ACCA F8 - Audit and Assurance Revision Kit 2016

111 Which of the following steps should you take first in relation to the uncorrected misstatement in respect
of the revalued property?
Accumulate the misstatement along with other uncorrected misstatements in a schedule of
unadjusted audit differences. If the aggregate is material, ask the directors to correct the
misstatements.
Ask the directors to correct the specific misstatement, explaining that it is material to the financial
statements.
Speak to the expert valuer to assess the methodology used in performing the valuation.
Modify the audit opinion, because the misstatement is material.
The following additional issues have arisen during the course of the audit of Minnie Co.
(i)
(ii)
Depreciation has been calculated on the total of land and buildings. In previous years it has only been
charged on buildings. Total depreciation is $2.5m and the element charged to land only is $0.7m.
Minnie Co’s main competitor has filed a lawsuit for $1m against them alleging a breach of copyright; this
case is ongoing and will not be resolved prior to the auditor’s report being signed. You have concluded that
the outcome of the lawsuit is uncertain. The matter is disclosed as a contingent liability.
112 Which of the following correctly summarises the effect of the depreciation charged on land and buildings
on the financial statements?
Material
No
No
Yes
Yes
Financial statement impact
No misstatement to the financial statements
Expenses are understated
Profit is understated
Assets are overstated
113 You have concluded that knowledge of the litigation is not fundamental to understanding the financial
statements.
In the light of this, which of the following options correctly summarises the impact of the lawsuit on the
auditor’s report?
Audit opinion
Unmodified
Unmodified
Qualified
Adverse
Disclosure in the auditor’s report
Material uncertainty related to going concern
No specific disclosure
Basis for qualified opinion
Basis for adverse opinion
114 Having commenced audit fieldwork on Minnie Co on 1 February 20X8, the audit was completed on
20 February 20X8. The auditor’s report is due to be signed on 5 March 20X8. Minnie’s board plans to issue
the financial statements on 30 April 20X8.
Which of the following would be the most appropriate date for the directors to sign the written
representation letter?
1 February 20X8
20 February 20X8
5 March 20X8
30 April 20X8
56 Questions