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dear tutor i wanted to ask is it possible for us to suggest 2 audit risks and 2audit response, both separately, on one specific area?
like for eg as far as loss/gain on disposal is concerned, there are 2 possible audit responses, ones that l/g may not be accurately calculated and the asset may not have been removed from NCA regt.
while the other audit risk could be that deprn rate is inaccurate, i.e. deprn may be understated and assets overstated.
so do we get in total 4 marks(2audit risk+ 2audit response)? Or we just get 2marks in total, because we just focused on loss/gain on disposal?
CBE provides a much more efficient means of planning your answer – so as you read through the scenario you can jot down in single words your ideas for audit risks in the work space provided. Then before you start writing out your answer points as identified and explained risks with risk responses you can reflect …. how many were asked for? Do you need to read the scenario again for anything obvious that you might have missed? Or do you have 9 ideas and you are asked only for 7? So you have the luxury to choose which 7 can expand on and develop an audit response for.
If you think about it – that a profit/loss on disposal of an asset might be misstated is perhaps rather trivial – (cost – accumulated depreciation) – proceeds = profit/loss – what are you going to suggest as the auditor response? To recalculate it? You’re second idea is a far better one to develop – as long as you’re not just talking about a single asset disposal – it would only be if there is a pattern of losses or a pattern of profits for a class of assets that you would question the suitability of the depreciation method/rate.
Although it is possible that there could be more than one risk arising from the same piece of information – and therefore, as you say, potential to earn 4 marks – I think that is relatively rare. The examiner’s report often points to one of those risks as “missing the [real] point”.
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