Forum Replies Created
- Posts
Yes for Q3(b), 3 accounting treatments have calculation of materiality. However for Q1, if one of the audit risk is overstatement of revenue, do we need to calculate revenue and profit before taxation ? or just one either revenue or profit before taxation ?
Because during exam, i’m worried because i won’t have much time to calculate so i would like to know whether we are required to calculate just 1 materiality calculation or all relevant materiality calculatin to score 1 mark as per marking scheme
1. since it’s agreed upon procedures that means it can also involve all the procedures (test of control, substantive test) that are used in reasonable assurance ??
2. However in the notes it does not state specficially which procedures will be performed… i would like to know whether limited assurance review ONLY involves analytical procedures and general enquiry
1. since it’s agreed upon procedures that means it can also involve all the procedures (test of control, substantive test) that are used in reasonable assurance ?
that means group auditor will never perform the test on the subsidiary on behalf of component auditor ? group auditor can only rely the work done by component auditor after they have done additional procedures or not ?
In the last sentence, you mentioned that when a company has GC issue, there will be MURGC (if adequately disclosed) or qualified (if no disclosure assuming mgmt don’t adjust).
And you mentioned adverse on GC really means entity is not going concern.
Then how do you actually judge whether it will be qualified or adverse if the question simply states GC issue ?
I feel like this depends on the people who answer the question when the question just say “the entity has GC issue”
That means we can write any context related procedures that may or may not occur in the future but within reasonable boundary ?
so that means i write the answer considering both that the entity is listed or not listed ? stating “if unlisted can provide the service if have safeguards” and “if listed and since the service is material in nature, service can’t be provided” ?
Because as for March / june 2016, like for “tax issue” i can state that the audit firm can reject because if the matter is material and the audit client is listed, tax service can not be provided.
However, if the audit client is not listed, i may say that audit firm can accept since the audit client is not listed and as long as safeguards are in place to reduce threats to an acceptable level.
In this question, i’m confused whether i should assume whether the firm is listed or not listed
1. Kim, what you mean is that if the question were to ask “assess the ethical and professional implication and recommendation any actions if possible”
i just need to assess meaning i need to state there is “advocacy threat explain why such arises ” regardless of whether it is permissible or not since the question asks for it
Am i correct ?
assess and evaluate is to weigh up the issues which means we have to put the safeguards.
Then how about “discuss” ? “discuss the ethical and professional issue(AND the question did not mention recommendation or actions”. according to the ACCA website it says weigh up pros and cons therefore discuss, evaluate and assess all have same requirements asking for ethical threats and safeguards right if such question come up ?
3. so for number 3, audit risk or risk of material misstatement in question 1(a) does not arise from incompetence or unprofessional behavior of finance director ?
2. Usually in a company, if they dispose one of their subsidiary, do they disclose the reason why they disposed that particular subsidiary to the shareholders ?
3. Then there’s no audit risk finance director might set up weak financial reporting process ? i thought this was part of control risk
inventory was sold after the reporting date and the business combination happened after the reporting date but former is adjusting and the latter is non adjusting.
Both happened after 31 December 2019 which is after the reporting date but i can’t understand why they one is adjusting while the other one isn’t
sorry Kim, it’s abit hard to understand this concept even after reading opentuition lecture notes from SBL and some videos on youtube. It’s quite hard to understand…
for number 3. may i know what is it mean by END date of the reporting period ?
because when i see in Kaplan textbook, “sale of inventory after the reporting date” is adjusting event while “major business combination after reporting date or disposal of subsidiary” is non adjusting.
Both events occurred after the reporting date but why former is adjusting while the latter is non adjusting ?
sorry kim i think i misunderstood the question.
so basically auditor can recommend to TCWG the ways to protect from deficiencies but if auditors were to assist in implementing such “recommendations” then it creates management threat correct ?
Hello Kim, i really have difficulties understanding number 2
it’s a bit hard to understand why we still agreed to provide litigation support service even when advocacy threat arises ? because assuming the client is non listed (if listed prohibited to provide service), self review threat can be avoided by using different engagement team but why we still provide service when advocacy threat arises ?
1. then whenever a question is asking about ethical issue and if a firm provides non audit service to an existing audit client, self interest threat automatically arises mainly because firm gets additional income and this additional income can impair her objectivity performing both audit and non audit service ?
2. sorry kim but i was asking about advocacy threat… but i’m not sure why you are explaining about self review threat.
or did i misunderstood. what you mean is that whether it’s advocacy threat or self review threat, as long as there’s proper safeguards ( assuming non listed, obviously prohibited for listed), then non audit service can be provided ?
3. for safeguard for advocacy threat, can planning with the client and ascertaining scope of the engagement will prevent the advocacy threat ? like clearly indicating that auditors will not express their opinion and only provide evidence based on the investigation they have done ?
also, i know advocacy threat arise if an audit firm provides to existing audit client, forensic accounting but this is inevitable since it’s a scope of engagement where auditors may support the audit client due to fact finding exercise (nature of forensic investigation).
However, this is acceptable for the audit firm ? because i thought audit firms can’t provide non audit service when ethical threats are compromised ? or this is safeguarded to a certain extent through thorough planning where auditors only provide evidence what they gathered not providing opinion whether to prosecute or not ?
so when it should have been independence and if i write objectivity, i won’t get full credit ?
it says whether provision has been “recorded” therefore it can also mean that it has meet the provision criteria is satisfied ?
Hi,
you have mentioned to only write recommendations (i.e safeguards) when the question ask for it in the requirement, however in the December 2011, Chestnut (a), they also mention safeguard ?
Question specifically mention to write issues only but why safeguards ( recommendations) are also shown in the marking scheme ?