that businesses trade with other
parties at arm’s length
...


KASHIF KAMRAN- FCCA- P7 (C)2015

Auditor responsibility

178

 Under ISA 550 Related parties, the auditor has an obligation to
perform audit procedures to obtain sufficient appropriate
evidence regarding the identification and disclosure of related
parties and related party transactions
...

 The auditor should review the information provided by the
management and should be alert for other material related party
transactions
...
com

89

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Auditor responsibility

179

 During the audit, the auditor should be alert for
transactions which may indicate the existence of
unidentified related parties
...

 Transactions processed in an unusual manner
...

KASHIF KAMRAN- FCCA- P7 (C)2015

Auditor responsibility

180

 The auditor should obtain a written representation from
management concerning the completeness of
information provided concerning related parties and
the adequacy of disclosures in the financial statements
...
com

90

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Audit procedures for dealing with related
parties

181

1) Review prior year working papers
2) Review the entity’s procedures for identifying related parties
3) Enquire about relationships between those charged with
governance and management and other entities
4) Review shareholder records for details of principal shareholders
5) Review minutes of shareholders’ meetings and other relevant
minutes and records
6) Enquire of other auditors involved with the audit
7) Review the entity’s income tax returns and other information
supplied to the regulatory authorities
...
com

12

Focused examinable area

TOPIC 7

KASHIF KAMRAN- FCCA- P7 (C)2015

182

91

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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EXTENDED READING

183

 [OCTOBER 2011]
 LISA WEAVER : COMPLETING THE AUDIT
 [FEBRUARY 2010]
 LISA WEAVER ARTICLE : GOING CONCERN

KASHIF KAMRAN- FCCA- P7 (C)2015

Evaluation and review

184

OVERVIEW

REVIEW STAGE PROCEDURES
ISA-510 : OPENING BALANCES
ISA -560: SUBSEQUENT EVENT
ISA-570: GOING CONCERN
ISA-710: COMPARATIVES
ISA-720: OTHER INFORMATION IN THE
DOCUMENT CONTAINING FINANCIAL
STATEMENTS
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

REVIEW STAGE PROCEDURES
06/11 Willow Co
...
[18] / 12/10 Clooney Co
...
com

93

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA 220 / 230 : Review of audit file

187

 All audit work should be subject to reviewed as this is basic
quality control requirement of ISA 220
...

 In performing a file review, the reviewer should consider the
sufficiency of evidence obtained and may need to propose
further audit procedures if evidence is found to be insufficient
or contradictory
...

 ISA 450 requires that all misstatements identified (other
than those that are clearly trivial) shall be accumulated
during the audit
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 The proposed adjustment may be in the form of a journal
entry, an amendment to the presentation of the financial
statements, or a correction to a disclosure note
...

KASHIF KAMRAN- FCCA- P7 (C)2015

ISA 450: Evaluation of misstatements

190

 When
misstatements
remain
uncorrected
by
management, the auditor must assess the potential
implications for the auditor’s report
...
com

95

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA 520: Final analytical procedures

191

 During the completion stage of the audit, the client should
prepare the final version of the financial statements
(which incorporate any adjustments of misstatements
proposed by the auditor)
...

KASHIF KAMRAN- FCCA- P7 (C)2015

ISA 520: Final analytical procedures

192

 The key issue is that, near the end of the audit, the auditor
should have sufficient audit evidence to explain the issues
highlighted by analytical procedures, and should
therefore be able to conclude as to the overall
reasonableness of the financial statements
...
com

96

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Disclosures in financial statements

193

 The auditor must at this stage carefully review the notes to
the financial statements for completeness and
compliance with the applicable financial reporting
framework
...


KASHIF KAMRAN- FCCA- P7 (C)2015

Disclosures in financial statements

194

 At this stage, the auditor should also read the other
information to be issued with the financial statements for
consistency with the financial statements
...
com

97

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA 560/570: Subsequent events & going
concern

195

 There are two ISAs that are particularly relevant near the
end of the audit
...

