The summary of ACCA P1 Governance, risk and ethics

Governance

Agency theory - directors act as agents of shareholders
Potential problem - strategy to benefit directors, not shareholders, different attitude to risk (not their investment), short-termism
Goal congruence - incentives to align interests (profit related pay and share option schemes)

Rules or principles-based approaches
Rules - SOX, legally enforced, section 404 ICFR penalises SMEs
Principles - UK Combined Code of CG, comply or explain, SMEs more leeway, not legally compulsory, market benefits or penalties for non-complier

CG concepts - HAIR DRIFT
Honesty- truth, not misleading
Accountability - directors accountable to shareholders, stakeholders
Independence - NEDs free from conflict of interests
Responsibility - directors responsible to stakeholders
Decision taking - improve wealth of an entity
Reputation - ability to comply with CG concepts
Integrity - honesty and balance, trustworthy
Fairness - take into account legitimate interests
Transparency - full disclosure of material matters

CG purposes -PIGCREW

Practice methods - governance provides practice methods to aid those who are managing a company
Investment - governance creates assurance and trust thereby attracting investment
Growth - governance creates conditions for growth of the economy
Control - it is set in place to control excessive behaviour in the organisation
Rules - it creates rules within which the organisation is operated
Employment - it creates employment as well as deals with several employment issues
Wealth - it supports a wealth-creating capitalist system

Chairman - role (Higgs report) - RAISE DIP
Run the board
Active engagement by board members
Induction programme
Sufficient time for complex decision
Effective communications with shareholders
Development needs for directors
Information provided accurately and timely
Performance evaluation

ACCA F8 Audit and Assurance - free lecture of substantive procedures

Hello to everyone!

I am preparing for ACCA F8 Audit and Assurance (Int). Searching in Youtube I found an excellent lecture on Substantive procedures. As you know, Substantive procedures is one of the most popular themes of ACCA F8 exam.

The lecturer teaches ACCA F8 at CityPro Institute (Johor, Malaysia).
The theme of this video - Substantive procedures and Non-current assets.

The lecturer handwrites the answers in the worksheet in ACCA F8 exam style. It is a very good example of presentation to score high marks on exam.

After watching this video I am sure you can write easily substantive procedures for PPE (Property, Plant and Equipment). Just use COVE (Completness, Ownership, Valuation and Existence) plus Disclosure!

See free video Substantive procedures and Non-current assets

Решение задач по аудиту ACCA F8 Pilot paper Q5 EastVale

Пятое задание по аудиту "стоит" 20 марок и должно быть выполнено за 1,8*20 = 36 минут. Традиционно пятое задание - это сценарий, по которому необходимо применить теоретические знания к конкретным специфическим условиям сценария.

Question 5 
Fire in warehouse

(i) Describe the additional audit procedures you will carry out;
(4 marks, 4*1.8 minutes = 7 minutes, 1 mark for each procedure)

1. Discuss the matter with management whether EastVale has sufficient inventory to comply short-term orders of supermarkets.
2. Enquire the directors if EastVale can continue the trading in long-term period. Obtain the written representation to this effect.
3. Estimate the value of inventory destroyed in the fire.
4. Inspect insurance documents for likelihood of compensation being received to replace the damaged stock.
5. Inspect the rental agreement for warehouse for penalty that may be imposed in the case of damage to the warehouse. Consider the need for provision.

(ii) State, with reasons, whether or not the financial statements for the year-end require amendment;
(3 marks, 3*1.8=5 minutes, 1 mark for each reason)

Решение задач по аудиту ACCA F8 Pilot paper Q4 SouthLea

Четвертое задание по аудиту "стоит" 20 марок и должно быть выполнено за 1,8*20 = 36 минут. Традиционно четвертое задание - это сценарий, по которому необходимо применить теоретические знания к конкретным специфическим условиям сценария.

Question 4 part a)

(i) Identify, and explain weaknesses in SouthLea Co's system of internal control over the wages system that could lead to misstatements in the fiancial statements.
(ii) For each weakness, suggest an internal control to overcome the weakness.

