See also ACCA F8 Flashcards: Set 1 | Set 2 | Set 3
What are the three elements of the ACCA’s ethical framework?
Fundamental ethical principles, threats to those and safeguards against the threats.
Analytical procedures are used at three stages of an audit. What are these?
The planning stage; as a source of audit evidence (substantive test); at the final review stage.
What sort of ethical threat arises from the auditor auditing financial statements that the auditor also prepared?
A self-review threat.
In what two circumstances might management representations provide the only source of audit evidence?
Where knowledge is confined to management
Reliance on the judgement/opinion of the directors
In a listed company, to whom should internal audit report?
The audit committee.
What sort of ethical threat arises from the auditor owning shares in the company audited?
A self-interest threat because the auditor wants the share price to rise.
Which of the following pairs of evidence are better?
External v entity’s records
Indirect evidence v auditor-direct
Oral v Written
External is better than entity’s records
Auditor direct is better than indirect evidence
Written is better than oral
An auditor gives weekly advice to a client on a wide range of matters (financial and non-financial).
What sort of threat can this give rise to?
A management threat.
Why is it important that audits are properly documented? (Four reasons)
To show that the audit work has been done properly
To enable senior staff to review the work of junior staff
To help the audit team in future years
To encourage a methodical, high-quality approach.
What are the words missing from the following extract from the audit report?
Auditor’s Responsibility
….we … plan and perform the audit to obtain XXXXXXXXXXXX whether the financial statements are free from XXXXXXXXX.
Auditor’s Responsibility
… we … plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
What type of audit report is given if the FS contain a non-material misstatement?
An unmodified report (if a matter is not material, a ‘clean’ audit report can be issued)
What sort of ethical threat can arise from overdue fees?
A self-interest threat because the auditor is anxious to be paid.
In what circumstances would auditors refer to the directors’ report in their audit report?
Auditors would refer to the directors’ report in their audit report if it contained anything that was at odds or contradictory with the financial statements.
What are the two reasons for which an audit report can be qualified?
1 The Financial Statements contain a material misstatement
2 The auditor has not been able to obtain sufficient appropriate audit evidence to conclude that the FS are free from material misstatement.
What type of audit report is given if the FS contain a pervasive material misstatement?
Adverse opinion
What range of percentage of profit is often taken as guidance for materiality?
½ – 1% of revenue
1 – 2% of total assets
5 – 10% of profit before tax
Is the following true or false?
The inclusion of an emphasis of matter paragraph in the audit report results in a modified audit opinion.
False. An emphasis of matter paragraph does not cause a modified opinion nor does it cause the FS to be qualified.
Describe what is meant by ‘true’ in ‘true and fair’
True: the information is factual and conforms with reality.
Is the following true or false?
Under the UK government code listed companies are required to have an internal audit department
False. Internal audit is encouraged and the need for it has to be kept under review, but it is not mandatory.
What sort of ethical threat arises from the auditor being a close friend of the financial director of the company being audited?
A familiarity threat
What type of audit report is given if the auditors’ ability to find sufficient appropriate audit evidence is pervasive?
Disclaimer of opinion
What is the title of the paragraph that can be inserted in an audit report to draw users’ attention to a note in the financial statements?
An emphasis of matter paragraph
Describe what is meant by ‘fair’ in ‘true and fair’
Fair: the information is free from discrimination and bias and is in compliance with expected standards and rules. It reflects the commercial substance of the transactions.
What is meant by ‘audit risk’
Audit risk is the risk that an inappropriate audit opinion is given.
Of what do financial statements consist?
* Statement of financial position
* Income statement
* Statement of changes in equity
* Cash flow statement
* Notes
* Any other material identified as being part of the financial statements
awesome….its help a lot… thanks
Very helpful, for people like that are planning to re-sit F8
Thank you Open Tuition.
nice one, thank you.
very helpful – thanks.
thanks
This is brilliantly smart way of ensuring that revision is hassle free, a big thanks to OT
very helpful for revision
lot of thanks to OT
Even helpful for those sitting P7
It neither can be downloaded nor it can be printed
Well done……almost revised
It doesnt allow me to download or copy and paste. Is there anyone who can help me out. I want to put them in one sheet and print the same.
@omarmahfooz, Flash cards are not downloadable.
You can only use flashcards on line
thks open tuition for these short key questions
thank you OT for the small keys note
Very useful, thank OT