ACCA F8 - Audit and Assurance Revision Kit 2016

(a)
Fundamental principles
Principle
Integrity
Objectivity
Professional
competence and due
care
Confidentiality
Professional
behaviour
Explanation
Members shall be straightforward and honest in all professional and business
relationships.
Members shall not allow bias, conflicts of interest or undue influence of others to
override professional or business judgements.
Members have a continuing duty to maintain professional knowledge and skill at the
level required to ensure that a client or employer receives competent professional
services based on current developments in practice, legislation and techniques.
Members shall act diligently and in accordance with applicable technical and
professional standards.
Members shall respect the confidentiality of information acquired as a result of
professional and business relationships and, therefore, not disclose any such
information to third parties without proper and specific authority, or unless there is
a legal or professional right or duty to disclose. Confidential information acquired
as a result of professional and business relationships must not be used for the
personal advantage of members or third parties.
Members shall comply with relevant laws and regulations and avoid any action that
discredits the profession.
(b)
Substantive procedures
(i)
Trade payables and accruals
– Ask management about the action they have taken to establish the value of the misstatement
of trade payables. If they have ascertained the value of the error assess the materiality of it
and the impact of it remaining uncorrected.
– Enquire whether any correcting journal entry has been calculated and whether it has been
processed in relation to the misstatement.
– For a sample of purchase invoices received between 25 October and the end of 31 October
20X2, verify that they are included within accruals or as part of trade payables via a journal
adjustment.
– Reconcile supplier statements to purchase ledger balances, and investigate any reconciling
items.
– Calculate and compare trade payables days to prior years. Significant differences should be
investigated.
– Compare trade payables and accruals against the previous year and expectations. Investigate
any significant differences and corroborate any explanations for differences to supporting
evidence.
– Review the cash book payments and bank statements in the period immediately after the year
end for evidence of payments relating to current year liabilities. Ensure any found are included
in accruals, trade payables or the trade payables journal.
– For a sample of payable balances, perform a trade payables’ circularisation. Any non-replies
should be followed up and reconciling items between the balance confirmed and the trade
payables’ balance should be investigated.
– For a sample of goods received notes before the year end and after the year end, ensure the
related invoices have been recorded in the period to which they relate.
(Note: Only six valid procedures were needed,)
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