ACCA Advanced Audit and Assurance (AAA) Question Practice on Risk
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14:09, the tutor mentioned about the suspects regarding written-off on disposal of computers. He said “the written-off on disposal of computers are $400, but the written-off on accumulated depreciation of computers are only $100, given that the useful life of computers are 10 years, that indicates the Company only used the computers for 4 years before finally disposing it.”
But isn’t it instead indicates that the Company used 1/4 of useful life e.g. 2.5 years (instead of 4 years) before disposing the computers? I’m a little confused here. It would be great if my question got answered. Thank you!
Yes I think you are correct – he’s said 400 then 4 years … I think just a slip of the tongue. So if disposed of after 2.5 years depreciation there is all the more reason to be suspicious about the appropriateness of a 10 year useful life estimate.
thank you so much.
Depreciation of disposal of vehicle is greater than disposal of motor vehicle cost(80 vs 70). They should be at least equal if they are fully depreciated. I think that it is also an indicator of mistake. Am I right?
Good spot – you are correct – though clearly the difference is not material and that may be why Ken does not mention it (if he does not mention it).
In the above video, when the tutor spoke about the examples of business risks and the responses, was he speaking and responding from auditors perspective and their responsibilities or what is management perspective ?? A lot of what is spoken like examining Board minutes and inspecting documents/correspondence is the duty of auditor right?
As it says on the bottom of page 57 “The auditor does not have a responsibility to identify or assess all business risks, but an understanding
of business risks that may result in ROMM is essential (ISA 315).” – please do look at the examples on page 58 and this chapter generally. In AAA, whether talking about business risk or audit risk it is the auditor’s perspective that is relevant – from management’s perspective is examined in other strategic professional exams (SBL, AFM, APM).
Thank you so much
Sir, regarding point 5, is this an example of NOCLAR? Should we enquire management if the are aware or seek legal advice first (similar to whistle blowing in fraud examples), should we then link the point to management integrity doubts etc?
It does only say “appear to be made of ivory” – so we cannot leap to any conclusions. But yes – there is a risk of NOCLAR – after all money laundering is also subject to law and regulations. As Ken says there should be a discussion with management about the possibility of breaking of law – there are ways of referring to NOCLAR without using this term.
Thank you very much.
Thank you, very helpful lectures