AUDIT & ASSURANCE (F8)
Crash Course Notes Dec 2020
HAMZAH SIDDIQUE FCCA
Audit & Assurance│Crash Course DEC 20
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Audit & Assurance│Crash Course DEC 20
HAMZAH SIDDIQUE FCCA
Course Plan
Day1 (7th Nov)
•
•
Day 2 (8th Nov)
Internal controls & TOC
Substantive Tests
•
•
Day 3 (9th Nov)
Substantive Tests
Audit Risk
•
•
•
Audit Risk
Ethics
Review and Report
Syllabus Area
MJ 20
SD 19
MJ 19
SD 18
MJ 18
Audit Risk
16 Marks
16 Marks
16 Marks
16 Marks
16 Marks
Internal control &
Test of Control
16 Marks
16 Marks
18 Marks
16 Marks
20 Marks
Substantive Tests
20 Marks
18 Marks
18 Marks
23 Marks
20 Marks
Audit review &
report
5 Marks
8 Marks
6 Marks
5 marks
5 mark
Audit
report
Going
Concern
Subsequent Going
Event
concern
Audit
report
EXAM FORMAT
SECTION
A
MARKS
30
QUESTION TYPE
3X10 –CASE STUDY HAVING 5 OBJECTIVE
TEST QUESTIONS
B
70
1X30-MARK QUESTION
2 X 20-MARK QUESTIONS PREDOMINANTLY ON
PLANNING AND RISK ASSESSMENT, INTERNAL
CONTROL OR AUDIT EVIDENCE
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Common Reasons for Failures in AA
1.
2.
3.
4.
lack of conceptual knowledge
There is little or no application of that knowledge to the scenario
Lack of exam appropriate practice and poor exam techniques
Being unable to draft answer as per examiner guidance
Audit Cycle
Audit Risk
Risk of inappropriate audit opinion by Auditor. Auditor wants to reduce this risk to an
acceptable low level
Risk of Material Misstatement in FS
Detection Risk
Inherent Risk
Control Risk
Due to the nature /complexity
of the item
Due to weak Internal control
system
Auditor may be unable to
detect material
misstatements in FS
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Audit Response
General /overall/FS level Response
Specific Response/assertion level
response
 Emphasizing professional scepticism
 Assigning additional or more experienced staff
 Providing more supervision on the audit
 Incorporating more unpredictability into the
audit procedures
As per the Risk …. Test of controls or/and
Substantive tests
How to solve Audit Risk Scenario?

Audit risks to be identified ( 0.5 marks each)

explained (0.5 marks each) and

an auditor’s response to each risk
(1 mark each)
To explain audit risk, candidates need to
 state the area of the FS impacted with an
assertion (e.g. cut off, valuation etc.), or,
under/over/misstated of any item in FS ,
or,
 inherent, control or detection risk.
Misstated is only awarded if it was clear that the
balance could be either over or understated.
Audit Response
Auditor’s response does not have to be a detailed
audit procedure, rather it is the approach the
audit team (Test of controls or substantives to
verify the issue) will take to address the
identified risk
Remember


