ACCA F8 - Audit and Assurance Revision Kit 2016

Qualifications
Experience
Reputation of the valuer.
Compare the valuation with the value of other similar properties in the locality and investigate any significant
difference.
Reperform the calculation of the revaluation adjustments and ensure the correct accounting treatment has
been applied.
Inspect notes to the financial statements to ensure appropriate disclosures have been made in accordance
with IFRSs.
40 Raisin
Study text reference. Chapters 4 and 18.
Top Tips. The scenario gives you the figures to calculate materiality in a fairly obvious way (by stating that the 'draft
financial statements show revenue of $12.5m, net profit of $400,000, and total assets of $78m'). This is almost
always a hint that you're going to have to calculate materiality at some point in your answer, and the opportunity to
do so comes up straight away in part (a)'s requirement for 'matters to consider' in relation to audit evidence. These
are easy marks, so to make sure you get them, calculate materiality, and then apply it to the scenario by stating
whether or not the matter in question is actually material.
Note, also, that you're asked to explain audit evidence that you should expect to find during your file review.
There were plenty of points in the scenario that you should have picked up on for your answer to part (b). Quality
control is a new addition to the F8 syllabus, so it's likely to appear in the exams. Make sure you are familiar with
this topic. You should have been looking to pass this part of question well – but without exceeding the time
allocation for it!
Easy marks. The calculation of materiality in part (a) offers easy marks.
Marking scheme
(a)
(b)
Trade receivable
Generally 1 mark per matter/evidence point:
Matters
– Correct calculation and assessment of materiality (max 1½ marks)
– Receivable impaired
– Consider any inventory in relation to Cherry Co
– Qualification re material misstatement
Evidence
– Initial correspondence with administrators of Cherry Co
– Confirmation with the administrators
– Agreement to receivables ledger
– Recalculations of impairment losses
– Review of inventory schedules
Quality control matters
Up to 2 marks for each point evaluated from ideas list
– No audit planning meeting – lack of direction
– Absence of manager and senior – lack of supervision
– Junior assigned difficult audit work (goodwill and WIP)
– Junior helped out with inventory count – lack of understanding/supervision
Marks
Maximum 6
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