 Therefore, the auditor will conclude on going concern
matters near the end of the audit having reviewed all
evidence obtained and after reviewing the final version of
the financial statements
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 This is a matter to be dealt with towards the conclusion of the
audit because it is a requirement of ISA 580 that the date of
the written representation shall be as near as possible to, but
not after, the date of the auditor’s report
...

KASHIF KAMRAN- FCCA- P7 (C)2015

Written representation

198

 Significant subsequent events may come to light very late
in the audit, and therefore the written representations
should cover all of the subsequent events period, right up
to the date at which the audit report is dated
...
com

99

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA 260: Communication with those charged
with governance

199

 The matters to be communicated include significant
findings from the audit and matters relating to auditor’s
independence
...

 Communication with those charged with governance is
the subject of an examiner’s article published in April 2008
...
Typically, at the clearance
meeting the following matters may be discussed:
1
...
Any proposed adjustments to the financial statements
3
...
The details of ethical matters that may need to be clarified with
the client
5
...
Confirmation that the client’s accounting policies are appropriate
...
com

100

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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201

Audit clearance meeting
 The audit clearance meeting is not a requirement of ISAs,
but is often used as a means to ensure that there are no
misunderstandings regarding the financial statements, the
auditor’s report and any of the other matters discussed
...
2

ISA 510 OPENING BALANCES
06/11 Wexford Co
...
com

101

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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ISA-510 Opening balances
Prior period
audited by
another
auditor

203

Prior period
not
audited

KASHIF KAMRAN- FCCA- P7 (C)2015

Prior period audited by another auditor

204

 Review predecessor’s working papers, considering the
professional competence and independence of the
predecessor auditor
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Collection or payment of opening accounts receivable or
payable in the current period
2
...
Examination of records underlying opening non-current assets
and liabilities, including confirmation from third parties where
possible

KASHIF KAMRAN- FCCA- P7 (C)2015

206

Audit report
 Auditor unable to obtain sufficient appropriate audit evidence
on opening balance – limitation on scope
 The auditor has a disagreement over the opening balance with
management – disagreement with management

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
3

ISA 710 COMPARATIVES

KASHIF KAMRAN- FCCA- P7 (C)2015

COMPARATIVES

ISA-710: Comparatives

208

CORRESPONDING
FIGURES
COMPARATIVE
FINANCIAL STATEMENT

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Accounting policies used are consistent with those of the current
period
2
...


 The auditor’s opinion is on the current period financial statements
as a whole (including corresponding figures) so corresponding
figures are not separately identified
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 If the opinion on that period has changed since the original
opinion was issued, an emphasis of matter paragraph should be
used to explain the reasons

KASHIF KAMRAN- FCCA- P7 (C)2015

212

TOPIC 7
...
[10]
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 The annual report may also include other information such as:
 The directors' or management's report
 Financial summaries or highlights
 Employment data
 Selected quarterly data
...
com

107

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Material inconsistencies

215

 Material inconsistency exists when other information contradicts
with information in the audited financial statements
...

 When the auditor considers that there is an apparent
misstatement of fact, he should discuss this with management
and identify reason thereof
...
com

108

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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What does Seeking a legal advice means in
audit ?

217

Normally the legal advice results in severe
actions from auditor which includes :

Not issuing
the audit
report

Enforcing the
Withdrawal
right to be
from the
heard at the
engagement
AGM
KASHIF KAMRAN- FCCA- P7 (C)2015

218

TOPIC 7
...
[20] / 06/11 Butler Co
...
com

109

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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OVERVIEW

ISA 570: Going concern

219

Auditor’s objective

Going concern assessment
at different stages of audit

Ethical issues

KASHIF KAMRAN- FCCA- P7 (C)2015

220

Going concern
 The recent global economic crisis, commonly referred to
as the credit crunch, has provided many challenges for
both the preparers and the auditors of published financial
statements
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
To obtain sufficient appropriate audit evidence
regarding the appropriateness of management’s use of
the going concern assumption in the preparation of the
financial statements
2
...
To determine the implications for the auditor’s report
...
com

111

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Going concern : Risk assessment stage (ISA
315)

223

 Auditor should obtain understanding of business and the
economic environment in which the audit client operates
...