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Audit Response must address the Audit
Risk and must be specific to that,
otherwise you will not be granted any
mark
It should not be too vague such as
‘increase substantive testing’ without
making it clear how, or in what area,
this would be addressed.
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Audit RISK
RESPONSE
Company undertakes continuous production and
the work in progress balance at the year-end is
likely to be material.
discuss with management the process they
undertook to assess the cut-off point for work in
progress at the year end and review the process
while attending the year-end inventory count
As production will not cease, the risk is that exact
cut-off of the work in progress may not be
established by the company and the inventory
valuation may be under or over stated
Company has ordered $720,000 of plant and
machinery, two-thirds of which may not have
been received by the year end.
The risk is that machinery may not have been
received, may have been included in NCA of the
company , PPE will be overstated
Management has introduced a new payroll
system this year
The risk is that staff may not be trained enough
to use new system causing errors and
misstatements in payroll record
Management has introduced a new payroll
system this year.
The risk is that during shifting of data from old
system to new system, errors may have been
committed causing misstatements in payroll
record
Company has capitalized 2.2 m Research and
development cost in FS
The risk is that this 2.2 m may include research
cost and other cost not meeting capitalization
criteria of IAS 38 and hence profits and assets
may be over stated
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Discuss with management as to whether the
remaining plant and machinery ordered have
arrived; if so, physically verify a sample of these
assets to ensure existence
Discuss with the management about any training
of staff about new system and assess adequacy of
that training
Perform detailed substantive tests on the payroll
record generated after implementation of new
system
Enquire from the management the process used
to shift data from old system to new payroll
system and assess whether the process was good
enough to prevent errors / misstatements in FS
or not
Obtain the break up of 2.2m R & D cost from
management and verify whether it includes all
the costs eligible for capitalization or not
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The receivables days have been increased from
35 days in the last year to 47 days this year
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Review aged receivable analysis of the company
and assess whether provision for doubtful debts
and bad debts have been recorded at correct
amount or not
The risk is that receivables are struggling to pay
and they are taking more time to pay because of
that and provision for doubtful debts and bad
debts may not have been recorded at correct
amount and assets & profits may be overstated
Management has demanded that this year audit
should be completed in just two months after the
year end The risk is that due to shortage of time
auditor may not be able to perform all the
required work to be able to give appropriate
report due to this detection risk
Perform interim audit this year to reduce the
amount of work to be done at year end
Practice Questions
MJ 2019
SD 2018
Q17 (b)
Q16 part(c)
Q17 part(b)
Q17 part (c)
Q16 part(a,b)
Question
page
10
33
49
61
71
Answer
page
16
38
55
67
75
RISK
MJ 2018
SD 2017
MJ 2017
Internal controls of the client and Auditor
Controls: Procedures implemented by Management of company within the
organization to achieve organizational objectives
Test of Controls: Ways/methods used by auditor to test th`\
effectiveness of the internal control system
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After understanding the controls, auditor will initially do a walk-through test – that is,
they will follow a transaction through the system to see if all the controls they think
should be in existence operated for that transaction.
What audit procedures can the auditor use to get evidence about controls?
•
Inspection of documents (checking the signatures / sequential numbering)
•
Inquiries about internal controls
•
Re-performance of control procedures (enter a fictitious credit sales exceeding the
credit limit, it should be rejected)
•
Observation of controls
Purchase System




Purchase requisition is generated
Purchase order is placed
Goods are received
Payment to supplier
Purchase requisition is generated (by stores department)
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Control Objectives
Controls
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Test of controls

Avoid excessive
stock & stock out as
well

Reorder level & EOQ
must be defined &
observed while preparing
Purchase requisition
For sample of purchase requisitions
prepared, review whether they have
been prepared according to
relevant EOQ and Reorder levels
defined by organization

Appropriate record of
purchase
requisitions.

