FAE Advanced Audit elective

Dellboy2007

AuditAgain wrote: »

Can there ever be an Ethical (specifically ES5) conflict when approached about an assurance (or AUP/Compilation) engagement?

For most the objective is in the same line as an audit so I don't think there is. But is there ever a case where a client would ask you to do an engagement where you will end up auditing an area that you've already provided a report on (and would in appearance be less likely to challenge it), so you'd need to implement safeguards or not accept?

For example, if a large client asked us to provide an assurance report over their revenue figures for the first 9 months of the year (for whatever reason). In practice I'd be inclined to think that's a bad idea - as if we come along at the year end and notice a load of adjustments we're going to look bad (clearly there's an incentive not to challenge the revenue figure there). But in an exam scenario, for an assurance (or AUP/Compilation) engagement on an audit client, do we always accept?

This is definitely basic, but it's just something that's always confused me.

I think for the example you have given we would insist on it being an AUP and therefore excuse ourselves of providing assurance which might conflict with any later audit report. (As a side note to this I think that is partly why AUP is always examined). Therefore we provide a factual findings report which specifically states that we are not expressing assurance. If you want more info on this whole area see Happy Holiday.

20 Times 20 Times

Just finished 2015 paper it was tougher than any other year ! But also manageable !! Hope we get a softer paper or otherwise pass rates will be down again

Torres999

20 Times 20 Times wrote: »

Just finished 2015 paper it was tougher than any other year ! But also manageable !! Hope we get a softer paper or otherwise pass rates will be down again

I reckon I'd pass last years paper this year and I can't imagine it being more difficult. Wonder if we will get group audits again, wouldn't be surprised, maybe review the work of a component auditor or something

AuditAgain

Is that not what we got last year?

I had previously thought group audits would be a likely topic due to last year. But I can't think of how else it could be examined apart from 'has a component auditor given enough to conclude on'. Can anyone think of any other angles they could go from? Is there much on our responsibilities as a component auditor (or would that basically be follow their directions and report as instructed)?

AuditAgain

Trying to think of different scenarios/indicators that could come up that would throw me. That's one way for me to **** up this exam. Seeing something I haven't considered before leading to me having to go researching for the answer or sitting pondering. Whether the exam's hard or not, I still think time is my biggest fault tbh.

One I was thinking which I haven't noticed in any prior cases - New client, and in the background information it mentions something that clearly indicates a prior period figure seems materially misstated. Answer could cover opening balances/prior period comparatives, impact on the audit report etc.

Torres999

AuditAgain wrote: »

Trying to think of different scenarios/indicators that could come up that would throw me. That's one way for me to **** up this exam. Seeing something I haven't considered before leading to me having to go researching for the answer or sitting pondering. Whether the exam's hard or not, I still think time is my biggest fault tbh.

One I was thinking which I haven't noticed in any prior cases - New client, and in the background information it mentions something that clearly indicates a prior period figure seems materially misstated. Answer could cover opening balances/prior period comparatives, impact on the audit report etc.

Jesus id really hate anything prior year adjustment, always just avoided those standards even in FR and hoped they wouldn't come up.

I was grand till I messed up a case pretty badly today then the panic starts again a bit.

I think for the next 5 days now I'm gonna go over technical day on Planning, Engagment, Fieldwork, Audit Reports and non audit ****e, maybe a small case every morning to keep me sharp

I feel like I'm not doing as much as I should be but there's only so much you can look at of the same subject each day

20 Times 20 Times

Torres999 wrote: »

Jesus id really hate anything prior year adjustment, always just avoided those standards even in FR and hoped they wouldn't come up.

I was grand till I messed up a case pretty badly today then the panic starts again a bit.

I think for the next 5 days now I'm gonna go over technical day on Planning, Engagment, Fieldwork, Audit Reports and non audit ****e, maybe a small case every morning to keep me sharp

I feel like I'm not doing as much as I should be but there's only so much you can look at of the same subject each day

I feel the exact same should be doing more !! But I'm so bored of the audit now at this stage !! I will pAss if it's a fair paper ! The appendix last year killed me the whole paper was 18 pages !!!

Torres999

20 Times 20 Times wrote: »

I feel the exact same should be doing more !! But I'm so bored of the audit now at this stage !! I will pAss if it's a fair paper ! The appendix last year killed me the whole paper was 18 pages !!!

