ACCA F8 - Audit and Assurance Revision Kit 2016

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Top tips. You were only asked for four strengths and related improvements. Others you may have come upwith in place of those given in the answer above are:Strength (i)The hospital has an internal auditdepartment monitoring the internal controlenvironment and advising on value formoney.Orders are authorised by a purchasingdirector to help ensure expenditure incurredis necessary expenditure.New surgical equipment purchased hasimproved the rate of operations and patientrecovery rates. This is an improvement inthe effectiveness of the hospital.Improvement (ii)The remit of internal audit could be extended to advising onimplementation.The volume of forms (200 per day) will no doubt takevaluable time away from the director which could be usedon more pressing matters. Orders below a certain monetarylevel should be authorised by the next level (down) ofmanagement. Orders over the specified monetary valueshould still be reserved for purchase director authorisation.The equipment is not used as efficiently as it could be dueto lack of trained medical staff. The hospital should look atproviding targeted training for existing medical staff andlook to recruit staff that have the appropriate skills.(c)Substantive procedures – property, plant and equipment (non-current assets)(i)(ii)(iii)ValuationReview depreciation rates applied in relation to asset lives, past experience of profits andlosses on disposals, and consistency with prior years and disclosed accounting policies.If assets have been revalued, consider:– Experience and independence of valuer– Scope of the valuer's work– Methods and assumptions used– Whether valuation bases are in line with IFRSsCompletenessCompare non-current assets in the general ledger with the non-current assets register andobtain explanations for differences.For a sample of assets which physically exist agree that they are recorded in the non-currentasset register.Rights and obligationsVerify title to land and buildings by inspection of:– Title deeds– Land registry certificates– LeasesExamine documents of title for other assets (including purchase invoices, contracts, hirepurchase or lease agreements).134 Answers
Top tips. Only two substantive procedures were needed for each assertion. You may have come up withalternative procedures including:ValuationRecalculate the depreciation charge for a sample of assets and agree the charges to the asset registerPerform a depreciation proof in total taking into account timing of additions/disposals and investigateany differences.CompletenessAgree the cost of a sample of additions of surgical equipment to purchase invoicesReconcile the schedule of non-current assets with the general ledgerReview the repairs and maintenance expense account in the SOCI for capital itemsRights and obligationsReview new lease agreements to ensure properly classified as finance lease or an operating lease inaccordance with IFRSs.Inspect vehicle registration documents (eg Ambulances) to confirm ownership of motor vehicles.Answers 135
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ACCA APPROVEDCONTENT PROVIDERACCA A
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PAPER F8AUDIT AND ASSURANCEBPP Lear
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About this Practice & Revision KitA
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Question indexThe headings in this
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Topic indexListed below are the key
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Revising F8Topics to reviseThe F8 p
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Understand the requirementsIt is im
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Tackling Multiple Choice Case Quest
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Useful websitesThe websites below p
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Questions1
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AUDIT FRAMEWORK AND REGULATIONQuest
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Conoy (CBE)20 minsThe following sce
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Which of the following options best
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17 Orange 39 mins(a)Explain the ext
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PLANNING AND RISK ASSESSMENTQuestio
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Which of the following statements i
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30 Having established a good unders
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35 Mason has not purchased any new
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It is expected that work in progres
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42 Recorder (12/14) 39 minsRecorder
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Required(a)(b)(c)Required(i)State M
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INTERNAL CONTROLQuestions 46 - 71 c
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52 When goods are received, the goo
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57 During the previous audit, the a
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64 You now need to gain an understa
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Greystone Co is a retailer of ladie
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Required(a) List FOUR control objec
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(iii)Describe a test of control Vio
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74 Which of the following procedure
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Which of the following options corr
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85 Tirrol Co's internal audit depar
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92 Redburn (12/09) 59 mins(a)Explai
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(c)For the audit of the inventory c
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96 Rose (12/12) 39 mins(a)Identify
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99 Bush-Baby Hotels 39 mins[This qu
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Which of the following correctly su
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108 A key supplier of Humphries Co
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[Questions 115 - 117 below do not r
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The directors have produced a cash
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Answers61
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BJM Co1 A The external audit is car
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13 D Stark is a public interest ent
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Tutorial note: There are a number o
