How I pass the AA for 50 marks at my first attempt

Hi all, this article was drafted on the next day of the exam with the feeling of getting an 85% or above mark on the AA paper. I got the result this morning and It turns out that I have 50%. So I have mixed feelings that if this article is helpful or not.

Anyway, I decided to share it, I hope someone finds this helpful to pass the next AA exam.

Tips on ACCA Audit and Assurance paper
Hello guys,

I took the AA exam on the 6th of June 2022 and I felt like I’d passed the paper on that day already because the exam questions were looking easy and familiar to me.

Anyway, I got 50 marks and passed! So, I wanna tell you the tips from my preparation for the AA exam.

[Wide and brief tips]
1. Take FR before the AA.
You don’t remember every detail of FR for AA. However, you need or use FR knowledge on the AA exam. I will explain how FR helps AA later on question specific tips.

2. Don’t be afraid to use rote learning.
There are so many concepts and terms you just need to memorize. You can apply your knowledge on the exam only after you remember them. Even some questions straightly request you to write down the correct description for certain concepts.

3. Use free resources
I’ve not used free resources on the ACCA website before this paper. When I found myself trapped in the question of “what the hack is AA?”, I went to the ACCA website and searched for extra resources and realized that the free resources were so so important. I strongly suggest the Examiner’s reports and the Past exam library.
People say that candidates always say the AA test was easy and AA is always recording the lowest passing late. I think the answer to this paradox is in the Examiner’s report. Candidates just wrote the wrong answers and got zero marks for it!!

[Specific tips for each question type]
When you go through the mock exams, specimen exams, and revision kits, you soon notice that certain questions are repeated. Here are tips I found from the solving questions.

1. Straight knowledge question.
There are some concepts or terms AA keeps asking candidates. For this kind of question, you don’t need to read the contents about the client. It asks just the knowledge itself. such as
1) Materiality and Performance Materiality
2) What should consider before establishing an internal audit department
3) What is management’s (auditor’s) responsibility for error and fraud in the financial statement
4) Types of documenting XXX system (sales, internal control, audit, etc) and pros and cons of them.
= narrative note, flowchart, ICQ, ICEQ
5) Components of audit risk

Look familiar? if you fail to answer those kinds of questions, there is no other way than rote learning.

2. Audit risks and auditor’s response
The important thing is that audit risk is not a business risk. Audit risk is that a certain account is misstated, overstated, or understated. You should focus on the misstatement itself, for example.
Let’s say a client extends the credit period from 30days to 90days. You easily connect this to the bad debt problem. Then how do you explain it?
1) because of the new credit policy, account receivables can’t be collected well so the client getting suffer from cash flow problems and business profit would decrease
or
2) AR amount and profit are overstated because possible bad debts are not included,

My answer would be like the second one. Focus on the misstatements(over/under) and provide responses to detect the misstatements.

3. Control deficiencies and recommended controls
I don’t prepare this type of question much but I can say that not like the audit risks, deficiencies are more related to business risks and business efficiency. So your explanations should focus on business/process issues.
Let’s say a client allows the salesperson to determine the credit limits of customers and there is no need for approval from a higher manager.
Then your recommendation for this deficiency would be “credit limit should be obtained from a third party credit agency, or sales director should authorize the credit limit that salesperson requested.”
so far I didn’t see any revision kit requests me to connect this issue with a financial statement.

You can define control deficiency and explain possible bad outcomes from them, and provide control methods that can reduce the outcomes.

4. Audit threats and safeguards
Here is where rote learning works. The types of threats(self-review, self-interest, familiarity, etc.) are needed to be memorized. And there are typical safeguards you need to remember too!

5. Substantive procedures for XXX
For this type of question. It is good to think about how the amount on the financial statement has been made. For example, if you are being asked about substantive procedures for inventory. You can imagine the flow of how the inventory balance is prepared. For instance,
Purchase order – receive the product – sell some – get damage some – year-end count – valuation, etc.
Then you can list substantive procedures for inventory from the above flow like
1) sampling purchase orders and making sure the order has been completed.
2) ensure the GRNs are mating with accounting entries
3) discuss with a third party expert to confirm the damaged inventory amount
3) review the year-end count document and confirm there were suitable controls.
4) if the selling price was dropped, compare historical cost and NRV and make sure the inventory value is correct.
5) in addition, an Analytical procedure is easy to squeeze in like “performing an analytical procedure to check if there is sufficient change of inventory [amount/turnover/holding days] from last year.”

This flow chart method could be modified over the questioning account, client’s circumstance, etc.