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Dear professor:
1.What is the difference between reporting to directors and those charged with governance?
2.When I introduce audit risks in the scenario, can I use my own words to summarize instead of using the same text in the scenario? Or can I use the same text in the scenario?3.If the question ask me to identify five audit risks, if I write six or seven, how will they mark? Can I get a higher mark if I identify more audit risk?
4.For the auditor’s response to audit risk, how many responses should I write, is it the more, the better? Can I just write one sentence for response for one particular audit risk?
5.if the question ask me to write audit procedures and it is 3 marks, how many procedures should I write, is it the more the better?
6.Can I use (1), (2),(3) or * to divide my point, instead of using “firstly, secondly” to connect each point?
7. If the question asks to calculate three ratios, what ratio should I choose, if I calculate more ratios , how will the examiner mark, will I get more marks?
8. If I talk about the audit risk, do I need to specifically point out whether the inventory is over or under-estimated? Can I just say the inventory will be misstated in case of the wrong identification? Also how to identify whether the inventory is over or under-estimated?
9.When talking about doing test for audit evidence, when should I do the after y/e test and when should do the pre-year end test? I do not know which to choose when telling the auditor’s response.
10. what date should I write for all the covering letterThank you so much
AnnikaPlease do NOT write so many questions on one post – it is ok to write related questions on one post but it is not helpful to other students looking for answers to similar questions to have so many.
1. See answer here https://opentuition.com/topic/those-charged-with-governance-4/
2. There are no marks for merely copying from the Q – you will have to use your own words to convey a fact from the Q as a risk.
3. No – give only the number asked for. Bear in mind that even if you identify more you have to be able to explain them AND come up with an auditor response. A good auditor response will not always be evident, so rather than “force” something which is not very good, concentrate on giving good answers to the number you have been asked for.
4. Yes – just one sentence should be enough to write a response which earns a mark.
5. For procedures – 1 relevant point is a mark – so write 3 for 3 marks.6. Yes – “firstly, secondly” is just padding.
7. Be guided by the question – it is perhaps more likely that you would be asked for 5 or 6 as “analytical procedures” to help identify risks. A range of ratios covering profitability, liquidity, performance and gearing will be better. You cannot get more than the available marks.
8. It depends on the risk. E.g. if the risk is of obsolesence it is strictly over-statement. So only say misstatement if it could be over or under.
9. Not sure what you mean here. If you mean cut-off testing see Chapter 20 – pages 95 and 96 for an explanation.
10. The exam date.Dear professor:
Thank you so much for your reply. However, I still have some questions:
1. If I can not figure out whether it is over or under-stated (but the correct answer provided should be a specific over/understated), is it ok to always use misstatement in all questions? Will I lose mark?
2. If the question is 3 mark for procedures (no mention how many should I write), I write 4 procedures, but the first one is false, will I get 3 mark?
3. If the question asks me to write 3 audit risks and is 3 marks, I write 4 audit risks, but the first on is false, will I get 3 mark?Thank you so much
Annika1.NO – you WILL lose the mark if you cannot decide whether it is under/over. Anything to do with an increased risk of bad debts, for example, means that there is a risk of overstatement of trade receivables (because the allowance is understated). Misstatement may validly relate to inventory – for example, if there are poor controls over physical inventory counting such that items may be omitted (understatement) or double counted (overstatement).
2. If the number is not specified e.g. substantive procedures (5 marks) this tells you that you need 5 mark-worthy points to get the full five marks. You can write more (but max is still 5 marks) but if you write too many there is a risk that they may be too short/too vague/repetitious and/or that you spend too long on this part.
3. If a number is specified that is the number you are expected to give and as I suggested above you should be selective about choosing those risks for which you can write an auditor response.Dear professor:
If the number is specifically said, then I will lose mark if I write more, is it? or it will just look at the first five if the question asks me to do 5 procedures?As far as I am aware whatever you write will be marked but as I say:
– marks will be “capped” at the total available
– if you write too many you will most likely penalise yourself by writing more but weaker points than if you focused on writing 5 good ones
– if the number is specified and the script is “marginal” – failure to adhere to instructions will not impress the second marker/examiner (whoever is reviewing).When you practice exam style and standard questions you should actually find that writing more points that are RELEVANT is quite hard/time-consuming and therefore you should be prepared to THINK more are write the best answer points you can in the time available and move on to the next requirement.
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