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aii) asks to explain the audit evidence you should expect to find in your file review in respect of the cash flow forecast
Confirm whether any plant and machinery has been classified as held for sale in the financial statements
Review the board minutes to ensure that management is committed to selling the asset within the next 12 months
Use the help of an auditor expert to study about the proposed demand for the quick fire product and compare it with management results to ensure that the revenue calculated is appropriate
With the help of an auditor expert ascertain whether the plant and machinery has a fair value of 50000 in the active market
are the above procedures valid?
“asks to explain the audit evidence you should expect to find in your file review in respect of the cash flow forecast”
EXPLAIN the audit evidence that you should expect to find
First, therefore, identify the audit evidence that you expect to find and then …
Second, explain it
What you have answered is a different question!
“What procedures would you expect to carry out in respect of …”
You have even asked me “are the above procedures valid?”
“Confirm”, “review”, use”, “compare”, “ascertain”
These are all verbs – necessary for inclusion within a procedure
You are asked to explain the audit evidence that you should expect to find
I’m really sorry to say this but your answer would score no marks 🙁
Ok i understood what you meant.suppose if my answer was in the noun form , will it then be correct?
Are you serious that my mistake of interpreting the question as asking to describe procedures scores no mark at all if asked in the real exam? Although the ‘real’ difference was the change in form of speech?
“Are you serious that my mistake of interpreting the question as asking to describe procedures scores no mark at all”
TOTALLY serious!
It’s in fact a quote from a previous year’s examiner’s report – it’s not something that I have made up
You can change many procedures into evidence by starting with “Documentation to show that …”
However, this question asks you for an explanation and simply to change the verb into a noun still doesn’t do it
What’s the explanation for the evidence?
In addition (I don’t have the question to hand – do you really want me to go looking for it?) is the fact of an asset being classified as held for sale relevant to evidence collected for a cash flow forecast?
It seems a strange matter to focus on in a cash flow forecast!
What’s the matter with the printed solution?
Here’s some of it:
“Agreement of the opening cash position to the audited financial statements and general ledger or bank reconciliation, to ensure accuracy of extracted figures
Confirmation that casting of the cash flow forecast has been reperformed to check arithmetical accuracy
A review of the results of any market research which has been conducted on the GreenFire product, to ensure the assumption regarding its successful launch is appropriate
Discussion of the progress made on GreenFire’s development with a technical expert or engineer, to gauge the likelihood of a successful launch in February 2014
A review of any correspondence with existing customers to gauge the level of interest in GreenFire and confirm if any orders have yet been placed
A review of any sales documentation relating to the planned sale of plant and equipment to confirm that $50,000 is achievable
Physical inspection of the plant and equipment to be sold, to gauge its condition and the likelihood of sale”
That’s just some of the points … and EVERY one explains the evidence that you would have expected to find on the audit file
In sequence we have:
“to ensure
confirmation that
to ensure
to gauge
to gauge
to confirm
to gauge”The evidence is identified but the mark is for the explanation
Now!!!! Having said all that, I’ve just also checked the marking plan! WOW!!!
Here’s an extract:
“(ii) Procedures on cash flow forecast
Generally 1 mark for each well described procedure:Agreement of the opening cash position to the audited financial statements and general ledger or bank reconciliation
Confirmation that casting of the cash flow forecast has been reperformed
Review of the results of any market research which has been conducted on the GreenFire product
Discussion of the progress made on GreenFire’s development with a technical expert or engineer”
I CAN’T BELIEVE IT
“Generally 1 mark for each well described procedure:”
NO, NO AND THRICE NO!!!
THE MARKING SCHEME IS IN LINE WITH NEITHER WITH THE QUESTION NOR WITH THE PRINTED SOLUTION
OK, rant over! You can take your choice. You can either believe me or you can look at the marking scheme and say that you’d rather believe that abhorrence
Up to you (but I’m sitting here FUMING!)
Ok i agree with you ,the mark allocation hasnt been right .
I have read the printed
solutionCan you tell me whats wrong with my answer if i restated my answer like below
Discussions made with auditors expert regarding the fair value of the proposed sale.This was to ensure whether the plant and machinery indeed had a fair value of 50k
Discussion made with the auditors expert regarding the demand for quickfire and compared it with management result to ensure revenue from the product forecasted is appropriate
Are these evidences correct?
Put in opening words … “A record of discussions …” or “A summary of discussions …”
and
“… and evidence of a comparison having been made between the experts’ notes and management’s results …”
Otherwise, you’re getting there
OK?
Thanks a lot now am quite satisfied?
By the way i didnt include ‘summary of discussion’ because the answer key didnt include it as well (
Discussion of the progress made on GreenFire’s development with a technical expert or engineer”)Thanks again.
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