ACCA F8 - Audit and Assurance Revision Kit 2016

Easy marks. In part (a), easy marks are available for explaining professional scepticism and defining professional
judgement.
Marking scheme
Marks
(a) (i) Professional scepticism
1 mark per valid point up to a maximum of 3
(ii) Professional judgement
1 mark per valid point up to a maximum of 3
(b) (i) Risks and responses
1 mark per well explained risk (maximum of 8) and 1 mark for
each valid response (maximum of 8) up to a total maximum of 16
(ii) Inventory count attendance
1 mark per valid point up to a maximum of 4
(c)
Audit procedures for value of property and disclosure
Up to 1 mark per procedure to a maximum of 4
Maximum marks 30
(a) (i) Professional scepticism
Professional scepticism is an attitude that includes having a questioning mind, being alert to
conditions which may indicate possible misstatement due to error or fraud, and subjecting audit
evidence to a critical assessment rather than just taking it at face value.
It is important that professional scepticism is maintained throughout the audit to reduce the risks of
overlooking unusual transactions, of over-generalising when drawing conclusions, and of using
inappropriate assumptions in determining the nature, timing and extent of audit procedures and
evaluating the results of them.
Professional scepticism is necessary to the critical assessment of audit evidence. This includes
questioning contradictory audit evidence and the reliability of documents and responses from
management and those charged with governance.
(ii)
Professional judgement
Professional judgement is the application of relevant training, knowledge and experience in making
informed decisions about the appropriate courses of action in the circumstances of the audit
engagement. The auditor must exercise professional judgement when planning an audit of financial
statements.
Professional judgement will be required in many areas when planning. For example the determination
of materiality for the financial statements as a whole and performance materiality levels will require
professional judgement.
Professional judgement will also be required when deciding on the nature, timing and extent of audit
procedures.
Answers 79