• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

JANSEN & CO sept 18 part a) i)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › JANSEN & CO sept 18 part a) i)

  • This topic has 7 replies, 2 voices, and was last updated 8 months ago by Kim Smith.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • October 27, 2021 at 9:17 am #639193
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    doubt 1: Accepting the assignment may also create a self?interest threat as a result of the auditor being perceived to have an interest in the outcome of negotiations with a third party and which may motivate the auditor to behave in order to protect that interest.

    ma’am I don’t understand how the auditor would have an interest in the outcome of negotiations? As in what kind of benefit would auditor try to protect, that may arise from a positive outcome like- acceptance of of loan application?

    October 27, 2021 at 9:33 am #639196
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    doubt 2: in he same subpart

    A self?review threat may also arise because the negotiations may result in facts and amounts which will form part of the audited financial statements. As a result, the auditor will be auditing financial statements which in part at least represent work which they themselves have performed. It follows that there is a risk that the auditor will not be sufficiently objective in performing the audit and may fail to identify any shortcomings in their own work.

    m’am again am unclear how exactly self review threat arises here. from my understanding it seems that some fo the prospective financial information(PFI) may as well turn out to be actual, and so when the auditor audits such information there is a chance they may not retain full professional scepticism-hence self review threat. Is my understanding correct?

    October 27, 2021 at 9:39 am #639198
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    doubt 1: Accepting the assignment may also create a self?interest threat as a result of the auditor being perceived to have an interest in the outcome of negotiations with a third party and which may motivate the auditor to behave in order to protect that interest.

    ma’am I don’t understand how the auditor would have an interest in the outcome of negotiations? As in what kind of benefit would auditor try to protect, that may arise from a positive outcome like- acceptance of of loan application?

    doubt 2: in the same subpart

    A self?review threat may also arise because the negotiations may result in facts and amounts which will form part of the audited financial statements. As a result, the auditor will be auditing financial statements which in part at least represent work which they themselves have performed. It follows that there is a risk that the auditor will not be sufficiently objective in performing the audit and may fail to identify any shortcomings in their own work.

    m’am again am unclear how exactly self review threat arises here. from my understanding it seems that some fo the prospective financial information(PFI) may as well turn out to be actual, and so when the auditor audits such information there is a chance they may not retain full professional scepticism-hence self review threat. Is my understanding correct?

    October 27, 2021 at 9:39 am #639199
    Kim Smith
    Keymaster
    • Topics: 87
    • Replies: 6089
    • ☆☆☆☆☆

    It is only saying that there MAY be a PERCEPTION of self-interest. If the client gets the loan and the expansion (that looks to be quite significant) goes ahead, the audit fee will presumably increase.

    October 27, 2021 at 9:45 am #639200
    Kim Smith
    Keymaster
    • Topics: 87
    • Replies: 6089
    • ☆☆☆☆☆

    Noah098 wrote:doubt 2: in he same subpart

    For example, it could increase the risk that the auditor overlooks to obtain confirmation of the new loan in the audit work.

    October 27, 2021 at 9:47 am #639201
    Kim Smith
    Keymaster
    • Topics: 87
    • Replies: 6089
    • ☆☆☆☆☆

    It would be helpful if you could think through your questions – perhaps draft in a doc and then copy and paste them into the forum?

    October 27, 2021 at 10:11 am #639212
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    I understood the self interest part. but I am still unclear with self review threat. can you elaborate slightly maam if possible…

    October 27, 2021 at 12:02 pm #639222
    Kim Smith
    Keymaster
    • Topics: 87
    • Replies: 6089
    • ☆☆☆☆☆

    You don’t have to understand every point in the model answers. It’s simply trying to say that the auditor may be “blinkered” (rather than objective) when auditing the loan as it eventually appears in the financial statements because they’ve already come across it in the other work. Knowing that $22m was the amount of the loan applied for wouldn’t be sufficient audit evidence.

  • Author
    Posts
Viewing 8 posts - 1 through 8 (of 8 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Manuga on ACCA AB Chapter 16 – How an individual can develop – Questions
  • Manuga on ACCA AB Chapter 16 – How an individual can develop – Questions
  • John Moffat on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • John Moffat on Accounting for Management – ACCA Management Accounting (MA)
  • ngtuanthungoc on FA Chapter 4 Questions Accruals and Prepayments

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy