ACCA F8 - Audit and Assurance Revision Kit 2016

Once SGCC has an audit committee and an internal audit department, the head of the internal audit
department should report to the audit committee
SGCC should not rely on the external audit to inform them of deficiencies in internal controls
4 You are aware that SGCC is considering establishing an internal audit department to perform a variety of
tasks:
Which of the following activities should the internal audit function NOT be involved in?
Monitoring of management's performance
Reviewing adequacy of management information for decision-making purposes
Taking responsibility for the implementation of a new sales ledger system
Assessing compliance with regulation relevant to SGCC
5 If SGCC’s Board decides to establish an internal audit department they will also need to decide whether they
will employ members of staff or outsource the department to an external firm. You have drawn up a list of
considerations relating to this:
(1) Specialist industry skills
(2) Resistance from current staff
(3) More cost effective service
(4) Good understanding of SGCC’s systems and operations
Which of the following options correctly allocates the above considerations to the relevant internal
auditor?
Employed by SGCC Outsourced
4 only 1, 2 and 3
1, 2 and 3 4 only
1 only 2, 3 and 4
2, 3 and 4 1 only
Scenario 2
The following scenario relates to questions 6 – 10.
You are an audit senior of UYE & Co and your firm is the external auditor of Carlise, a large private company that
runs major sports venues in the UK. Carlise has a year-end of 31 December and you are currently planning the
interim audit of Carlise for the six months ended 30 June 20X4.
6 This year you will have another audit senior, James, working with you who has recently joined UYE & Co.
James did not work on any interim audits with his previous audit firm and your audit manager has asked you
to train him to use the different approach used in interim audits.
James has drawn up the following list of audit procedures:
(1) Update documentation relating to Carlise’s accounting systems which has been prepared in prior year
audits
(2) Obtain third party confirmations relating to receivables, payables and cash at bank
(3) Review the directors' assessment of whether Carlise is a going concern. Consider whether the
assumptions made by the directors are reasonable and whether it is appropriate to prepare the
accounts on the going concern basis
(4) Perform preliminary analytical procedures in order to identify any major changes in the business or
unexpected trends
216 Mock exam 2: questions