 The auditor also needs to consider risk which arise from
factors for example :
 Reduce demands for goods and services
 Customer inability to pay
 Inability to raise necessary finance
KASHIF KAMRAN- FCCA- P7 (C)2015

Going concern: Performing audit procedures

224

 Audit procedures should be performed on areas where
going concern risk has been assessed
...
com

112

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Going concern : Procedures to validate
management going concern assumption

225

1
...
Reviewing the terms of loan agreements and
determining whether they have been breached
3
...
Reviewing events after the year end to identify factors
relevant to the going concern assumption as a basis for
the preparation of the financial statements
...
This means
that the financial statements are effectively rendered
meaningless, and ISA 570 requires the auditor to express
an adverse opinion on the financial statements
...
com

113

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Going concern : Forming an audit opinion

227

 Situation 2:
 Where the financial statements have not been prepared
under the going concern assumption (for example, using
a liquidation basis), and the auditor agrees with the use of
this alternative basis for the preparation of the financial
statements, the audit report will not be qualified, as there
is no basis for a disagreement, but the auditor may
consider it necessary to include an Emphasis of Matter
paragraph in the audit report to highlight the unusual
circumstances to the users of the financial statements
KASHIF KAMRAN- FCCA- P7 (C)2015

Going concern : Forming an audit opinion

228

 Situation 3:
 Where the disclosure of material uncertainty is considered
adequate, the auditor includes an Emphasis of Matter
paragraph within the audit report to highlight the
uncertainty to the users of the financial statements

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

Going concern: Ethical issues

230

 In the current economic climate, with severe restrictions
on borrowing facilities in many jurisdictions, auditors are
likely to be asked by audit clients to perform non-audit
services which may create self review, advocacy or
management threats to independence
...
a review of the business including advising on restructuring
options
2
...
advising on corporate finance options, or negotiating such
options
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
A review of the going concern assessment and
conclusion reached by a partner who is not a member
of the audit team
2
...
com

Focused examinable area

TOPIC 8

KASHIF KAMRAN- FCCA- P7 (C)2015

232

116

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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233

EXTENDED READING
 [APRIL 2011 ]
 GRAHAM FAIRCLOUGH : GROUP AUDITING
 [MARCH 2008]
 LISA WEAVER: GROUP AUDIT ISSUES ( ISA 600 REVISED)

KASHIF KAMRAN- FCCA- P7 (C)2015

234

OVERVIEW

Group audits
GROUP AUDIT
JOINT AUDIT
TRANSNATIONAL
AUDIT

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

06/11 Nassau Group [18] / 06/10 Grissom Co
...
com

118

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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237

Key terms

Group audit

Principal
auditor

Component
auditor

Components

KASHIF KAMRAN- FCCA- P7 (C)2015

238

Main points
1
...

2
...

3
...
Specific audit procedures would be performed on
consolidation process
5
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
These firms are referred to as component auditors
...
com

120

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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241

Process of group audit

Stage 2:
Consolidation

Stage 1:
Gathering
evidence on
components

Stage 3:
Issuing the
group audit
opinion

KASHIF KAMRAN- FCCA- P7 (C)2015

Gathering evidence

Stage 1: Gathering evidence on components

242

Planning and risk
assessment
Involvement in the
work of component
auditor

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
e
...

 Materiality levels should be established for the group in
aggregate,
and
for
the
individually
significant
components
...

 The group auditor cannot simply rely on another auditor’s
opinion on the financial statements of the company
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Alternatively, the group auditor may issue a questionnaire,
to be completed by the component auditor, which would
highlight key issues arising from the audit of the
component
...
A review of the component auditor’s overall audit
strategy
2
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 The group auditor should review the consolidation process
carried out by the group management to ensure
compliance with relevant financial reporting standards
...
com

124

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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Stage 3 : Issuing the audit opinion

249

 The group auditor issues an opinion on the consolidated
financial statements
...

