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If you missed today’s free webinar – it is now available on demand – register for it from the link here The webinar presents a new resource “Read the mind of an AAA marker” – which provides insights into the marking of two candidate’s scripts
To obtain most benefit from this resource I strongly recommend that you attempt the Qs yourself first.
The one page summary “How to approach AAA” which introduces the webinar
Revenue is always Significant risk. Not sure if we can explain in the answer that it is also a presumed risk.
@Chris777 – please do use my AAA forum for technical queries – it is not clear here whether you are commenting on something in the article or asking for clarification. If the latter, it comes from ISA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements – the risk of misstatement in revenue recognition is misstated is presumed except in the simplest of cases).
In Q1 if I am not wrong we can always note down Revenue as a Significant Risk and earn easy marks as it is a presumed risk ?
My comment was in response to the above ” Read the mind of an AAA marker”You should see it in most published answers – the presumption would only be one mark. You’d have to elaborate on how exactly the risk of material misstatement (over? under?) arises in the given scenario.
Thanks. sometimes there are notes next to some account balances. E.g Revenue, note 1 which provides additional information, so when we calculate materiality do we need to include the additional information per the note ? i.e do we need to make any adjustment to the balance and then calculate materiality
I’m really not sure what you mean – perhaps you could make a new post to the AAA tutor forum citing a question to illustrate your point https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-advanced-audit-and-assurance-aaa-exams
If it’s relevant to some calculation of materiality I would expect that to be illustrated in the published answer. Certainly you should expect there to be some information about revenue in the scenario so you can elaborate on the explanation of exactly HOW misstatement could arise – e.g. because some part of revenue should be recognised over time rather than at a point in time.
I mean for Q1, so on the P/L there might be a note next to revenue containing additional information, so do we have to take into account the additional information in the note before calculating materiality.
Also, would we maximise the marks if we evaluate 15 audit risks rather than 5-6 in detail ? Is there a cap on the number of audit risks that can be evaluated ?
If there are any $s in a note it might lend itself to a calculation relevant to materiality – e.g. if a sub-class of transactions within revenue is material (and therefore more likely to be materially misstated than a sub-class that makes up only a small proportion of total revenue). But as I said, it is more likely that the information is there for evaluation (which is more than mere calculation of materiality).
See here for detailed discussion re the mark allocation for the EVALUATION of risks https://opentuition.com/topic/aaa-exam-2 – you should note that marks for calculations (including materiality, ratios and trends) will be capped.
No you will not maximise marks by skimping on detail and just giving lots of ideas – (1) because the requirement specifies SIGNIFICANT risks (and to have 15 means that some would be trivial (2) if you have ever read candidates’ feedback on the AAA exam polls on this forum, you will see that it can be difficult to find more than a handful of significant risks.
Thanks. Also when we have a Group related quesitons, can we always assume that related party is a significant risk ?
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