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Re: “What IS the difference between ‘performance audit’ and ‘audit of performance information?”
Is described the difference between limited and reasonable assurance.
negative v positive opinion and level of assurance provided.Q1 i found tough but assumed it was materialtiy of component auditors, the Year end consolidated dates not being co-terminus, accounting standards, ISA600, minority interest of acquisitions and their materiality, reliance on component auditors and assess them for their reliance, experience, qualifications and independence etc. Hopefully will get some marks anyway!
Usually like audit report Q’s but was unsure about the recognition of the revenue under IFRS 15 re the terms of the contract, was that terms spicifically re those 2 businesses contract or did it effect the revenue recognition! SO i skipped it and did Q3 instead!
Q3 was easier to answer than it looks i think!
Its always the same, matters to consider for any of them are their materiality to fin st’s , the accounting standards, their risk of material misstatement and effect on audit report, then evidence is Q&A’s , recalculations…..just did the same points for each part a,b and c but re-jigged to relate to each part!Here’s hoping i passed this time!
What Q has the EOM where there was a contingent liability? For this I wrote that the EOM was not appropriate, and if the contingent liability was causing a going concern issue it should be disclosed under the basis of opinion under heading of Material Uncertainity in Relation to Going Concern and also mentioned in the KAM section of the audit report.
Was a tough paper overall Q1 requirements were very vague, audit risk but caveat to say no need to mention disclosures which to me meant she wanted the audit risks just in relation to the audit planning stage not any ROMM risks caused by audit risk.
I think that was Q2 as they said the report was unmodified but with an EOM paragraph, which means that its was unqualified but not unmodified , so maybe she was looking for that to be pointed out! If causing going concern issue it should be disclosed in EOM paragraph and KAM if listed co.
It’s so hard to know, but i think it was ok to mention ROMM caused by audit risk if it was material but just not talk about the element of whether to disclose it or not.
There’s so little time to even be able to contemplate whether or not to mention these things!This is my 3rd time sitting this paper and i hope it was the last!!!
Unfortunately, I also mentioned that the basis for qualification should also be mentioned in KAM. This is wrong….see point b below. On the other hand, you don’t lose points for stating wrong things…
A matter giving rise to a qualified or adverse opinion in accordance with proposed ISA 705 (Revised),2 or the existence of a material uncertainty related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereinafter referred to as “material uncertainty”) in accordance with proposed ISA 570 (Revised),3 is by its nature a key audit matter. However, the auditor shall: (a) Report on these matter(s) in accordance with the applicable ISA(s); (b) Not describe these matter(s) in the Key Audit Matters section of the auditor’s report; and (c) Include a reference to the Basis for Qualified (or Adverse) Opinion or the Going Concern section(s) in the introductory language of the Key Audit Matters section. (Ref: Para. A44–A45)
Q5
I did the adjustment for the revenue/receivables. (adj needed as risks & rewards not transferred according to contract)I also put that we needed to check whether the inventory had been removed from stock as it needed to be added back in at lower of cost & nrv.
Qualified opinion if inventory still on stock list as material ($17m), not pervasive.
Adverse opinion if inventory needed adding in as aggregate errors were then pervasive.Did anyone else do this or am I completely barking up the wrong tree?
That is the new change if its causing a going concern it no longer goes in EOM paragraph but goes into its own heading called material uncertainty related to going concern paragraph under the basis of opinion and is mentioned in the KAM section too if listed, I cant rem if it was listed or not. I presumed that’s why they originally had the contingent liability as an Emphasis of Matter, a vague question that arguments can be made for different treatments.
If everyone has another 45 mins in there we would probably all pass just goes to show they want to time pressure you to fail you. I had 15 mins to do my last question and could only write bullet points 🙁
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Question 1 was very very difficult for me. i do not believe i identified enough Audit Risks. it was too long. Examiner needs to reassess question 1 especially given the many things that were required for the rest of the paper.
Re the other sections, there was a lot to write in the time alloted. i hope the examiner takes this into consideration when grading because it was impossible to fully develop pointers during the time. i wrote my exam down to the wire.
Fairly manageable paper. keeping my fingers crossed.
Hello guys, what did you do about that question with cost of inventory with labour rate in it. How did you deal with it ?
For matters i said the materiality of the items, their accounting standards being handled correctly as per IAS 2 etc and the risk of them being materially misstated.
For the evidence, that there should be a Q& A with management, copy of the records etc or where their assertions came from and re-calculations of them to confirm accuracy
I did the same format for all 3 points, just amended for each situation.
I wrote something along the lines of..
Performance audit
-Higher assurance
-Positive report/opinion
-Required by regulations/stakeholdersaudit of performance information
-Limited Assurance
-Negative opinion
-Not legal requirementIt was just 3 marks so half a mark for each point was sufficient I thought.
The answer should be along the lines of revenue recognition, IFRS 15. When it should be recorded, if risk and reward not passed then revenue overstated, inventory understated.
@scared123 said:
You mean Q2 the EOM paragraph issue?
I personally don’t think so.
KAM is determined when the matter has been communicated to charged with governance, then matters that requires significant attention during the audit – which they said the audit evidence has sufficient and appropriately obtained, does not pose any challenges to obtain the evidence, then the final KAM which is most significant in the current audit.I don’t think KAM is suitable at this point.
ok, that was what i was refering to. I just thought it was a KAM since it said it was significant. Thanks.
did not know the difference between audit of performance and performance audit. Mind games
I didnt feel confident after the exam at all. Question one took me by surprise it was too much information to absorb let alone answer in one hour. The paper was generally too much ethics for me and I felf totally unprepared for all the writing that was necessary.
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In my understanding Performance audit refers to Audit of actual performance
While Audit of Performance information refers to audit of the information on performance given eg KPI’s
It was totally packed with ethics and professional issues. I did the best i could and am hoping for above average pass.
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Anyone attempt qn 3 a?
One week to go now. I don’t feel good about P7 because I think it was a bad idea to try P7 before passing P2 exam 🙂
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