Yeah I know it's just confusing, I answered questions from Sim 1 on the case from Sim 2 and realised after about 30 mins of picking business risks, anyway won't be happening again, I'm the same, fair paper and I pass going in fresh

Abbey14

AuditAgain wrote: »

Trying to think of different scenarios/indicators that could come up that would throw me. That's one way for me to **** up this exam. Seeing something I haven't considered before leading to me having to go researching for the answer or sitting pondering. Whether the exam's hard or not, I still think time is my biggest fault tbh.

One I was thinking which I haven't noticed in any prior cases - New client, and in the background information it mentions something that clearly indicates a prior period figure seems materially misstated. Answer could cover opening balances/prior period comparatives, impact on the audit report etc.

It came up in 2012 where there was a prior year adjustment and the effect on the audit report, but because there were 2 PY adj that netted to below materiality it did not give the effect on the audit report. I was just wondering do you qualify the audit report based on a material prior year adjustment? or if they prior year adjustment is made and a note included is this just an EOM paragraph?

Thanks.

20 Times 20 Times

Torres999 wrote: »

Yeah I know it's just confusing, I answered questions from Sim 1 on the case from Sim 2 and realised after about 30 mins of picking business risks, anyway won't be happening again, I'm the same, fair paper and I pass going in fresh

Yeah - I think not doing core this year will be a massive help. I was sooooo tired Thursday last year - I had to tell myself about 10 times just to read the paper.

Dellboy2007

Abbey14 wrote: »

It came up in 2012 where there was a prior year adjustment and the effect on the audit report, but because there were 2 PY adj that netted to below materiality it did not give the effect on the audit report. I was just wondering do you qualify the audit report based on a material prior year adjustment? or if they prior year adjustment is made and a note included is this just an EOM paragraph?

Thanks.

Qualify soci and cash flow but don't qualify sofp

AuditAgain

Dellboy2007 wrote: »

Qualify soci and cash flow but don't qualify sofp

Where's that coming from sorry?

My understanding of prior period errors (material) is:

- if you audited the prior year FS, and they refuse to adjust/disclose = adverse or qualified.

- if you audited the prior year FS and they do adjust/disclose in CY FS but the prior year audit opinion has not been re-issued = Emphasis of Matter para

-if another firm audited prior year FS and you contact them and new prior period FS are issued with new audit report = no impact, you just audit CY figures.

-if the prior year firm refuses to re-issue, but CY FS are adjusted/disclose = Other Matter para.

The part I'm fuzzy on is if you audited both years, could you have prior year re-issued with new audit report and then have no impact on the current year audit report?

Let me know if any of the above is incorrect, because it's what I was planning on going with!

Torres999

I don't really get what ya mean qualify the cashflow and SOCI?

AuditAgain

Yeah, I read that and thought "ahh for feck sake, I didn't even know that was a thing".

Dellboy2007

If you can't obtain sufficient evidence over opening balances it may result in either:

(a) A qualified opinion or a disclaimer of opinion, as is appropriate in the circumstances; or
(b) Unless prohibited by law or regulation, an opinion which is qualified or disclaimed, as appropriate, regarding the results of operations, and cash flows, where relevant, and unmodified regarding financial position.

Dellboy2007

Anyone got a solution for Town and Country Newspapers Limited?

20 Times 20 Times

Dellboy2007 wrote: »

Anyone got a solution for Town and Country Newspapers Limited?

Should be on revision portal now if you don't have access pm me I'll email it over to you

Dellboy2007

Checked on portal, it doesn't appear to be there although there is one file which isn't opening. Have you got a soft copy saved down?

20 Times 20 Times

Dellboy2007 wrote: »

Checked on portal, it doesn't appear to be there although there is one file which isn't opening. Have you got a soft copy saved down?

I do ! Email me think you have my address I'll email you it in the morning ,

AuditAgain

Town and Country Newspaper? Where does this case come from?

I'm using a friends login who's sitting for the first time. Have they given different cases to resit students?

AuditAgain

Should clarify I don't have a login for revision portal. Would anyone mind screenshotting the portal and emailing it onto me? Just want to see if there's much I haven't seen.

Did you get anything out of the revision lectures? Any decent feedback/tips?

