ACCA F8 - Audit and Assurance Revision Kit 2016

13 D Stark is a public interest entity, so the audit engagement partner should only remain on the audit
team for a maximum of seven years before being rotated. It would also be beneficial for an
independent review partner to be appointed but Mr Day should not take on this role as, following
rotation, he should have no involvement with the audit client for a 'cooling off' period of two years.
14 C This is the process by which the IAASB develops new standards.
15 C There is no blanket prohibition on disclosure, nor is there any general right of the police or taxation
authorities to demand information. Auditors have an implied contractual duty of confidentiality. There
is no statutory duty of confidentiality.
16 L V Fones
Text references. Chapter 4.
Top tips. The majority of this question is ethics-based. A lot of the marks can be gained purely through drawing on
the knowledge of ethical threats and safeguards, which you should have gained during your studies. The most likely
cause of missing out on marks in a question like this is not addressing all of the requirements, or answering a
different question to that asked. Remember to read the question very carefully and take a minute to make sure you
have understood it, and are ready to answer all the requirements.
In part (a) you should notice that there are essentially two requirements – stating the five threats and listing one
example of each. Don't lose out on half the marks here because of only stating the threats and not providing an
example for each.
Try to keep your answer to (c) to an appropriate length so that it does not eat into your time available for other
questions. Five marks suggest that describing five valid steps will be sufficient.
Easy marks. The easier parts to this question were (a) and (c), as they were largely knowledge based. Part (b) was
more difficult as it required application of ethical knowledge to the scenario. Overall this question is a relatively
straightforward question on ethical threats and safeguards, and engagement acceptance.
Examination Team's comments. Part (a) was very well answered by the vast majority of candidates. A significant
minority of candidates confused the requirement for threats with that of the fundamental principles; unfortunately
these answers gained no marks. In addition some candidates did not provide an example of each threat, choosing
instead to explain the threat in more detail.
Part (b) (i) was well answered by most candidates. Some candidates did not explain the threats in sufficient detail,
sometimes just identifying the issue and not explaining how this was an ethical threat.
Part (b) (ii) required methods for avoiding the threats, candidates performance here was generally satisfactory.
Some answers tended to be quite brief and to include unrealistic steps, such as resigning as auditors to reduce the
risk of fee dependence, not allowing the finance director and partner to be friends.
Part (c) for 5 marks required the steps an auditor should perform prior to accepting a new audit engagement. This
question was well answered by most candidates.
Answers 65