[kasiak]

Thank you very much!

My understanding is that risk assessment includes: assessing the risk and responding to the risk assessed.
Since as clarified above risk must be continually reviewed by auditors – would it mean risk assessment procedures and responses to the assessed risk vary depending on the stage of an audit?

The reason why I’m asking is that Kaplan book did confuse me a bit.
Following it – pages 144/145 say: response to assessed risk includes: review journal entries, review management estimates, review transactions outside the normal course of business and obtain written representations from management (ISA 240) while page 453 says: test of controls and substantive procedures (ISA 330).

Maybe in other words: what is the difference between ISA 240, ISA 315 and ISA 330? Is risk being assessed and responded differently in each case?

Thank you!

[kasiak]

So, instead of stating that “ISAs are professional guidelines that the auditor MUST follow to ensure each audit in performed consistently and to the required standard of quality.” is not true! There are cases where audit firm conducts an audit in accordance with different standards. It just needs to be reported.

Better phrase would be “Auditing standards SHOULD BE followed during all audits unless there are exceptional circumstances which would mean the audit objective would not be met” or “ISAs must be applied in all but exceptional cases. Where the auditor deems it necessary to depart from ISA to achieve the overall aim of the audit, this departure must be justified.”- another two statements from the book.

Statements in the above two paragraphs explain auditing standards, however they are not cohesive.

My understanding is the following:
ISAs must be followed if taken and modified to local use/needs. Otherwise local standards should be followed and departure must be justified.
In other words, at the end nationals standards are followed, which are or not developed based on ISAs. Whichever standards are followed, auditor must report.

Thank you!

[kasiak]

Shouldn’t an auditor follow local arrangements, which MIGHT take ISAs as issued by the IAASB and modify them for the local needs?
However to me that doesn’t mean ISAs MUST be followed. They can be considered in individual countries but don’t have to be.

So assuming me being an auditor – what would I have to follow? ISAs issued by the IAASB (being professional guidelines) or local auditing standards (a country law, which might consider ISAs but doesn’t have to)?

Thank you for clarifying!
Kasia

[kasiak]

In this case, would you please be so kind to list all the possible valuation methods allowed by ISA 2?

Considering above correspondence, its: specific identification (in some cases), first-in first-out (FIFO), weighted average cost, as per definition
+ GP, maybe not used nowadays that much often, as you explained, but still allowed? I’ve read somewhere that it’s used only for the interim FS? It that correct?

Anymore methods that I should be aware of?

Thank you!

[kasiak]

Dear Sir,

I’ve found the following definition:
“IAS 2 Inventories contains the requirements on how to account for most types of inventory. The standard requires inventories to be measured at the lower of cost and net realisable value (NRV) and outlines acceptable methods of determining cost, including specific identification (in some cases), first-in first-out (FIFO) and weighted average cost.”

My questions are:
1. Is the knowledge of all the 3 methods of determining cost of inventory mentioned above required for the F8 exam?
2. What is the Gross Profit Method mentioned in the BBP study text? Get’s me confused a lot, as there is not many details mentioned and I cannot find any link between the GPM and the definition above:(

Thank you!!!

[kasiak]

Thank you for such a fast response! Now, this topic become clearer…ufff:) It’s difficult to understand and memorize everything when you don’t have a hands-on experience…

Thank you again!

[kasiak]

So we have the same procedures for assessing the risk and responding to risk? It looks like the auditors are doing the same job twice?
First they assess the risks using A,E,I, O and U procedures and then using the same procedures they respond those risks?
It’s still very confusing to me:(

Please help me, as I really got stuck here:(

[kasiak]

This is written in BPP ACCA F8 book – “In general, there may be familiarity and intimidation threats when a member of the audit team joins an audit client”. Thus my question. Thank you very much for the explicit answer!

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