Audit terminology

If you download the notes you will be able to search on words to find answers:

Page 5: Audit is one form of assurance.
So assurance engagements are wider in scope than audit.

We talk about “external” and “internal” audit – they are different types of audit. “External” audit is synonymous with “statutory” audit – see page 15. “Internal” audit is a component of control within the organisation – see page 68.

“Board” means board of directors – page 11. You should know that directors in law have statutory responsibilities. Managers tend to be the next level down from directors but that doesn’t mean that senior managers cannot attend board meetings – anyone can attend a board meeting if invited.

The audit committee oversees both external and internal audit – see page 14.

You may find it helpful to download the AB notes https://opentuition.com/files/securepdfs/2019/09/ACCA-AB-D19-Notes.pdf as AA rather assumes that students know the fundamentals of an organisation. And maybe the LW notes too for some background information on directors’ duties etc and the “agency” relationship between directors (management) and the shareholders, who entrust management with their investment (shares).

1, Shareholders attend general meetings of the company – not board meetings – assumed knowledge of LW. Preparation of FS and internal control are collective responsibility of the board – assumed knowledge of AB.
2. Perhaps search ahead on “non-audit” in the notes to see that auditors may supply other services which create issues of independence – hence need for a policy. Alternatively make a note of this as a point you don’t understand but will look out for the answer later.
3 In a listed company “those charged with governance” means the audit committee. If there is no similar body to oversee management, the board is also charged with governing the company. Internal audit would report to the audit committee on their findings on risks and controls. See para in auditor’s report on page 30 for their respective responsibilities or management and TCWG.

1. Yes – see page 97.
2. Client must tell the bank that it is authorised to disclose – the bank would not disclose without authority as it owes a duty of confidentiality to its client
3. Accruals/accrued expenses generally mean the same thing e.g. company hasn’t received an invoice for some quarterly expense at the end of the accounting year – so estimates what it would be. Accrued revenue is similar – someone owes company money but company hasn’t invoiced for it yet – e.g. if company is sub-letting an office for rental income. This is assumed knowledge of FA/F3 – you MUST be prepared to refer to assumed knowledge sources of knowledge if you were exempt these exams.
4. Provision must be a liability per IFRS definition. A contingent liability does not meet definition – see page 113 of AA notes are refer to assumed knowledge of FA/F3 if necessary.
5. Practice – read – and plan – so you do not run out of time. See the articles that are “sticky posted” at the top of this forum.
6. Going concern is the only assumption which underlies the preparation of FS – this is fundamental assumed knowledge of FA/F3. A going concern risk is anything that threatens the company’s survival – e.g. continuing operation losses. See page 37 of AA notes.
Please can you post NEW questions on NEW topics on separate threads rather than post a miscellaneous number of questions to one post – this assists other users of the forum in findings answers to similar questions. Perhaps search the NOTES first for answers too.