 The group auditor needs to consider the overall group
materiality for the giving opinion on the group financial
statements
...

KASHIF KAMRAN- FCCA- P7 (C)2015

Stage 3 : Issuing the audit opinion

250

 Similarly a pervasive qualification in a subsidiary’s audit
report may only have a material impact on the group
opinion
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Different accounting policies might be used in the foreign
country
...
Language problems might arise
...


KASHIF KAMRAN- FCCA- P7 (C)2015

252

Letter of support
 A 'letter of support' is an agreement made
between the holding company and its subsidiary
under which the holding company agrees to
provide support in the form of funding to enable
the subsidiary to meet its debts and liabilities
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2

12/08 Maxwell Co
...

 They will work together planning the audit , gathering
evidence, reviewing the work and providing the
opinion
...
com

127

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

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255

Joint audit
 Before accepting appointment as a joint auditor it will
be necessary to consider the experience and standards
of the other firm
...

 Both firms must sign the audit report and both are
responsible for the whole audit
...

KASHIF KAMRAN- FCCA- P7 (C)2015

256

Benefits
 Retention of subsidiary auditor ( and therefore their
cumulative audit knowledge and experience) following
acquisition
 Availability of wider range of resources ( across national
boundaries)
 Possible efficiency improvements

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
3

KAPLAN CHAPTER REFERENCE :

10

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Reliance on these audits might be for the purposes of
significant lending , investment or regulatory decision
...

 Transnational audit are largely due to variation in:
 Auditing standards
 Financial reporting standards
 Corporate governance requirements

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

131

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

elements

of

an

assurance

 A three party relationship involving:
i
...
a responsible party and
iii
...
e
...
1

12/07 Mulligan Co
...
[10]

KAPLAN CHAPTER REFERENCE :

15

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

1
...
Review of financial statements for Co’s exempt from audit

KASHIF KAMRAN- FCCA- P7 (C)2015

266

F8: ISRE-2400

Framework
Scope
• Analytical
procedures &
inquiry

Assurance
• Limited

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2

06/09 Robster Co
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Agree interim financial information to underlying records
2
...

3
...
Perform AP and inquire the accounting / finance staff for
any unusual items or fluctuations in financial information
5
...
Obtain a management representation letter
KASHIF KAMRAN- FCCA- P7 (C)2015

270

Assurance service other than
historical data: Due Diligence
Topic 9
...
[14] / 06/11 Jacob Co
...
com

135

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

271

OVERVIEW

Due diligence
DEFINITION
TYPES
AUDITOR
LIABILITY

KASHIF KAMRAN- FCCA- P7 (C)2015

M&A & due diligence

272

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Problem
may arise however where one party to the transaction has
more or better information than the other party
...

 There are several types of due diligences which can be
offered by the auditor to the buyer
...
com

137

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

One word on each of the due diligence

275

 Financial – scanning the financial information / going concern status
 Commercial – scanning the target company’s market and external
economic environment
 Operational due diligence- scanning the quality of controls /
recommending buyer areas to be improved upon
 Technical – scanning the need to develop new technologies to survive
 IT- scanning the current IT environment and the security of the related IT
environment
 Legal – scanning the contingencies ( hidden liabilities )
 HR- scanning the current workforce/ need for downsizing / training etc
...
Provide the bidder with an independent assessment and
review of the target company
2
...
Give assurance to provider of finance
4
...
com

138

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Potential liabilities and due diligence

277

 If those involved in due diligence do not act properly there is a
significant potential for one of the parties to suffer loss as a
consequence and seek legal redress ( remedy)
 The auditor and other experts can be held liable for damages
caused by their failure to uncover potential or actual liabilities or
other problems during due diligence
 Similarly the requirement of corporate governance could render
director personally liable if adequate due diligence was not
conducted
KASHIF KAMRAN- FCCA- P7 (C)2015

278

Assurance services other
than
historical data: Prospective financial
information (PFI) –ISAE 3400
Topic 9
...
[16] / 06/11 Butler Co [8]/ 12/07 Cusiter Co
...
com

