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GOOD DAY
2 Questions Sir1.PAPER F8,F5.Is it permissible to use abbreviations such as Non Current Assets NCA or TCWG thos charged with governance.i noticed the use on one of the study material where they only use the full name once and then show the abbreviation in brackets and from then on,use abbreviation only.I am thinking i could save a lot of time particulary where i have repeat the phrase .
2.On identifying audit risks it is possible to get up to three from one statement e.g increase in receivable days ,may be a sign that overstated, may also be a sign that uncertainity on going concern exists.is it ok to ‘milk’ the marks this way or you have to demonstrate ability to identify other risks
The examiner doesn’t like abbreviations.
I don’t really know what you mean, but it is important to explain risks properly. So, when you go on to talk about going concern you would have to say why, in this case, a potential bad debt might lead to going concern problems. For example, if there were lots of cash in the bank it is possible that all debts would go bad yet the company could survive.
If you had no information about cash or the size of receivables, then say something like “… if the increase in collection period is primarily due to one large amount then there could also be a going concern risk if that customer fails to pay.”
Precision rather than a scatter-gun is needed.
thank you.
On the same matter.on audit response ,can putting 2 responses that compliment each other constitute a scattergun approach.for example, carrying out an age receivable analysis to identify possible bad debts. and inspect post year end cash receipts in respect of receivables identified above to verify collectibility
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