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I’m sorry to hear that – it is horrible.
Can I ask, did it actually say you’d reached your character limit or was it something else?
Did ANYBODY have an issue where the exam put an error message saying that the ‘character limit’ had been reached and it stopped you from typing?
Please, please let me know.
Hi Sir
The question is from the Kaplan exam kit for SBL (2019 – June 2020). It’s called CC & J and it’s from the ‘Organisational Control and Audit’ part of the syllabus (F). Apologies, but the paper it was taken or adapted from, has not been given, but it is an SBL syllabus question.
Apologies, I know there were a lot of posts I made there and so:
In terms of my very first post, those questions related to a line in the mark scheme, to the same question (CC & J), which reads: ‘It is well known that Sarbanes-Oxley specifically prohibits non-audit work for financial auditors demonstrating the importance of the issue in global governance.’ Whereas, I have read, from other sources (from Google searches – hence I am not sure about how reliable and updated those sources are) that the S-O prohibits some, but NOT all types of non-audit work, for example, tax calculations and returns are permitted and so I wasn’t sure?
And for the second post – relating to the same question (CC & J) – I suppose I was just wondering, when asked what could reduce the threats to auditor independence, if we should cite measures that both the company commissioning the audit and the firm performing the audit, could do – as this is what appears to be the case in the mark scheme – they suggests measures which the audit client and practitioner could have employed?
In the final post – relating to the same question (CC & J) – I was trying to gauge what angle the examiner wants us to approach the task from? I wasn’t sure whether we should try to stipulate what could have prevented the auditor independence ever being threatened or, whether, once independence was threatened what measures could have been discharged to protect collective auditor independence and quality, by implementing subsequent safeguards to enable the audit firm and team (plus any additional persons, like an engagement quality control reviewer) to generate a reliable, independent opinion on whether the financial statements were faithfully representative, or not?
Thank you
And the last part of the Q was:
In the above task (‘Discuss the threats to auditor independence in this case and identify measures that would have helped reduce these threats.’) – are we being asked to consider what could have been done to reduce the threats from ever having materialised in the first place or how to reduce the effects of the risk?
What I mean is, is the task asking us to consider what measures could have been in place to have prevented professional boundaries being crossed, low-balling prices being charged and excessive periods without auditor rotation occurring or;
Is it asking us to consider, given that all of the above incidents post threats to auditor independence, what could have been done, thereafter, to limit the risk of auditor independence being compromised, then causing audit failure?
I ask because when I originally answered the question, I suggested measures such as engagement quality control review being performed due to the self-interest and familiarity threat to independence and I’m not sure if the question was looking for measures which would have helped prevent the threats from transpiring in the first place, rather than dealing with the consequences of the threat?
Apologies, I also meant to ask:
When a task requires us to: ‘Discuss the threats to auditor independence in this case and identify measures that would have helped reduce these threats.’
And the case study embeds points, which point to both governance failures, by the client and policy omissions/failings by the audit firm – can we suggest measures, which could have helped reduce independence threats, which involve actions/policies that could have been undertaken by the client being audited and by the audit firm themselves?
I ask, because an excerpt from the mark scheme (‘The company should have a clear policy regarding auditor rotation, as required by governance regimes’) suggests that we should, if relevant, recognise that there are provisions, which can be made by the company itself, to help safeguard auditor independence?
Thanks sir.
(1) Is there a ‘rule of thumb’ for (or just a sensible way of determining…) when differences in the size of the respective project’s investment are significant enough to be considered to be investments of differing scales?
Best Regards,
Ali
Hi John
I’ve been using lots of your F5/PM lectures to revise the technical content of the SBL exam.
Do you know if we need to be able to calculate mix and yield variances for the SBL exam and whether we need to be able to calculate Learning Curve effects for the SBL exam?
I used to feel very comfortable with these years, but it’s been two years since studying these papers and it’s very rusty now?
Thank you
Thank you sir – sorry for my delayed response on this – I really appreciate all of your help.
Apologies, I hadn’t ticked the option for notification of a response and I’ve just seen this, by manually checking.
Thanks for your response.
I’d watched the two lectures, but didn’t want to proceed any further without clarifying this first. Further, I had re-watched the second lecture to try to figure out, where I was going wrong, because, intuitively, I sensed that I was misunderstanding something.
In the second lecture video for IHT, Illustration 4, Dee had gifted $200k from her estate (continuing from a previous example where she had gifted nothing) and so I’d interpreted this to mean, that she had gifted $200k, from the $750k estate and so I was expecting the death estate to have been reduced down to $550k (the $750k less the gift of $200k) and the residual NRB of $125k to be applied to the $550k – I didn’t appreciate that she had a $750k death estate after gifting $200k already. Hence my confusion, apologies, I can be prone to such interpretative errors, but I am really trying to work on it.Thank you – sorry, I missed the option to be alerted to your response and hadn’t noticed you responded. Thank you very much.
Hi Sir
I’m very sorry if this has been posted in the wrong, but I had to say thank you for your expert support and lucidity. Your support was invaluable and I cannot recommend your provisions enough to anybody I know, studying for ACCA exams.
THANK YOU.
Thank you sir.
That’s what I thought, but the solution includes the cost of the discount itself only, but does not include the admin cost increase, which is stated in the scenario.
‘What would be the annual cost of the early settlement discount if offered by ZXC Co?’
Would you suggest that we include the annual cost in an objective test question then, even though in this one they did not?
Sorry, sir, another question. In another past question, from my question bank – the business is offered a bulk buying discount, which will triple its order size and the business accepts. The solution says that the cash operating cycle would be unchanged as the increase in inventory value, would increase inventory days, but this is then offset by an equal and opposite increase in payables and paybables days.
Would this therefore also mean that the current ratio would be unchanged because net current assets would be unaltered because of the proportionate increase in the current assets and current liabilities?
Thank you.
