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Cheetah co S17/D17 (A)Kaplan kit part b)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Cheetah co S17/D17 (A)Kaplan kit part b)

  • This topic has 6 replies, 2 voices, and was last updated 1 year ago by Kim Smith.
Viewing 7 posts - 1 through 7 (of 7 total)
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  • October 11, 2021 at 11:09 am #637443
    Noah098
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    ma’am I wanted to understand how by accompanying the client to the bank could possibly lead to assuming management responsibility? I mean the audit firm may seem to promote the acquirer and the acquisition and perhaps provide a degree of assurance but in no way any of these things involve assuming management responsibility, from my PoV, at least. what’s your take ma’am?

    October 11, 2021 at 11:14 am #637444
    Noah098
    Member
    • Topics: 935
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    • ☆☆☆☆☆

    but still somehow the second paragraph/point tries to hammer home this point…

    October 11, 2021 at 12:42 pm #637450
    Noah098
    Member
    • Topics: 935
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    • ☆☆☆☆☆

    doubt 2) same sub-part) Self?review threat – interim review

    “Reviewing the work of the team engaged in the interim financial statements review would also create a self?review threat to objectivity as the audit team would be reviewing the work of another team within the audit firm.”

    maam where is it written that interim accounts will be prepared by external auditor? A self review threat arises when the auditor reviews something that it prepared by itself. Since the interim accounts will be prepared by the management there shouldn’t be any self review threat

    October 11, 2021 at 1:41 pm #637453
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6789
    • ☆☆☆☆☆

    But consider – an auditor accompanying a client to a bank an “holding their hand” – is that not rather like having a solicitor with a client who is helping the police with their enquiries? The mere fact that they are present suggests some capacity to influence the meeting/outcome – it is management’s responsibility to negotiate the terms of the loan and the auditor would be in impossible position if called upon in the meeting to make any comment on the proposals.

    October 11, 2021 at 1:45 pm #637454
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6789
    • ☆☆☆☆☆

    Interim accounts are REVIEWED by the external auditor – this is an example of a limited assurance engagement. See page 123 of the notes. (The applicable standard is International Standard on Review Engagements (ISRE) 2410 “Review of Interim Financial Information Performed by the Independent Auditor OF THE ENTITY”.)

    October 12, 2021 at 3:15 am #637501
    Noah098
    Member
    • Topics: 935
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    • ☆☆☆☆☆

    am clear with my first doubt ma’am.

    with re to the second one, I am still unclear how self-review threat is arising? like what specific event is giving rise to it?

    October 12, 2021 at 7:43 am #637531
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6789
    • ☆☆☆☆☆

    Because the external auditor is reviewing interim financial statements and providing a report thereon (“negative” assurance) – the same external auditor who will provide a “reasonable assurance” opinion on the year-end financial statements.

    “Self-review” is to take account of one’s own work – which is not restricted to having “prepared” something for audit. Per the IESBA Code …

    “Self-review threat – the threat that a professional accountant will not appropriately evaluate the results of a PREVIOUS JUDGMENT [“negative” opinion] made OR an ACTIVITY performed …. on which the accountant will rely when forming a JUDGMENT as part of performing a CURRENT ACTIVITY.”

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