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Dear tutor,
I have some doubt over the solution of this question (option 3), why not option 1? Because IMO the response number 2 (The auditor should appoint an expert to properly assess the risks of misstatement ) is also a good safeguard to the increased audit risk.
Can you please explain?
Thank you!
“As at 1 July 20X5, you are an audit manager at Owl & Co and are responsible for auditing Hawk Co. Hawk Co produces kites and sells them directly to customers through its website. You are currently preparing the audit for the financial year ending 31 July 20X5.
During a planning meeting with the finance director, two key issues were identified.
Dismissal of the financial controller
The company’s financial controller, who had worked at Hawk Co for more than 20 years, was dismissed in May 20X5. The company has now received a claim for unfair dismissal. No replacement has been appointed yet, and the finance team is temporarily sharing the responsibilities.Payables ledger supervisor
The payables ledger supervisor left in March 20X5, and a replacement was only appointed recently, in the past week. During the period without a supervisor, no reconciliations of supplier statements or trade payables accounts were carried out.The finance director has also provided the latest management accounts so that you can perform preliminary analytical procedures. Based on this information, you have calculated the following ratios:
20X5-20X4
Gross profit margin 17% – 26%
Payables payment period 40 days – 75 days
Receivables collection period 38 days – 29 days66
Which of the following are appropriate auditor responses to the increased audit risk
created by the finance team being allocated the work of the financial controller?
1 The audit team should be fully briefed and be alert throughout the audit for additional
errors
2 The auditor should appoint an expert to properly assess the risks of misstatement
3 The finance director should be requested to provide the audit team with assistance for
matters that cannot be addressed by the remaining finance function
4 The auditor should consider resigning from the engagement as audit risk cannot be
managed to an acceptable level
+ 1, 2 and 3
+ 2, 3 and 4
+ 1 and 3 only
+ 1 and 4 ”I’ve only read your first para and my immediate thought is that “ask an expert” is invariably an incorrect answer/distractor because it’s a “cop out”. An auditor MUST be able to identify risks of material misstatement in financial statements without deferring to somone else!
Now to the Q – again, at a glance, I see this is NOT a past OT-case Q (where are you getting these from? do they not have answer justifications?)
You say option 3 is given as the correct answer – “1 and 3 only” – since “2” is a distractor, I agree with the given answer.
Dear tutor,
Thank you for your answer.
Actually, the questions I have asked are from Kaplan Exam Kit. As far as I learned, they are adapted versions of the past ACCA exam questions.
The reason why I use this Exam Kit is that I am using their study text for theory review. (To be honest I do not want to use the textbooks from other publishers because the way they present those books made me confused and I do not get the whole picture after reading those textbooks). So, I use Exam Kit and workbook from the same publisher to make it easier for the review.
I am planning after reviewing these KIT questions, I will turn to ACCA platform to practice their past exams.
I am really sorry if what I asked makes you feel unconfortable. I do not mean it.That is so considerate of you – but rest assured it doesn’t make be uncomfortable 🙂 My concern is that I do not want to mislead or confuse you in your studies by contradicting something you are reading that I don’t have.
I now have a copy of a Kaplan Kit so I can see where there are gaps in the answer justifications – e.g. for this Q there is no explanation why the “expert” option is incorrect.
I do have another concern – that the wording of the Qs you have copied is not as “polished” as the wording in the 2026-27 edition (e.g. the standard start to a Q with dates is always “It is 1 July 20X5.”).
So if you have an old edition you must not use it for any questions on auditors’ reports and opinions or “going concern” as ISA 570 (Revised 2024) is the examinable document.
Here are some additional sources of Q practice that shouldn’t confuse and have fully justified answers (I hope! If not you can ask me on this forum!)
https://opentuition.com/acca/aa/aa-practice-questions You shouldn’t find these too demanding and you will see some different OT Q types (not just multiple choice and “which two” multiple response). I know the current real exam format does not have “standalone” OTs – but sometimes Qs within an OT case are effectively standalone – and these are quite good for clarifying technical understanding. Alternatively, if you don’t want to plough through these by topic, you can make your self a revision test of Qs drawn randomly from our Q bank: https://opentuition.com/acca/aa/acca-aa-revision-test
There are two sets of OT-case Qs here – each set has 3 scenario each with 5 Qs
https://opentuition.com/acca/aa/aa-case-questions-set-1
https://opentuition.com/acca/aa/aa-case-questions-set-2The scenarios of these are briefer than the real exam but still test technically important points and, again, include different Q types.
And there’s another set of 3 scenarios with 5 Qs here https://opentuition.com/acca/aa/acca-aa-revision-mock-exam
Dear tutor.
Thank you so much for your detailed explainations and guide. I will look for the latest version of Kaplan Exam Kit, and hopefully that version is good for my exam preparation. I will also visit the links that you sent.
I cannot believe that I am lucky enough to meet you here. You are an attentive instructor, and you are amazing. Thank you 🙂
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