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(b)(c)MarksUp to 1 mark per ethical
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Ethical threatA senior member of th
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(a)Client acceptance procedures(i)(
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(c)Ethical risks and steps to mitig
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EuKaRe24 The correct answer is:The
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Easy marks. In part (a), easy marks
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Audit riskThe finished goods value
Page 101 and 102: Marks- Junior asked to challenge FD
Page 103 and 104: Reduction of sample sizesIt is clea
Page 105 and 106: The following factors may increase
Page 107 and 108: Audit riskThe already short reporti
Page 109 and 110: Separate engagement teamsProcedures
Page 111 and 112: Marking schemeMarks(a) (i) ½ mark
Page 113 and 114: Audit riskThe current ratio and qui
Page 115 and 116: (b)Audit risks and auditors' respon
Page 117 and 118: 45 SmoothbrushText references. Chap
Page 119 and 120: MarksProvisions:- Discuss with mana
Page 121 and 122: Suitable ControlsDamaged/obsolete g
Page 123 and 124: 53 C The direction of the test is i
Page 125 and 126: Easy marks. These were available in
Page 127 and 128: ImplicationPayroll calculations not
Page 129 and 130: (d)(e)Substantive procedures - Redu
Page 131 and 132: Part (d) required candidates to use
Page 133 and 134: (ii)(iii)ImplicationThe reliance is
Page 135 and 136: (d)Additional assignments for inter
Page 137 and 138: (c)(d)Marks1 mark for each valid pr
Page 139 and 140: (d)Audit proceduresObservationObser
Page 141 and 142: Marking schemeMarks(a)(b)(c)(d)Up t
Page 143 and 144: - Select a sample of goods despatch
Page 145 and 146: The requirement for tests of contro
Page 147 and 148: Deficiencies Recommended controls T
Page 149 and 150: (c)(d)Payroll substantive procedure
Page 151: MarksRights and obligations (iii)Ve
Page 155 and 156: 79 The correct answer is:Accounting
Page 157 and 158: 92 RedburnText references. Chapters
Page 159 and 160: (e) (i) Define net realisable value
Page 161 and 162: (d)Inherent risks and mitigating co
Page 163 and 164: (b)MarksUp to 1 mark per well descr
Page 165 and 166: Deficiencyanomalies noted, as the i
Page 167 and 168: 94 Springfield NurseriesText refere
Page 169 and 170: (e)(ii)(iii)Computers and motor veh
Page 171 and 172: (c)MarksEvent 2 - Explosion- Provid
Page 173 and 174: Marking scheme(a)(b)MarksUp to 1 ma
Page 175 and 176: (ii)(iii)Receivables- For those rec
Page 177 and 178: (a)Procedures to obtain audit evide
Page 179 and 180: 98 Rocks ForeverText reference. Cha
Page 181 and 182: (d)diamond industry which the firm
Page 183 and 184: Audit procedureObservation involves
Page 185 and 186: 102 The correct answer is:MaterialY
Page 187 and 188: 114 The correct answer is:5 March 2
Page 189 and 190: Obtain written representations from
Page 191 and 192: that the business may struggle to c
Page 193 and 194: the company’s overdraft which is
Page 195 and 196: Marking schemeMarks(a)(b)(c)(d)Up t
Page 197 and 198: • Perform audit procedures in res
Page 199 and 200: Mock exams181
Page 201 and 202: ACCAPaper F8Audit and AssuranceMock
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Section A - ALL 15 questions are co
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Scenario 2The following scenario re
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Scenario 3The following scenario re
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Section B - ALL THREE questions are
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Question 18(a) (i) Identify and exp
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AnswersDO NOT TURN THIS PAGE UNTIL
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Plan of attackIf this were the real
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achieve the required level of assur
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Marks(c)(d)Up to 1 mark per well ex
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Deficiency Implication Recommendati
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Question 17Text reference. Material
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(ii)Audit risk and responsesAudit r
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(b)MarksUp to 1 mark per well descr
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(ii)(iii)Substantive procedures for
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ACCAPaper F8Audit and AssuranceMock
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Section A - ALL 15 questions are co
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Which of the following options corr
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13 It is May 20X7. The directors ha
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Question 17You are a member of the
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7 The correct answers are:The signi
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Question 16Text references. Chapter
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OccurrenceAudit procedureFor a samp
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(c)Marks- To ensure all goods dispa
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DeficienciesThe same order clerk ta
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Information sourcePrior year financ
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(v)(vi)The ability of current emplo
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ACCAPaper F8Audit and AssuranceMock
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Section A - ALL FIFTEEN questions a
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Extract from Balotelli’s non-curr
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The following scenario relates to q
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Section B - ALL THREE questions are
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Question 18Vieri Motor Cars Co (Vie
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Option B is based on depreciation b
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Section BQuestion 16(a)(b)(c)(d)(e)
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If Milla has incorrectly classified
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the level of substantive testing to
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Deficiency Control recommendations
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(a)Reliance on the work of an indep
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Notes
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Review Form - Paper F8 Audit and As
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ACCA F8 - Audit and Assurance Revision Kit 2016

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