139

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

OVERVIEW

Prospective Financial Information

279

PROSPECTIVE FINANCIAL
INFORMATION
PROCEDURES

REPORTING

KASHIF KAMRAN- FCCA- P7 (C)2015

280

Definition
 Prospective financial information means financial information
based on assumptions about events that may occur in the future

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
The intended use of information ( is it intended for
internal or external use)
2
...
Nature of assumption
4
...
Period covered by information

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
This
means they will state that "nothing has come to their attention"
which causes them to believe that the assumptions are not a
reasonable basis for the forecast
...
com

142

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

285

No
assurance
Related services

engagement:

Topic 9
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Such an engagement may involve the audit firm performing
certain procedures concerning individual items of financial data
or the whole financial statements

KASHIF KAMRAN- FCCA- P7 (C)2015

Agreed upon procedures

288

 Some of the areas covered by such procedures are as follows
...
com

144

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Agreed upon procedures

289

 The auditor should ensure with representatives of the entity and
other specified parties who will receive copies of the report of
factual findings, that there is a clear understanding regarding the
agreed procedures and the conditions of the engagement
...

 Procedures may include:
1
...
Recalculation
3
...
Inspection
5
...
com

145

2/14/2015

2014 EXAMINATIONS

SOCIAL & ENVIRONMENTAL AUDITING
12/10 Eastwood [18]
KAPLAN CHAPTER REFERENCE :

15

KASHIF KAMRAN- FCCA- P7 (C)2015

OVERVIEW

Social & environmental auditing

Un-focused examinable area

TOPIC 10

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

291

292

AUDITOR’S PERSPECTIVE
AUDITOR RESPONSIBILITY
(ISA 250)
IAPS1010 –SUBSTANTIVE
PROCEDURES
ASSURANCE SERVICE
OTHER THAN AUDIT
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Not just provision or contingencies it may affect company’s going
concern status ( cancellation of license)

KASHIF KAMRAN- FCCA- P7 (C)2015

IAPS 1010 : substantive procedures

296

 The auditor may perform substantive testing to obtain evidence
in relation to environmental matters
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Consider publicly available information regarding any existing or
possible future environmental matters
...

KASHIF KAMRAN- FCCA- P7 (C)2015

Substantive procedures

298

 Enquire about any planned changes in capital assets for
example, in response to changes in environmental legislation or
changes in business strategy and their impact on the valuation of
those assets
...
com

149

2/14/2015

2014 EXAMINATIONS

INTERNAL AUDIT & OUTSOURCING
KAPLAN CHAPTER REFERENCE :

18

KASHIF KAMRAN- FCCA- P7 (C)2015

OVERVIEW

Internal audit & outsourcing

Un-focused examinable area

TOPIC 11

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

299

300

IMPACT OF
OUTSOURCING ON AUDIT
OUTSOURCING

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

06/10 Mac Co
...
com

151

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Impact of outsourcing on audit practice

303

Impact

Planning

Scope

Control
risk

KASHIF KAMRAN- FCCA- P7 (C)2015

Impact of outsourcing on audit practice
PROS

CONS

 Independence
 Competence
 Possible reliance on
organization’s auditors

304

 Access
service

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


Review
contractual
terms

Access to
evidence
Performance
standards /
controls

KASHIF KAMRAN- FCCA- P7 (C)2015

What is a type 2 report ?

306

 A report on:
 Description
 Design
 Operating effectiveness of internal controls at service organization

 It contains a report prepared by management of service
organizations and a reasonable assurance of report by
service organization auditor
 Before placing reliance on service auditor , the client
auditor should ensure competence and independence of
service entity auditor
...
com

153

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

ISAE-3402: Use
organization

2/14/2015

audit

report

of

service

307

 The client auditor should request the service auditor to provide
assurance on the controls at service entity
...


