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Hi, in AAA exam, I notice that 3 of the most popular questions that would be asked are Audit Risks, Risks of Material Misstatement, and Matters to be Considered. Please may I know for these 3 types of questions, are they all requiring us to figure out the relevant accounting standards, consider appropriate accounting treatment, and the risks/incorrect treatment of accounting rules?
Basically, is it all about getting to know in-depth about accounting standards and then to apply those standards correctly whenever we see incorrect accounting treatment in the exam’s case scenarios?
Thank you.
See here re the difference between audit risk and RoMM https://opentuition.com/topic/acca-aaa-audit-risks-and-risks-of-material-misstatement-2
IFRS is only a part of it – IFRS is about the REPORTING of transactions/events/balances – before reporting, there is also basic accounting i.e. recording transactions in books of prime entry in the first place. If you’re only looking for “accounting treatments” in scenarios you may miss other risks – e.g. management bias.
“Matters to be considered” can be something completely different – e.g in the context of acceptance decision “matters” may be ethical/practical/professional (nothing to do with accounting).
Oh I see.
For example, if the question asks to comment on the matters to be considered in respect of some audit working papers which involves incorrect accounting treatment, then the answer will be more about the correct application of accounting treatment?
And if question asks about the matters that should be discussed with management in relation to uncorrected misstatements, then I will need to create awareness as to uncorrected misstatements, explain the consequences of such, and to provide some recommendations to solve the issue?
If a question asks about the matters to be considered in respect of a loan given, then the answer should explain about the nature of the loan, terms & conditions of the loan, related party relationship involved, etc?
As for matters to be considered when accepting an audit engagement, and we will answer the fees involved, time, job scope, due diligence review, etc?
Overall, it is all about fulfilling the requirement of the question as to what matters that we will need to consider, and to explain clearly according to such requirement?
Please may I know whether my interpretations above are correct? Please let me know if I’m wrong in any of these interpretations. Thank you. 🙂
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