(8 marks, 1,8*8 = 14 minutes, 1 mark for indentifying each weakness and explanation its consequence and 1 mark to suggestion of control. Maximum 2 marks for each area)

Weaknesses		Consequence		Recommended control
Workers clock in by entering their unique number on a key pad.		It’s not supervised, then workers may swap numbers and clock in employees who are absent. SouthLea will then pay employees who have not worked.		Clocking in and out should be supervised by the foreman.
The foreman can issue temporary numbers for new empoyees.		The foreman may be able to issue a number for a fictitious employee and have waged paid into his own account.		The foreman must obtain authorisation to issue a new number from HR director. The issue of a new number should be backed up with the new employee's contract.
Overtime is not authorised before adding to standard pay.		Employees may claim for overtime that they have not worked.		The foreman must uathorised the list of overtime payments before adding it to the net pay.
The staff in the wages department can set up employee records wthout authorisation		The records may be set up for fictious employees whose wages are paid by cash to the clerks.		Any amendments to employee records must be authorised by the HR director and backed up with the employee contract. The HR director should review a weekly print out of amendments to ensure they are all reasonable and authorised.
Employees are paid in cash.		Cash is easy to misappropriate. Employees may claim that they didn't receive their payments as they are not expected to sign for their wage envelopes.		It's better to make the payments by trasfer. If not, a list of cash payments should be kept and employees should sign to say they have received their envelope.

Решение задач по аудиту ACCA F8 Pilot paper Q3 NorthCee

Третье задание по аудиту "стоит" 20 марок и должно быть выполнено за 1,8*20 = 36 минут. Традиционно третье задание - это сценарий, по которому необходимо применить теоретические знания к конкретным специфическим условиям сценария.

Question 3 part a)

Identify, and explain the relevance of, any factors which may threaten the independence of Dark & Co's audit of NorthCee Co's financial statements for the year ending 31 December 2007. Briefly explain how each threat should be managed.
(10 marks, 1,8*10 = 18 minutes, 0.5 mark for identifying the risk, 1 mark for explanation risk and 1 mark to suggestion how to resolve. Maximum 2.5 marks for each area)

Threats for independence

- rotate of audit partner

Решение задач по аудиту ACCA F8 Pilot Paper Q2

Второе задание по аудиту "стоит" 10 марок и должно быть выполнено за 1,8*10 = 18 минут. Традиционно во втором задании необходимо показать теоретические знания.

Question 2 part a)

State SIX items that could be included in engagement letter. (3 marks, 1,8*3 = 5minutes, 0.5 mark per point)

- objective of an audit of financial statements
- management's responsibilities for the financial statements
- the scope of an audit with reference to appropriate legislation
- the auditor may not discover all material errors
- the form of a report of the results of engagement
- basic fee and billing arrangement

Question 2 part b)

State and briefly explain four types of audit evidence that can be obtained by auditor (4 marks, 1,8*4= 7 minutes, 0.5 mark for stating the type and 0.5 mark for explanation).

AEIOU

Решение задач по аудиту ACCA F8 Pilot Paper Q1 Westra

Я начинаю свою практическую подготовку с Pilot Paper.

Задание и ответы можно скачать здесь http://www.accaglobal.com/content/dam/acca/global/PDF-students/2012b/pilotQA.pdf.

Мой разбор заданий и техника решения будет ниже.

Первое задание Westra представляет собой сценарий и "стоит" 30 марок. Это означает, что на его выполнение на экзамене отводится 54 минуты (30*1,8). Рекомендуется потратить время на чтение 15 минут на разбор первого задания, так как сценарий весьма объемный, а количество марок 30.

Часть а) требует перечислить аудиторские процедуры для подтверждения полноты (completeness), возникновения (occurence) и правильного временного периода (cut-off) для покупок и объяснить цель такой процедуры. Задание стоит 12 марок и должно занять не более 21 минуты на выполнение. 6 марок за процедуру и 6 марок за объяснение цели. Лучше использовать формат таблицы для ответа на это задание.
В технической статье от 01.11.2012 указаны требования к написанию аудиторских процедур. Каждая процедура должна включать в себя:
1. тестируемое утверждение (assertion)
2. аудиторскую процедуру
3. основание для процедуры

Выглядеть каждая аудиторская процедура должна вот так:

The auditor will agree a sample of items from the inventory sheets to the raw material inventory1 to ensure that the inventory recorded on the sheets actually exists2. 
This will confirm the assertion of existence of inventory as an asset in the financial statements3.
(1 = the audit procedure; 2 = the reason for the audit procedure; 3 = the assertion).

Question 1 Part a)

Substantive audit procedures for purchases