Purchase requisitions
must be sequentially pre
numbered & multi copied
properly
Review a sample of purchase
requisitions whether they are
sequentially pre numbered and
multi copied properly.
Purchase order is placed (By purchase department)
Purchases at competitive
prices
A list of authorized suppliers
must be maintained and all the
orders must be places with
those suppliers only
Review a sample of purchase
orders placed, whether they
have been placed with the
authorized suppliers of
company or not
Appropriate record of
purchase orders
Purchase orders must be
sequentially pre-numbered and
multi-copied properly
Review a sample of
purchased orders whether
they are sequentially pre
numbered and multi copied
Goods requested are
ordered
Purchase Order must be
counterchecked with Purchase
Requisition by a specific person
and be signed by that person
Review a sample of copies of
purchase orders whether
they bear the signatures of
the person counterchecking it
with the relevant purchase
orders or not
Purchase order should be
authorized
Purchase orders must be
signed by Purchase manager/or
some other senior person
review a sample of purchase
orders whether they bear the
signature of a senior person (
purchase manager) as an
evidence of authorisation
Goods are received (at store)
Ensure that Goods ordered
are accepted
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On receipt, goods must be
matched with copy of
Observe for a sample of
goods deliveries whether
they are being matched with
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Purchase Order at stores and
then should be accepted
Appropriate record of goods
received
relevant copy of Purchase
order before being accepted
For the goods received at
stores, a sequentially pre
numbered and multi-copied
GRN must be issued
Payment to supplier
Payment for goods received&
purchased only
Accounts department
personals must match the
purchase invoice with the
relevant copy of GRN and
goods ordered mentioned on
copy of PO and then issue
cheque in the name of
supplier
For a sample of payments to
the suppliers , review the
relevant vouchers/invoices
whether they bear the
signatures of the relevant
person of accounts as an
evidence if its matching witrh
the relevant copy of PO and
GRN
For a sample of vouchers
prepared for payments
compare the names of
supplier mentioned on the
voucher with the relevant
Purchase invoice to see
whether payment has been
made to the right supplier
Question Type 1
a) Identify and explain deficiencies in the system / controls
b) Give recommendation to remove that deficiency
Deficiency
Purchase manager does not always authorize the
purchase orders , rather employees purchase
goods by themselves
Employees may purchase the goods not required
for the business resulting unnecessary
expenditures
Recommendation
All the purchase orders must be signed/
approved by the purchase manager before being
placed with suppliers
Question Type 2
a) Identify and explain deficiencies in the system / controls
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b) Give recommendation to remove that deficiency
c) Write test of controls on those recommendations
Deficiency
Purchase manager does not
always authorize the purchase
orders , rather employees
purchase goods by themselves
Employees may purchase the
goods not required for the
business resulting unnecessary
expenditures
Recommendation
Test of Controls
All the purchase orders must be
signed/ approved by the
purchase manager before being
placed with suppliers
For a sample of purchase
orders placed with suppliers ,
review their copies whether
they bear the signatures of
purchase manager as approval
or not
June 2015
Cherry Blossom Co (Cherry) manufactures custom made furniture and its year end is 30 April. The
company purchases its raw materials from a wide range of suppliers. Below is a description of Cherry’s
purchasing system.
When production supervisors require raw materials, they complete a requisition form and this is
submitted to the purchase ordering department. Requisition forms do not require authorisation and no
reference is made to the current inventory levels of the materials being requested. Staff in the purchase
ordering department use the requisitions to raise sequentially numbered purchase orders based on the
approved suppliers list, which was last updated 24 months ago. The purchasing director authorises the
orders prior to these being sent to the suppliers.
When the goods are received, the warehouse department verifies the quantity to the suppliers despatch
note and checks that the quality of the goods received are satisfactory. They complete a sequentially
numbered goods received note (GRN) and send a copy of the GRN to the finance department.
Purchase invoices are sent directly to the purchase ledger clerk, who stores them in a manual file until
the end of each week. He then inputs them into the purchase ledger using batch controls and gives each
invoice a unique number based on the supplier code. The invoices are reviewed and authorised for
payment by the finance director, but the actual payment is only made 60 days after the invoice is input
into the system.
Required:
In respect of the purchasing system of Cherry Blossom Co:
I.
Identify and explain FIVE deficiencies; and
II.
Recommend a control to address each of these deficiencies.
Note: The total marks will be split equally between each part. (10 marks)
Deficiency
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Recommendation
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Requisition forms are completed by production
supervisors but are not authorised.
This increases the risk of fraudulent
purchases, or of goods being ordered which are
not required, leading to unnecessary cash
outflows ( 1 mark )
Orders are being placed for goods without the
inventory levels being checked first.
This could result in goods being ordered which
are not required, leading to unnecessary cash
outflows.
In addition, as the company does not currently
monitor inventory levels, it could experience
stock-outs resulting in the company being unable
to meet customer orders.
The purchase ordering department maintains an
approved supplier list; however, this has not
been updated for 24 months.
As this list has not been recently updated, the
suppliers being used may not be ideal with
regards to price, quality and delivery times. This
could result in Cherry paying increased costs for
raw materials or receiving poorer quality goods.
Goods are being received without any checks
being made against purchase orders.
This could result in Cherry receiving and
subsequently paying for goods it did not order
Purchase invoices are manually filed by the
purchase ledger clerk and only updated to the
ledger on a weekly basis.
Until the invoices are input into the system, there
is a risk that they may be misplaced and not
entered. This would result in an understatement
of trade payables and Cherry failing to make
payment to the suppliers on time.
Purchase invoices are not being agreed to the
relevant goods received notes (GRNs) prior to
authorisation and payment by the finance
director.
This could result in invoices being paid for goods
which were not received.
HAMZAH SIDDIQUE FCCA
Requisition forms should be authorised by the
production manager or director prior to being
sent to the purchase ordering department. This
department should not process any unauthorised
requisitions.
The inventory system should be updated to
record minimum/maximum required levels of
raw materials. When completing the purchase
order, the ordering clerk should check the
current level of inventory on the system and only
order if the quantity is within the set parameters.
The company should set minimum authorised
reorder levels for inventory items
The approved supplier list should be reviewed
and updated as necessary. Going forward, it
should be updated regularly, at least on an
annual basis.
A copy of the authorised order form should be
sent to the warehouse department. This should
then be checked to the goods when received
The purchase ledger clerk should record the
invoices in the ledger on a daily rather than
weekly basis.
All purchase invoices should be matched to the
related GRN; the details should be agreed prior to
the invoice being logged in the purchase ledger.
EXAMINER GUIDANCE
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Internal control questions typically require internal control deficiencies to be identified (½ marks
each), explained (½ marks each), a relevant recommendation to address the control (1 mark), and,
often a test of control the external auditor would perform to assess whether each of these controls, if
implemented, is operating correctly (1 mark).
In common with prior sittings, Candidates were able to identify the internal control deficiency from
the scenario however some candidates did not clearly explain the implication of the deficiency, they
needed to explain how this could cause problems for the company
The scenario in the exam will always contain more issues than required to be discussed and it was
therefore encouraging that candidates generally applied effective exam technique and focused on
providing answers which identified the required number of issues as noted in the question.
Most candidates were able to provide good recommendations to address the deficiencies. However,
often the recommendations did not clearly address the specific control weakness identified.
Many candidates simply repeated their controls and added “to check that” or “to make sure”. These
are not tests of control.
Also many candidates suggested that the control be tested through observation. For example
“observe the process for authorisation of sales discounts”. This is a weak test as it is likely that if the
auditor is present that the control will operate effectively; instead a better test would be “to review
sales invoices for evidence of authorisation of discounts by sales manager.”
Practice Questions
MJ 19
SD 18
MJ 18
SD 17
MJ 17
Question
Number
16(b)
Q17 part(b)
Q16 part
(a,b)
Q16 part (c)
Q18
Question
page
8
35
48
60
73
Answer
page
16
42
52
64
79
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Substantive Tests
Procedures/ WAYS used by auditor to detect misstatement in FS


