Specimen -S16

Please look for answers in the notes etc to reduce the number of questions you feel the need to post - the notes can be downloaded as a pdf and are fully searchable https://opentuition.com/files/securepdfs/2018/12/ACCA-AA-MJ19-Notes.pdf 1) Yes - search “Engagement Quality” and on page 98 you will see that it states “Public interest audits, such as the audit of listed companies, should undergo an Engagement Quality Control Review” 2) See Chapter 17, page 77, para 2 – agreeing a debt does not mean the customer has the intention and/or means to settle it. 3) See 3.10 on page 26. 4) I am looking at the exam as published by ACCA and the answer is “1 and 2” and (2) is “Review the cash book post year end for receipts from Pirlo Co”. The answer appears to me to be fully justified in the ACCA published answer “Writing to the customer/agreeing to invoices, while valid procedures during the audit to verify the existence of an outstanding balance, would not allow the auditor to assess the recoverability of the balance which is the key issue in determining whether an adjustment is required. Therefore options 3 and 4 are incorrect. Post year-end cash testing is the best way for the auditor to assess if the balance is recoverable wholly or in part and therefore the cash book should be reviewed for any receipts which will change the assessment of the debt after the year end. The issue should also be discussed with management to understand their reasons for not wanting to amend the financial statements as this may be due to a change in circumstances. “ 5) You should be able to see that this is a 2nd point (“in addition”) so it is not the most obvious point, but candidates would have got credit if they gave it. Basically it is saying that as part of the process of controlling the investment in assets, the ordering/capital expenditure requisition process should indicate whether the investment is in a new or replacement asset – and where it is in a replacement asset – to say what has or will happen to the replaced asset (sold or scrapped?) 6) Most substantive procedures start with obtaining a schedule – prepared by the audit client – to show the make-up or break down of the amount(s) included in the financial statements. Casting (i.e. adding up) any list of amounts is a check of “completeness and accuracy”. So far example, if the balance per the SoFP is $11,000 and the schedule shows the amounts of $1,000 + $2,000, $3,000 and $4,000 added up to $11,000, casting the schedule shows that the list is incomplete because it adds up to only $10,000.. 7) If you search “except for” in the notes you will see that the modified opinion “qualified ‘except for’” is explained in section 5 starting on page 34.