ACCA F8 - Audit and Assurance Revision Kit 2016
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Which of the following correctly summarises the effect of the issue relating to the inventory count at the
year end?
Material
No
No
Yes
Yes
Financial statement impact
Current assets are understated
Gross profit may be understated
Opening inventory may be materially misstated
Gross profit may be overstated
103 The audit engagement partner has requested that additional audit procedures be performed in order to
conclude on the level of adjustment needed in relation to the above inventory issue.
Which TWO of the following audit procedures should be performed in order to form a conclusion as to
whether Ash’s 20X5 financial statements require amendment?
Obtain a copy of the aged inventory report and use computer assisted audit techniques to verify the
accuracy of the report. Discuss the valuation of slow moving inventory with the production director.
Review the internal audit reports of the inventory count to identify the level of adjustments made to
the records, in order to assess the reasonableness of relying on the inventory records for the purpose
of the year end audit.
Perform test counts of inventory in the warehouse and compare these first to the inventory records,
and then from inventory records to the warehouse, in order to assess the reasonableness of the
inventory records maintained by Ash.
Review Ash’s sales order book for February, March and April 20X5 to estimate the level of inventory
that will need to be produced in the new accounting period to fulfil customer demand.
104 Alternative procedures performed as Chestnut & Co were unable to attend the inventory count were unable
to provide sufficient appropriate audit evidence regarding the inventory balance in the statement of financial
position.
Which of the following options correctly summarises the impact of the inventory issue on the auditor’s
report?
Audit opinion
Qualified
Disclaimer
Qualified
Disclaimer
Disclosure in the auditor’s report
Basis for qualified opinion
Basis for disclaimer of opinion
Key audit matters section
Emphasis of matter
Humphries (12/11) (amended)
20 mins
The following scenario relates to questions 105 – 109.
Humphries Co, your audit client, operates a chain of food wholesalers across the country and its year end was
30 September 20X1. The final audit is nearly complete and it is proposed that the financial statements and auditor’s
report will be signed on 13 December. Revenue for the year is $78 million and profit before taxation is $7.5 million.
105 Which of the following audit procedures would identify subsequent events occurring up to the date of the
auditor’s report?
(1) Enquire of management whether there have been any unusual accounting adjustments
(2) Enquire of management whether there have been any issues of shares/debentures, or changes in
business structure
Questions 53