Introduction to Advanced Audit and Assurance (AAA) (INT/UK)
1 Warning!
Do not even think of studying this paper if you haven’t already studied paper Strategic Business Reporting (SBR).
In every AAA paper, there is at least one question dealing with audit risk and/or audit evidence/procedures. Audit risk is the risk that there might be a material misstatement in the financial statements. Whenever there is such a risk, the auditor must decide how to respond and that usually means carrying out more audit work to gather more audit evidence.
What you need to realise is that material misstatements can be caused by two types of error:
The amount is wrong.
The item has not been treated in line with the relevant financial reporting standard.
For example, if the company incurs research and development expenditure, not only does the auditor have to obtain evidence about the amount of expenditure, but must also collect evidence that the expenditure has been written off or capitalised in line with IAS 38 Intangible Assets. Therefore, if the expenditure has been capitalised, the auditor must collect evidence that the project is technically viable, that the company can fund its completion….and so on. If you do not know the standard, you cannot plan to collect the right evidence.
The IFRS Accounting Standards examined in SBR set out the requirements that determine the amounts to be recognised in the financial statements and where and how they should be presented; each standard has implications for auditors (see Chapter 14). IFRS Sustainability Disclosure Standards are relevant to the assurance of sustainability information (see Chapter 30).
2 The ‘maturity’ of answers required
Consider this: During attendance at a physical inventory count at a client who makes jars of preserved food, a pack of 12 jars falls from its shelf in the warehouse and the jars shatter. The contents smell awful and it is obvious that pack contained food that had gone bad. What audit issues does this incident cause and how should the auditors respond?
At the AA level you might simply have said that the pack had to be written off. At AAA, the incident raises many more issues. See if you can think what they might be. This is discussed in the lecture for Chapter 12.
With effect from September 2022, the AAA exam will contain a total of 80 technical marks and 20 Professional Skills marks. All the professional skills that will be assessed are explored and developed throughout the Ethics and Professional Skills module (EPSM). According to ACCA data, candidates who complete EPSM in advance of sitting Strategic Professional exams have a 20% better success rate.
Professional skills are ESSENTIAL to the role of the auditor; you are strongly advised to complete the EPSM before sitting the AAA exams.
3 Topics in AAA, not in AA
The main additions are:
Money laundering and professional liability
Business risk (audit risk, but not business risk, was in AA)
The audit of groups
Specific assignments (due diligence, prospective financial information and forensic audits)
Sustainability information
The audit of performance information in the public sector (INT Syllabus only)
Auditing aspects of insolvency (UK Syllabus only)
Current issues
Most AA topics appear again in AAA but to a more detailed level. Professional ethics remain very important. You will not be asked to evaluate an accounting system to identify weaknesses in internal control.
4 Syllabus
4.1 Aim
To analyse, evaluate and conclude on the assurance engagement and other audit and assurance issues in the context of best practice and current developments.
4.2 Objectives
On successful completion of this paper, candidates should be able to:
Recognise the legal and regulatory environment and its impact on audit and assurance practice.
Demonstrate the ability to work effectively on an assurance or other service engagement within a professional and ethical framework
Assess and recommend appropriate quality management policies and procedures and recognise the auditor’s position in relation to the acceptance and retention of professional appointments.
Identify and formulate the work required to meet the objectives of audit assignments and apply the International Standards on Auditing.
Evaluate findings and the results of work performed and draft suitable reports on assignments.
Identify and formulate the work required to meet the objectives of non-audit assignments.
Understand the current issues and developments relating to the provision of audit-related and assurance services.
Apply a range of professional skills in addressing requirements within the AAA exam, and in preparation for, or to support current work experience.
Demonstrate employability and technology skills.
5 Approach to examining the syllabus
The syllabus is assessed by a 3 hour 15 minute examination.
The examination is constructed in two sections. Questions in both sections will be largely discursive. However, calculations will be expected, for example to be able to assess materiality and calculate relevant ratios where appropriate.
Section A
Case study (50%)
Set at the planning stage of the audit for a single company or group of companies (or, potentially several audit clients). Candidates will be provided with detailed information and be required to address a range of requirements from syllabus sections A, B, C and D.
The 50 marks will comprise of 40 technical marks and 10 professional skills marks. ALL professional skills with be examined in Section A.
Section B
Two compulsory 25 mark questions, predominately based around a short scenario.
One question will always predominantly come from syllabus section E (completion, review and reporting). The other question can be drawn from any other syllabus area including section F.
Each question will comprise 20 technical marks and 5 professional skills marks examining a minimum of two professional skills.
Syllabus section G, Current Issues, may be examined in Section A or Section B, but is unlikely to to form the basis of any question on its own.
Full details are shown on syllabus available from the ACCA’s site:
Advanced Audit & Assurance (INT) - syllabus and study guide:
Advanced Audit & Assurance (UK) - syllabus and study guide: