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Hello Sir,For PYQ Sept/Dec 2019 Q2(a)
(i)sale and leaseback transaction(evidence expected to be on file)
1. What is the difference between schedule and agreement?is it one is prepared by the auditor and one is prepared by the client? and how the agreement look like?
2. How the review that being conduct by the auditor documented in the audit working paper file? writing in words by stating who review, what being review and when?
(ii)Investment property
1.What if the matters to consider the answer is wrong(eg: suggest the property to be IAS 16 rather than IAS 40) , will the evidence suggested to be on file will also gain no marks?
(iii)Asset impairment (evidence expected to be on file)
1. Why the opening balance is not from NCA register to the property account? why its the other round?
Thank you.
(i)
1. “A schedule calculating any gain or loss on the transaction, recalculated by the audit team …” it would make no sense for the audit team to recalculate their own calculation so this schedule must be one prepared by the client.
Schedule is just a normal every day word – it has no specific technical meaning except perhaps in law where appendices to contracts are often referred to as schedules. An audit work paper could be described as a schedule.
An agreement between two or more parties may be formal or informal – it is often used interchangeably with the word contract though in legal terms the word contract means legally binding and enforceable in law. I would take agreement and contract to be the same thing in AAA answers – between businesses for anything to do with the supply of goods/services etc this is going to be in writing and includes “Ts & Cs” (terms and conditions). For loan/lease agreements, etc a contract is likely to include a (re)payment schedule as an appendix.2. If you are asking whether this is relevant as an answer point then NO. The requirement is “Comment on the matters to be considered and explain the audit evidence you would expect to find during your review of the audit working papers in respect of THE ISSUES DESCRIBED ABOVE” – i.e SPECIFIC to EACH of those THREE issues (only). Anything about “review” in general earns nothing at this level.
(ii)
1. If the evidence happens to be the same (e.g. inspection of title deeds) you would still get credit for it – but if you suggest evidence that is not relevant to the real issue but an irrelevant issue it will not earn marks.
(iii)
1. Direction doesn’t matter – if it agrees, it agrees (!)Sir, you have been misunderstood my question , maybe its because I do not describe clearly.
The agreement and review part is referring to the examiner answer:
“Agreement of the sale proceeds as per the sale agreement to the cash book and/or bank statement to confirm the correct calculation of the gain or loss on disposal”
“A review of the board minute for evidence of….”
How these two audit procedure is documented in the audit working paper as its not a noun but verb?
Thank you.
I confess I was having to guess your meaning.
OK – so the answer could have said “Notes of a review of the board minutes …”
“A summary of a review of surveyor reports …”
“A schedule ….” etc, etc, etcWhen the examiner asks for evidence she is more interested in the information it conveys than a description of the working paper/audit documentation.
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