KASHIF KAMRAN- FCCA- P7 (C)2015

308

Outsourcing
TOPIC 10
...
[10]/ 12/07 Sci-Tech [9]

KAPLAN CHAPTER REFERENCE :

18

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
[4] / 12/07 Mulligan Co
...
com

Focused examinable area

TOPIC 12

KASHIF KAMRAN- FCCA- P7 (C)2015

310

155

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

311

EXTENDED READING
 [SEPTEMBER 2008 ]
 LISA WEAVER ARTICLE : FORENSIC AUDIT

KASHIF KAMRAN- FCCA- P7 (C)2015

OVERVIEW

Examiner article : Forensic audit

312

DEFINITION
TYPES OF
INVESTIGATIONS
FORENSIC AUDIT
PROCESS
FORENSIC AUDIT
REPORTING

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 The work would normally involve an investigation into the
financial affairs of an entity and is often associated with
investigations into alleged fraudulent activity
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Planning
 Evidence
 Review
 Report

KASHIF KAMRAN- FCCA- P7 (C)2015

316

Forensic audit
 ‘Forensic auditing’ refers to the specific procedures
carried out in order to produce evidence
...
com

158

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

317

Types

Types of investigation

Corruption
Asset
misappropriation
Financial
statement fraud

KASHIF KAMRAN- FCCA- P7 (C)2015

318

Process of Forensic investigation

Acceptance

Planning

Evidence

Reporting

Court
proceeding

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Necessary skills and experience ( accountants must have
received training in interviews, integration techniques
and safe custody of records)
2
...
Unless
robust safeguards are in place a firm should not offer
audit and forensic investigation service to one client
...
Commercial considerations

KASHIF KAMRAN- FCCA- P7 (C)2015

320

Planning
 The investigating team must carefully consider what they have
been asked to achieve and plan their work accordingly
...
identifying the type of fraud that has been operating, how
long it has been operating for, and how the fraud has been
concealed
2
...
quantifying the financial loss suffered by the client
4
...
providing advice to prevent the reoccurrence of the fraud
...
com

160

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

321

Evidence
 In order to gather detailed evidence, the investigator must
understand the specific type of fraud that has been
carried out, and how the fraud has been committed
...

 It is important that the investigating team is skilled in
collecting evidence that can be used in a court case,
and in keeping a clear chain of custody until the
evidence is presented in court
KASHIF KAMRAN- FCCA- P7 (C)2015

322

Evidence
 Evidence can be gathered using various techniques, such as:
1
...
Analytical procedures to compare trends over time or to
provide comparatives between different segments of the
business
3
...
Discussions and interviews with employees
5
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Summary of evidence
2
...

3
...
Which controls, if any, were circumvented
...
Recommendation to improve controls within the
organization to prevent any similar frauds occurring in
the future
...

 The evidence gathered during the investigation will be
presented at court, and team members may be called to
court to describe the evidence they have gathered and to
explain how the suspect was identified
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

Focused examinable area

TOPIC 13

KASHIF KAMRAN- FCCA- P7 (C)2015

326

163

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

327

EXTENDED READING
 [SEPTEMBER 2011]
 LISA WEAVER : AUDIT REPORTS IN UK
 [SEPTEMBER 2010]
 SIMON FINLEY : MATTER OF OPINION (F8/P7)
 [APRIL 2011]
 CLARITY AUDITING STANDARDS – ISA 265
 [APRIL 2008]
 LISA WEAVER: AUDITORS' REPORTS TO THOSE CHARGED WITH
GOVERNANCE
KASHIF KAMRAN- FCCA- P7 (C)2015

328

Overview

FORMING AN
AUDIT OPINION

OTHER REPORTING/
COMMUNICATIONS

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1

12/10 Willis [15]
KASHIF KAMRAN- FCCA- P7 (C)2015

330

Reports

F8: Types of reports

Un-modified

Positive

[ISA-700]

[ISA 706]

Modified
Negative
[ISA 705]

Emphasis of a matter
paragraph
Other matter
paragraph
Financial statements
are materially
misstated
Inability to obtain
sufficient appropriate
audit evidence

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...


