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“For public interest entities, internal audit services must not be provided if they relate to a significant part of the internal controls over financial reporting”
What does “significant part of the internal controls over financial reporting” mean?
Welcome to my forum!
Do you have some context? e.g. see my response 3 on this post https://opentuition.com/topic/mar-jun16-q4bchennai
“significant” like “material” is going to be a matter of professional judgment
How do we know if a threat is significant when we are answering an ethics question during the exam?
If we say ‘a threat’ is significant but the answer says otherwise, does that mean we will we zero mark?
You’ll always get marks for exercising judgment – just don’t contradict the the question scenario. So if for example it indicates that the main tasks would be relevant to OPERATIONAL controls and that relevance to FINANCIAL controls was incidental, then you could reasonably conclude that the service could be provided.
In the ACCA technical article on the exam
technique for answering ethics question is,(a) Identify threats to independence
(b) Evaluate the significance of the threats identified, and
(c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an acceptable level
Does that mean we always need to talk about the significance of threats identified when answering ethics question in exam?
Can we talk about the implications only because some of the answers given did not talk about the significance of threats identified
You’re not evaluating a threat unless you consider its significance – generally threats are more significant in the context of a listed entity – hence there are prohibitions on certain things for PIEs – i.e. NO safeguard can reduce the threat to an acceptable level.
You can’t jump from the identification of a threat to a safeguard/action without considering something in-between … well you could, but you are going to limit the marks available to you.
I see…thanks for clearing up my confusion
Another question is, let’s say a question mentioned in a scenario “time pressured audit”.
If the answer given only states, intimidation threat to objectivity in the marking scheme, and I talk about self interest threat to objectivity (because auditors will try to cut corners in the audit). Does this mean this point will get no mark?
What if my point is not in the marking scheme?
I strongly recommend these sources of marking guidance to you:
https://opentuition.com/topic/the-most-productive-1-hour-in-the-preparation-for-the-aaa-exam
https://opentuition.com/topic/looking-for-guidance-on-marking-read-the-mind-of-an-aaa-marker (see the link to the pdf download in my initial post)Generally, if you’re looking at a past exam Q & A in a kit, the answer will be pretty comprehensive in terms of what earned credit – as an examiner it was rare to see a relevant answer point in a script that was not covered by the marking scheme – rare, but not impossible.
I suggest that the “cutting corners” issue is a threat to competence – perhaps the answer suggested that?
Can I please ask that you start new threads with new subject lines for new Qs as this helps other students benefit from the forum posts.
Apologies, my bad! Will start a new thread for different questions next time
I have forgotten which past paper it was. If not, I would have posted the name/year of the past paper for you to have a look. Too bad!
Anyways, thanks 🙂
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