June 10 Exams POLL Paper F8 was Post your comments here

@gagsingh said:
I think the wording throughout the exam was difficult to work out what exactly was required by the examiner…possibly due to the fact that it was a new examiner!

Still not sure about the last part of question 4, i thought the situation was that the company has included a going concern disclosure, but while the auditor agrees with this he believes there is material uncertainty to the effect that the going concern does not exsist (ie, the auditor feels the company cannot continue to trade for the forseeable future).

SO…the going concern disclosure would say that the directors DO beleive the company can continue to trade for the forseeable future, but the auditor does not…so i would say this needs to be either an adverse audit report or a disclaimer of opinion depending on if the uncertainty is due to mis-statement or the inability to obtain sufficient audit evidence.

What are your thoughts?

Thanks

Gag

Are you sure that question was saying so?
“there is material uncertainty to the effect that the going concern does not exsist”
I don’t remember that question said that going concern does not exist…..Any one remembers? If so the question is straightforward…

@sefiller said:
Are you sure that question was saying so?
“there is material uncertainty to the effect that the going concern does not exsist”
I don’t remember that question said that going concern does not exist…..Any one remembers? If so the question is straightforward…

Question said that management made appropriate disclosures, and auditor is happy that going concern assumption is ok, but material uncertainty exists. So, UNMODIFIED REPORT with emphasis of matter is the answer.

that was correct answer. my one far from that

@mustay said:
@milachika it doesn’t matter if the examiner asked for audit risk definition in Q1a. Read the comments in the marking scheme for that question.

To buttress this, Q4 in Dec 08 asked for risks definition and still asked students to SPECIFICALLY identify INHERENT risks in the part b. So do you see the relevance?

Thank Goodness I never ignored Elements of Assurance Engagement:
* Tripartite Relationship between Professional Accountant, Responsible party and Intended users.
* A subject matter
* The subject matter information
* Suitable Criteria
* A written report
* SAAE

Its an irrelevant point. Nobody will lose marks for putting them in, or not putting them in either way. The important part was the risk itself and explanation.

@fl123 said:
my understanding of ques 5 was the comp made all the disclosures and the auditor agreed with them, but there was a material uncertainty. therefore the report must be modify with an emphasis of matter paragraph. because it most be modified to put in an emphasis matter paragraph.

I don’t think so. As far as I am aware, unmodified reports include emp of matter paras.

@fl123 said:
look at this F8 Modified audit reports- emphasis of matter

Sorry, i should have been clearer. When it relates to going concern it is an unmodified report with an emphasis of matter. Slightly different. If you have the BPP book it is page 294 – “Scenario 1 – Going concern appropriate but material uncertainty which is adequately disclosed – In this situation, the opinion on the financial statements will be unmodified but the auditors report will include an emphasis of matter paragraph.”

Hope its not a mistake in the book.

The quote above is taken word for word from the book.

So, as i said, maybe the book is wrong. I hope not.

@mustay said:
Read between the lines. I never mentioned that you’ll be penalized. My view is that classification narrows your scope. What if you make an incorrect classification?

An Unqualified opinion is E.O.M

A qualified is LOS or DWM

Qualified + Unqualified are both forms of Modification.

Unmodified is ONLY when you have a TAFV FS – no hitches.

Again, the BPP book clearly states the above (that eom can accompany an unmodified opinion) I am gonna trust that ahead of you thanks..

@fl123 said:
look at this F8 Modified audit reports- emphasis of matter

I think I found answer of your dispute. I was thinkin like fl123 because this is written in open tuition course notes BUT I opened the ISA book and see what I found:

“ISA 570 GOING CONCERN
Use of Going Concern Assumption Appropriate but a Material Uncertainty Exists
Para 19. If adequate disclosure is made in the financial statements, the auditor shall express an unmodified opinion and include an Emphasis of Matter paragraph in the auditor’s report.”
and
“ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report
Para 7 (d) When the auditor includes an Emphasis of Matter paragraph in the auditor’sreport, the auditor shall: Indicate that the auditor’s opinion is not modified in respect of the matter emphasized.”

So it looks like boscobosco is right. Audit opinion with emphasis of matter is unmodified (although in open tuition it is written that it is modified).

If every one is happy on the exam, any chance the assessor will be more stricter for the assessment. If you marked 50, but this time you only can be marked 48 or 49 to control the pass rate.?

For Audit Risk question I classified risks under headings Inherent, Control and Detection Risk. I included 3 risks under Inherent Risk and 1 risk each for Control and Detection Risk. Detection risk may occur if auditors preliminary assessment of materiality is incorrect and hence, will apply insufficient audit procedures.

Can anyone confirm for sure whether it is correct or incorrect to classify audit risks in Q1 into inherent, control and detection risks?