Analytical Procedures
Test of details
 Inspection of documents (invoices, Board minutes , correspondence)
 Confirmation letter
 Enquiry/discussion with management
 Physical observation … (inventory/assets )
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Financial Statement Assertions are representations by management explicit or otherwise,
embodied in FS
Assertions related to
Account balances
Valuation and allocation
Completeness
Rights and obligation
Existence
Presentation and disclosures
Assertions related to
classes of transaction and
events
Accuracy
Completeness
Occurrence
Classification
Cut off
P&D
ACCA COVER
Substantive tests



Write three substantive procedures on Receivables ( 3 marks)
Write audit procedures to verify completeness and existence of receivables ( 5 marks)
Write procedures on a scenario ( )
1 mark per procedure
 Understanding / knowledge /concepts
 Drafting skill
Substantive Test = Action + Source + Purpose (sufficient detailed)
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AUDIT TESTS FOR SPECIFIC ASSERTIONS
ASSERTIONS
COMPLETENESS
TYPE OF
ASSERTIONS
•
•
Classes of
transactions
Account
balances
TYPICAL AUDIT TESTS
(b) Tracing
(c) Analytical procedure
(d) Reconciliations to control accounts
(e) Completion of disclosure check lists
Rights &
Obligation
•
Account
balances
Valuation &
Allocation
•
Account
balances
Existence
•
Account
Balance
Occurrence
•
Classes of
transactions
Accuracy
•
Classes of
transactions
(a) Recalculation of correct amounts
(b) Analytical review
Classification and
understandability
•
Classes of
transactions
a) Confirming compliance with law and accounting
standards
(b) Reviewing notes for understandability
Cut Off
•
Classes of
transactions
Tracing Last source documents through accounting
record
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(a) Reviewing invoices for proof that item belongs to
the company
(b) Confirmations with third parties (receivable
/payable /bank / lawyer / inventory held at third party)
(c) title / registration book
(d) register of charges
(a) Matching amounts to invoices
(b) Recalculation
(c) Confirming accounting policy is consistent and
reasonable
(d) Expert valuation
(a) Physical verification
(b) Third party confirmations
(c) Review of post year-end items
(d) vouching
(e) Review of correspondence of company with third
parties
(a)Inspection of supporting documentation (vouching)
(b) Confirmation from directors that transactions relate
to business
(c) Inspection of items purchased
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Substantive Procedures on Payables
Completeness