KASHIF KAMRAN- FCCA- P7 (C)2015

Difference between emphasis and other
matter paragraph

334

 Emphasis of a matter paragraph should be included in the audit
report to emphasize on the matter appropriately disclosed in the
notes to the financial statements
 Other matter paragraph is included in the audit report for
emphasis of additional auditor responsibilities , disclaimer of
auditor liability to third parties , or for any misstatements of facts in
other information presented in the annual report

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

168

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Question type -2

337

 Discuss the implication of audit senior file note on
the completion of audit and on the auditor report,
recommending any further actions to be taken by
auditor ?
 December 2011

KASHIF KAMRAN- FCCA- P7 (C)2015

Question type -3

338

 Assess the implication for the completion of the
group audit, explaining any adjustment that may
be necessary to the consolidated financial
statements , recommending further procedures
necessary and
 Describe the impact on audit report if these
adjustments are not made
 June 2013
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

170

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Implication for completion of audit

341

1
...
Discuss with management – delay if any
3
...
Appropriate documentation+ review of evidence
gathered

KASHIF KAMRAN- FCCA- P7 (C)2015

Critically appraise the report

342

1
...

3
...


Headings of paragraphs – basis for opinion / opinion
Unprofessional language
Impact on given
No reference to accounting standard/ no standard
accounting treatment given
5
...
Name of company not given
7
...
com

171

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

343

Matters
Materiality

Accounting treatment
Matters

Disagreement / scope
limitation

Impact on report
(separate in exam
question)

KASHIF KAMRAN- FCCA- P7 (C)2015

344

Actions
1
...
Inform the management the implication of not amending the
financial statements to audit report
3
...
discuss the matter at AGM with shareholders explaining them
properly the matters and how to lead to qualified opinion

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2

12/08 Blod Co
...

[20]
KASHIF KAMRAN- FCCA- P7 (C)2015

ISA 260 : Communication with TCWG

346

A request that all identified misstatements be amended
Matters relevant to auditor independence
Request for written representation
Significant difficulties encountered during the audit
Views regarding significant policies and practices
Auditor responsibilities in relation to audit
The wording of expected modifications
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

Focused examinable area

TOPIC 14

KASHIF KAMRAN- FCCA- P7 (C)2015

348

174

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

349

EXTENDED READING
 [NOVEMBER 2012]
 LISA WEAVER : A QUESTION OF ETHICS

KASHIF KAMRAN- FCCA- P7 (C)2015

350

Overview
FUNDAMENTAL
PRINCIPLES

THREATS TO
OBJECTIVITY

CONFLICT OF
INTEREST
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
1
FUNDAMENTAL PRINCIPLES

KASHIF KAMRAN- FCCA- P7 (C)2015

IESBA’s code of ethics for professional
accountants

352

Code of ethics

INTEGRITY
OBJECTIVITY
PROFESSIONAL
BEHAVIOR
PROFESSIONAL
COMPETENCE
CONFIDENTIALITY
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
2
THREATS TO OBJECTIVITY

12/08 Becker Co
...
[17]/ 06/10 Carter Co
...
com

177

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

355

TOPIC 14
...
com

178

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Safeguards by profession
1
...

3
...


357

Educational requirement for entry into profession
CPD
Corporate governance
IESBA Code of ethics

KASHIF KAMRAN- FCCA- P7 (C)2015

Safeguards within work environment

358

 Each audit firm should have visible ethical leadership and
published code of conduct
 Strong internal controls
 Consultations
with
professional
bodies
for
any
uncertainties

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
com

180

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Provision of non-audit service to audit clients
Accounting
and book
keeping
services

Valuation
service

Taxation service

361

Litigation
services

KASHIF KAMRAN- FCCA- P7 (C)2015

Safeguards for permitted non-audit services to
audit client

362

Safeguards
includes:

Different teams
for different
services

An independent
partner reviews of
work performed

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
4

EXAM TECHNIQUES – HOW TO HANDLE A QUESTION ON ETHICS ?

KASHIF KAMRAN- FCCA- P7 (C)2015

Exam techniques : Examiner article

364

1
...

