ACCA F8 - Audit and Assurance Revision Kit 2016

Question 16
Text references. Chapters 10, 11 and 16
Top tips. This 30 mark question is split into four parts so it is very important that you spend the appropriate
amount of time on each part – do not get bogged down in one part and then find out that you do not have enough
time to answer the other parts of the question.
In parts (a) and (b), you can score one mark for each audit procedure and one mark for explaining the purpose of
that audit procedure, therefore half the marks available are for your explanations. Make sure that you do explain the
reasons fully. An appropriate way of setting out your answer for those two parts would be in a table format. Such a
format ensures that you link each audit procedure to an explanation.
In part (c), you are asked to 'describe' control procedures over the trade payables master file. This means that,
again, you need to explain the control procedure fully – you will not score the full marks available if you do not do
this.
In part (d), you are asked to discuss how CAATs can be used in the audit of payables at this client. Although you
need to understand what CAATs are and how they can be used, it is very important that you apply your knowledge
to this particular scenario. A general answer on CAATs will not score well unless it is relevant to the circumstances
in this question.
Easy marks. This is a challenging question and there are no easy marks as such. However by using the information
in the scenario, you should be able to score relatively well in parts (a) and (c), provided you explain your answers
as required by the requirements.
Marking scheme
(a) Audit procedures – purchases 12 marks. 1 for procedure and 1 for the reason. Limit to 5 marks
in each category where stated briefly without full detail.
Audit procedure
Reason for procedure
Parts to GRN
Check completeness
Parts no GRN number
System error or cut-off error
GRN to computer
Parts received were ordered – occurrence
GRN agree to invoice
Completeness of recording
Review unmatched GRN file
Completeness of recording of liabilities
Paid invoice – GRN attached
Confirms invoice in PDB
Invoice details to payables ledger Completeness and accuracy of recording
Review unmatched invoices file
Indicate understatement of liability (lack of
completeness)
Payables ledger to purchase invoice Liability belongs to Westra
Payables ledger to payments list Liability properly discharged – payments complete
Payment list entries to invoice
Payment made for bona fide liability
Payments list to bank statement
Confirms payment to supplier
Bank statement entry to payments list Confirms payment relates to Westra
GRN cut-off testing
Accuracy of cut-off
Maximum marks 12
(b) Audit procedures – payables, 8 marks. 1 for procedure and 1 for reason. Limit to 0.5 mark in
each category where stated briefly without full detail.
Audit procedure
Obtain and cast list of payables
Total of payables to the general ledger
and financial statements
Reason for procedure
Ensure that the list is accurate
Confirm that the total has been accurately recorded
Marks
Mock exam 2: answers 229