ACCA F8 - Audit and Assurance Revision Kit 2016

(e) (i) Define net realisable value
(ii)
½ mark for reference to IAS 2 and 1/2 mark for
each element of definition.
IAS 2
Selling price
Less estimated costs to completion
Less estimated costs to make the sale
Maximum marks 2
Four procedures
Up to 1 mark for stating procedure and up to 1 further
mark for explanation, but maximum 8.
On sales price
On costs to completion
On selling and distribution cost
Discussion with management
Maximum marks 8
Marks
10
30
(a)
The importance of audit planning
ISA 300 Planning an audit of financial statements covers the general planning process. This requires the
auditor to plan the audit so that the engagement is performed in an effective and efficient manner. Proper
audit planning can:
Help the auditor devote appropriate attention to important areas of the audit
Help the auditor identify and resolve potential problems on a timely basis
Assist in the selection of appropriate team members and assignment of work to them
Facilitate the direction, supervision and review of work.
Top tips. You could also have validly stated that planning helps the auditor to properly organise and manage
the audit so it is performed in an effective manner, and that it assists in the coordination of work done by
experts.
Matters included in the audit plan
Two matters that would be included in an audit plan are as follows:
A description of the nature, timing and extent of planned risk assessment procedures
A description of the nature, timing and extent of planned further audit procedures at the assertion
level.
Top tips. There are a number of other matters that would be included, but only two were required. Other
matters you might have come up with include:
Assessment of inherent and control risk and an understanding and assessment of the control
environment
Whether the auditor will undertake controls or substantive testing or a combination of both (along
with details of how this was decided)
Other planned procedures required to be carried out to comply with ISAs.
Answers 141