2
...
e
...
Some candidates take a scattergun
approach to their answer and simply list out all of the threats in the
hope that one or more will be relevant to the scenario
...
Again, this approach is wasteful of time in the exam, as full credit
can only be given where the correct threat or threats have been
identified and also explained
...
com

182

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Exam techniques : Examiner article

365

1
...

2
...

Second, different types of safeguards may be described,
including those created by the profession, legislation or
regulation if relevant, such as the prohibition of an action
such as the provision of certain types of non-assurance
service, as well as firm-wide and engagement specific
safeguards
...
More than one safeguard may be relevant to an identified
threat, and so it may be appropriate to discuss or
recommend a range of safeguards
...
It is a matter of professional judgment to decide if an
audit engagement or other professional service should
be declined or discontinued due to the severity of
threats and/or lack of appropriate safeguards
...
If relevant in a scenario candidates should carefully
explain why the threats are so severe, or why
appropriate
safeguards
cannot
be
employed,
remembering that withdrawing from an audit
engagement is a last resort and will need to be
appropriately justified
...
com

183

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Exam question style

367

 Identify and explain the ethical and practice
management implications in respect of ?
 Identify and discuss the ethical and other professional
issues raised and recommend what action, if any the
Co should now take in respect of ?

KASHIF KAMRAN- FCCA- P7 (C)2015

Examples of practice management
implication / professional issues

368

 Competence of the firm
 Resource availability
 Time commitment required
 Training needs
 Commercial consideration
 Can a quality service be offered and what if a service is below a
standard ?
 Effect on firm reputation
 Loss of income
 Loss of resources if client offer job to audit trainees
KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
[6]/ 12/08 Blue Bell Co
...
[13]/ 12/09 Grape Co [12]
KAPLAN CHAPTER REFERENCE :

20

KASHIF KAMRAN- FCCA- P7 (C)2015

OVERVIEW

Accounting matters & audit procedures

Focused examinable area

TOPIC 15

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

369

370

AUDIT
PROCEDURES
MATTERS
P2
KNOWLEDGE

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...

 Students should have sound knowledge of financial reporting
standards from the P2 paper
...

 Students should also have sound knowledge of audit
procedures from F8 paper
 Examiner has written a detailed article on the type of question
which comes from this topic
...

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Recognition and valuation of 5
...
Discontinued operations
non-current assets
...
Provisions – contingent
2
...

3
...
Related
and
subsequent
transactions
measurement
...
Event after
4
...
Business combination

KASHIF KAMRAN- FCCA- P7 (C)2015

Examiner article: less likely
1
...

3
...

5
...

7
...

Cash flow statements
...

Earnings per share
...

Government grants and assistance
Construction contracts
...
com

187

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2/14/2015

Examiner article: audit procedures

375

 Students should re-call this from their F8 paper
...

 Substantive procedures:
 Inquiry
 Inspection
 Re-calculation
 Analytical procedures
 Confirmations

KASHIF KAMRAN- FCCA- P7 (C)2015

Examiner article : question type

376

 The question from this topic will cover either both of the
following requirement or only one of them
 Describe the principal audit procedures in relations to an
accounting standard and
 Describe the matters to be considered

KASHIF KAMRAN- FCCA- P7 (C)2015

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...

2
...

4
...

 For example, looking at the third requirement illustrated above, in
respect of the recoverability of a deferred tax balance, many
candidates suggested they should ‘observe the tax asset’, which
is clearly meaningless, and detracts from the quality of the
answer
...
com

189

2/14/2015

Focused examinable area

TOPIC 16

P7 ADVANCE AUDIT AND ASSURANCE2015 EXAMINATIONS

2014 EXAMINATIONS

CURRENT ISSUES
KASHIF KAMRAN- FCCA- P7 (C)2015

379

380

EXTENDED READING
 [NOVEMBER 2012]

 Reporting on audited financial
significant changes proposed

statements

–

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail
...
Micheal Barnier Paper

i
...
Concentration and structure of the audit market
iii
...
Changes in audit report

KASHIF KAMRAN- FCCA- P7 (C)2015

KASHIFKAMRANkashifkamran@gmail

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