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Plz give me the step by step guide on how to tackle audit report question , I find it very tough to gather enough material written down to score passing marks in this question (I am pretty sure I fail the last 2 attempts because of this question) , I am thinking of skipping this question altogether in this attempt , but would it be wise to do so? This year it might worth 20 marks so I am pretty confuse on what to do ,
Identify the problem / the issue which is going to affect your report / opinion.
Determine materiality – both quantitatively and qualitatively
Is it material?
How has the matter arisen – is it because we are unable to obtain sufficient appropriate audit evidence or is it some matter where we disagree with the directors’ proposed treatment in their financial statements?
Is it, alternatively, some matter about which we concur with the directors’ treatment but, because the matter is SO important for a proper understanding of the financial statements, we feel we need to bring the matter specifically to the attention of the reader.
It could even be some point within, say, the Chairman’s Report which we feel is misleading or inconsistent with the financial statements.
OK, now you’ve decided whether it’s a qualified opinion or simply an emphasis of matter.
If it’s qualified, you’ve decided whether it’s an inability to obtain or it’s a disagreement.
Now make up your mind, is it pervasive or merely material ….. and explain your thinking.
Or maybe it’s not even material – again, explain your thinking
You could well find yourself writing in the exam something like “On the basis of the information in the question, it would seem that the matter is not material enough on its own to justify any modification in the audit report.
However, if it were considered to be material, then the appropriate treatment would be …..”
That way you would cover all bases – but you need to explain why your preferred treatment is preferred! And why any possible alternatives are not preferred.
But your problem could well be that you see instantly what the affect on the audit report / opinion should be and that’s your answer. Whereas, in the exam, you need to show that you have considered all the possibilities and build up to your conclusion rather than saying something like “This is a material disagreement and the audit report would read ‘Except for the matter referred to above ….’ ” That would only be worth one mark whereas if you build up to your conclusion and identify that you have considered all other possible affects, that should be scoring you passing marks
Exactly I just dont know how to build up enough material to score passing marks , when I see the question and Its instantly clicked on my mind “Well this is a qualified opinion because of limitation on scope” and thats it , I dont know how put solid reasoning behind my opinion to convince the examiner to give me passing marks , Just plz tell me how to start the question and give me steps on how to put reasonable supportive arguments to base my opinion.
Also the same problems occurs when handling Ethics question as well , I do know whats wrong in the situation and I do know how to handle the problem as well , but I dont know how to write it down with a convincing reasoning and enough points to score passing marks.Also you have explained brilliantly what thinking process should I use when tackling the audit report question and I am very thankful to you , but plz tell me in steps what points should I write down in explaining the above mention thinking process to score the passing marks.
Also plz tell me the steps of both the thinking process and write down procedure for Ethics question
Thanks.For eg (points I used to write down the answer in matters to consider are)
1)Materiality calculation and a bit chat on it.
2)Correct accounting treatment for the matter
3)Whether three is a breach of any IAS
4)Impact on audit report if breach is not resolve.Thats it , good enough for me to score passing marks ,
Plz tell me in the above mention way on how to tackle Audit report and Ethics question , I will be really greatful to you.Most likely I will have to make 8 points for Audit report questions and 6 to 8 points to score passing marks in Audit Report and Ethics question respectively.
I thought that my response to your original post identified the steps necessary! In your 4 point summary the “Correct accounting treatment for the matter” point will almost certainly be capable of being split into more than just the one point. There aren’t many matters ( in exam questions ) which are so clear cut …. so you need to be identifying the different possibilities.
In addition, audit procedures asked for by the examiner would include “Discussing the point with the client’s board of directors and those charged with governance” Then, based on their reaction, the auditor will need to decide on the impact on the audit report – whether that impact be a qualified opinion or not. And if not, why not? And if qualified, on what grounds and how severe?
No, I can’t give you a step by step approach – good exam question answering is not achieved by the waving of a magic wand. Have you read all the past exam questions and answers? Noted the style? Seen the headings and sub-headings? Have you got the self-discipline to plan your answers before you start writing them out?
Fail to plan? Plan to fail!
Ofcourse it wont work like that but atleast it gives me a framework to base my answer , because in exam situation I just get bamboozled by the pressure and forgets from where to and how to start. So kindly plz give me a frame work to write down the answer , I know I do get it right in my mind (both ethics and Audit report question) but some how I dont know what to write in the answer sheet.
Ok, try this!
Identify the problem
Define any matters which are relevant
Explain / expand the identified problems fitting them in with the definitions
Apply your thinking to the scenario and reach your conclusion
OK, well don’t do it that way 🙂
See you in December 🙂
If you ask my advice, and then choose to ignore it – that’s fine
I appreciate your advice but I am just wanna standardize framework to write down the answer.
There are actually two styles of reporting questions: critique and forming your own opinion.
Mike’s advice is good for both. Any rigid framework will tie you down and may result in you ignoring the specifics of the question.
If you desperately need a framework, then quite frankly:
-know ISA 700 suite and be able to apply it
-have good financial reporting knowledge to spot issues in the question
-one clear point that relates to the requirement will give you one mark (the best framework u could ever want)<cite> @mikelittle said:</cite>
Thanks Rajiv 🙂Very nice , Thanks
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