Reconcile the sum of individual payable accounts with the balance of payable ledger
control account and if there is difference investigate
Obtain selected suppliers' statements and reconcile these to the relevant suppliers'
accounts and if there is difference, investigate
Complete the disclosure checklist to ensure that all the disclosures relevant to liabilities
have been made.
Compare the payables turnover and payables days to the previous year and industry
data and if there is unusual difference, investigate
Trace a sample of purchase invoices from relevant GRN, purchase ledger and relevant
Payable ledger
Existence




Vouch selected amounts from the trade accounts payables listing and accruals listing to
supporting documentation, such as purchase orders and suppliers' invoices & GRN as well
write a confirmation letter for a sample of accounts payables
Review post year-end transactions of the company to identify any payment made to supplier.
Review any correspondence of client with the suppliers to assess the existence of payables
Valuation & Allocation





Trace selected samples from the trade accounts payables listing and accruals listing to
the supporting documentation (purchase orders, minutes authorising expenditure,
suppliers' invoices etc).
Obtain selected suppliers' statements and reconcile these to the relevant suppliers'
accounts.
For a sample of accruals, recalculate the amount of the accrual to ensure the amount
accrued is correct.
Compare the current year balances for trade accounts payables and accruals with the
previous year and if there is significant difference investigate
Compare the payables turnover and payables days with the previous year and industry
data and if there is significant difference investigate
Rights & obligation
perform payable circularization for a sample of suppliers
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(a)
i.
ii.
Identify and explain four financial statement assertions relevant to account
balances at the year end.
For each identified assertion, describe a substantive procedure relevant to the
audit of year-end inventory.
(8 marks)
Practice Questions (Substantive Tests)
MJ 19
SD 18
MJ 18
SD 17
MJ 17
Question
Number
16c
18
16
(a,b,c) (d,e)
18
(a,b)
16 (d)
18
16 (d)
(a,b,c)
18
Q17
(a,b,c) part(a,b,c,d)
Question page
9
11
33
36
48
50
60
62
72
Answer page
17
20
40
43
54
57
65
68
78
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SUBSEQUENT EVENTS REVIEW
Subsequent events are events occurring between the date of the financial statements and the date of
the auditor's report, and facts that become known to the auditor after the date of the auditor's report.
Two types
• Adjusting events: events that provide evidence of conditions that existed at the year-end date.
FS are amended for their effect
• Non-adjusting events: events that are indicative of conditions that arose after the year-end
date. They are just disclosed in notes to FS
Adjusting events
Non-adjusting events
Settlement of a court case which was in court
at year end
Dividends declared after the year-end
Sales of inventory after year-end providing
evidence of its NRV at year-end
Fire causing destruction of major plant
Fraud or error showing the financial statements
are incorrect
Announcement of a major restructuring
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Going concern
Under the going concern assumption, an entity is viewed as continuing in business for the foreseeable
future.
Responsibilities
MANAGEMENT
 Assess entity's ability to continue as a going concern and present the financial
statements accordingly
 The assessment should cover at least 12 months from the reporting date.
 Disclose any material uncertainty to going concern appropriately
AUDITOR
Auditor should evaluate




The process management followed to make its assessment
The assumptions on which management's assessment is based
Management's plans for future action and whether these are feasible in the circumstances
remain alert throughout the audit for evidence of events or conditions that may cast
significant doubt on the entity's ability to continue as a going concern
check whether any material uncertainty has been appropriately disclosed by
management or not
Indicators of going concern Problems
Financial Indicators
 Net liability or net current liability position
 Inability to pay creditors on due dates
 Inability to comply with terms of loan agreements
 Inability to obtain financing for essential new product development or other essential investments
 Fixed-term borrowings approaching maturity without realistic prospects of renewal or
repayment
 Indications of withdrawal of financial support by creditors
 Negative operating cash flows
 Adverse key financial ratios
 Substantial operating losses
 Arrears or discontinuance of dividends
Operational indicator
 Loss of key management without replacement
 Loss of a major market, key customers, licence, or principal suppliers
 Shortages of important supplies
 Emergence of a highly successful competitor
Other Indicators
 Non-compliance with laws
 Litigation
 Changes in laws/regulations/government policy expected to adversely affect the entity
 Uninsured or underinsured
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Audit procedures applied in performing going concern reviews