Abbey14

AuditAgain wrote: »

Where's that coming from sorry?

My understanding of prior period errors (material) is:

- if you audited the prior year FS, and they refuse to adjust/disclose = adverse or qualified.

- if you audited the prior year FS and they do adjust/disclose in CY FS but the prior year audit opinion has not been re-issued = Emphasis of Matter para

-if another firm audited prior year FS and you contact them and new prior period FS are issued with new audit report = no impact, you just audit CY figures.

-if the prior year firm refuses to re-issue, but CY FS are adjusted/disclose = Other Matter para.

The part I'm fuzzy on is if you audited both years, could you have prior year re-issued with new audit report and then have no impact on the current year audit report?

Let me know if any of the above is incorrect, because it's what I was planning on going with!

Brilliant - thanks for that was really over thinking.

I don't think we would re-issue the prior year audit opinion, but I could be wrong... the way I imagine we would do it would be to put PY figures restated, a note as to what was restated and an EOM para. I could be totally wrong but if I had to call that would be it.

colint104

Has anyone got good tips/notes for understanding other engagements? I find it so difficult to identify the correct standard.

Thanks in advance

AuditAgain

I'm the same.

when the case shows they want an assurance opinion, and the answer turns round with 'recommend an AUP'. Could they not have equally taken the line that an AUP is inappropriate because they specifically requested a level of assurance, which an AUP simply wouldn't give them.

I can only assume it's a practical thing. I.e. Knowing the kind of reports that would be given in practice as opposed to what theoretically meets what they've asked for.

If anyone does have any notes on that topic it could be helpful.

Dellboy2007

Can't see why in the mock paper for the payroll, where they went for a limitation of scope, that in the absence of control reliance that they would increase tests of detail. Am I missing something here? Is it because the wages and salaries are such a significant expense that they would not be able to gain sufficient evidence efficiently by doing tests of detail alone?

20 Times 20 Times

Dellboy2007 wrote: »

Can't see why in the mock paper for the payroll, where they went for a limitation of scope, that in the absence of control reliance that they would increase tests of detail. Am I missing something here? Is it because the wages and salaries are such a significant expense that they would not be able to gain sufficient evidence efficiently by doing tests of detail alone?

What Sim you referring too and indicator ? I will look at it now.

Dellboy2007

20 Times 20 Times wrote: »

What Sim you referring too and indicator ? I will look at it now.

Sim one indicator 3, cheers.

20 Times 20 Times

Dellboy2007 wrote: »

Can't see why in the mock paper for the payroll, where they went for a limitation of scope, that in the absence of control reliance that they would increase tests of detail. Am I missing something here? Is it because the wages and salaries are such a significant expense that they would not be able to gain sufficient evidence efficiently by doing tests of detail alone?

They are assuming the following :

Potential implications for the auditor’s report
In the event that we:-
 Cannot obtain a Type 2 Report; or
 Are denied access to PAS to carry out relevant testing ourselves; or
 The use of an alternative independent auditor to test such controls cannot be agreed.

Dellboy2007

20 Times 20 Times wrote: »

They are assuming the following :

Potential implications for the auditor’s report
In the event that we:-
 Cannot obtain a Type 2 Report; or
 Are denied access to PAS to carry out relevant testing ourselves; or
 The use of an alternative independent auditor to test such controls cannot be agreed.

Yeah I understand how they have arrived at the conclusion for the report, I just don't see why they wouldn't say, well we can't rely on controls so we will have to increase tests of detail. It's as if they just skipped this part and went straight to impact on report.

Confused Accountant

Dellboy2007 wrote: »

Yeah I understand how they have arrived at the conclusion for the report, I just don't see why they wouldn't say, well we can't rely on controls so we will have to increase tests of detail. It's as if they just skipped this part and went straight to impact on report.

I would have thought the same as that's what you'd do at work generally if you don't have control reliance. I don't think the solution explains it that well. The only thing I can figure is that they are assuming that it's such a big cost, there's so many employees and therefore probably a very high number of transactions that no amount of substantive testing is going to give you sufficient evidence (except if you do loads which leads to an inefficient audit). Whereas, it's such a routine automated/mechanical transaction, controls reliance would be the main part of sufficient audit evidence. What do ye think?