Analyse and discuss cash flow, profit and other relevant forecasts with management
Analyse and discuss the entity's latest available interim financial statements (or management
accounts)
Review the terms of debentures and loan agreements and determine whether they have been
breached
Read minutes of the meetings of shareholders, the board of directors and important committees
for reference to financing difficulties
Inquire of the entity's lawyer regarding litigation and claims
Confirm the existence, legality and enforceability of arrangements to provide or maintain financial
support with related and third parties
Assess the financial ability of such parties to provide additional funds
Consider the entity's position concerning unfulfilled customer orders
Review events after the period-end for items affecting the entity's ability to continue as a going
concern
Confirm the existence, terms and adequacy of borrowing facilities
Obtaining and reviewing reports of regulatory actions
Reporting implications
Going concern assumption
inappropriate
Going concern assumption
appropriate, but a material
uncertainty exists
Inadequate assessment by
management
FS prepared on
going concern
basis
Adverse opinion
Properly disclosed
by management
Not properly
disclosed by
management
Unable to obtain audit evidence
MURGC
paragraph will be
added to Audit
report to highlight
this matter
Qualified or
adverse opinion
Qualified / disclaimer of opinion
FS on
Liquidation
basis
Unmodified
opinion with
EOMP
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Audit & Assurance│Crash Course DEC 20
KAM
Audit Report
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HAMZAH SIDDIQUE FCCA
Title
Addressee
Opinion
Basis of opinion
MU relating to going concern
KAM (only for Listed Co Report)
Other information
Responsibilities – Management
Responsibilities – Auditor
Date, address and signature
Those matters that, in the auditor’s professional
judgment, were of most significance in the audit of
the financial statements of the current period. Key
audit matters are selected from matters
communicated with those charged with
governance.’
EOM
Used to emphasize/ highlight the Matters of
fundamental importance for users understanding,
correctly disclosed by management
OM
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Used to enhance the understanding of FS
users regarding auditor’s responsibilities
Pervasiveness
A matter will be pervasive when its effect
 Will not be confined to one item of FS and is spread across multiple items of FS (Non
consolidation of subsidiary, FS prepared on inappropriate basis) or
 Is confined to one item of FS and that item is substantial Part of FS ( correction of the item may
turn profit into loss, more than 70% of the assets / revenues for the year )
 Is related to some fundamental disclosures in FS
Modified Audit Report
With Unmodified opinion
With modified opinion
Material but not
pervasive
Material and
pervasive
Misstatement in FS
Qualified / Except
for
Adverse opinion
Auditor is unable to
obtain evidence
Qualified / Except
for
Disclaimer of
opinion
Emphasis of Matter paragraph
Other Matter Paragraph
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Audit & Assurance│Crash Course DEC 20
HAMZAH SIDDIQUE FCCA
REVIEW & REPORT PRACTICE QUESTIONS
MJ 19
Sep/dec2018
Mar/june 2018
Sep/dec 2017
Mar/june 2017
Question
number
18(d)
Q18 part (d)
Q18 part (d)
Q18 part (d)
Q17 part (e)
Question page
12
36
50
62
72
Answer page
21
45
57
69
78
ACCA Codes of Ethics
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Integrity ( honest & straightforward )
Objectivity ( being unbiased, independent, avoid conflict of interest)
Professional competence & due care (Maintain competence CPD . work as per all professional
standards)
Confidentiality ( must keep client’s information confidential )
Professional Behaviour (compliance with laws & avoiding actions which discredit the profession)
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Ethical Threats
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Self-Review Threat ( where
auditor has to review and
report on the credibility of
his own work previously
performed)
Familiarity Threat ( where
auditor loses professional
skepticism)
Advocacy Threat ( where
auditor is promoting the
position of client in fromt of
third parties)
Intimidation Threat ( where
auditor is pressurized by
client )
Safeguards in General with specific guidance
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Different team + independent partner review
Rotation of the person from audit team
Discuss with TCWG/Audit Committee
Politely decline the audit services
Vary
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Self Interest Threat (where
personal benefits of Auditor)
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Prohibited
Sell off / or change the person
Delay the start of next audit till recovery is made
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Audit & Assurance│Crash Course DEC 20
HAMZAH SIDDIQUE FCCA
Provision of Non Audit services with audit services Self review threat
Auditor Shouldn’t assume management responsibilities
Other clients
Listed Clients
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if impact is material on FS: Prohibited
Allowed with safeguards
Immaterial : allowed with safeguards
How to solve the Scenario??
1. Identify & explain the threat
2. Explain how it will impair the objectivity of auditor
3. Apply safeguards as per the scenario
Practice Questions on ethics
SEP/DEC17 (Q 16) Page 60 (answer page 64)
MJ 17 (Q 16) Page 71 (answer page 77)
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