ACCA
F8 AUDIT & ASSURANCE
EXAM SCENARIO COMPILATION/TEMPLATE
, Contents
Audit Risk ..................................................................................................................................... 3
INVENTORY ..................................................................................................................................... 5
WIP ................................................................................................................................................... 7
ASSETS ............................................................................................................................................ 8
RECEIVABLES ............................................................................................................................... 10
REVENUE ....................................................................................................................................... 11
EXPENSES ..................................................................................................................................... 12
PAYABLES...................................................................................................................................... 12
LIABILITIES..................................................................................................................................... 13
CONTINGENT LIABILITIES ............................................................................................................ 14
CONTINGENT ASSET .................................................................................................................... 14
CAPITAL ......................................................................................................................................... 15
FRAUD ............................................................................................................................................ 15
CONTROL ....................................................................................................................................... 16
misc ................................................................................................................................................. 17
OUTSOURCING ............................................................................................................................. 18
GOING CONCERN ......................................................................................................................... 18
AUDIT SIDE .................................................................................................................................... 19
Test of control ............................................................................................................................ 20
Cover letter ...................................................................................................................................... 21
MISCELLANEOUS .......................................................................................................................... 22
SALES ............................................................................................................................................. 24
PURCHASES .................................................................................................................................. 30
PAYROLL ........................................................................................................................................ 36
INVENTORY ................................................................................................................................... 44
CASH .............................................................................................................................................. 52
NCA ................................................................................................................................................. 58
FRAUD ............................................................................................................................................ 60
Audit Evidence ........................................................................................................................... 61
GENERAL AUDIT PROCEDURES ................................................................................................. 62
, NCA - Tangible ................................................................................................................................ 63
NCA – Intangible ............................................................................................................................. 66
Inventory.......................................................................................................................................... 67
Receivables ..................................................................................................................................... 73
Revenue .......................................................................................................................................... 76
Bank and Cash ................................................................................................................................ 78
Payables and Accruals .................................................................................................................... 81
Purchases and other expenses ....................................................................................................... 84
Payroll ............................................................................................................................................. 86
Tax .................................................................................................................................................. 88
Capital ............................................................................................................................................. 89
Directors’ emoluments ..................................................................................................................... 90
Contingent Liability .......................................................................................................................... 91
Going Concern ................................................................................................................................ 92
Internal control records – Flowcharts etc ......................................................................................... 93
Auditor’s Report......................................................................................................................... 94
Subsequent Event...................................................................................................................... 95
Section A .................................................................................................................................... 96
Knowledge-based questions .................................................................................................... 97
Watch this video from ACCA to understand answering techniques:
https://www.youtube.com/watch?v=OzWioAYhYII
, Audit Risk
Audit Risk
1. Restate the scenario of the question (1/2 marks)
2. Explanation: (1/2 marks)
What risk is created/increased
What specific account is affected? What direction? (over/under)
Client side Auditor side
• Assertions • Detection Risk
• Balance over/understated • Time pressure/ tight reporting schedule
• Inherent/Control Risk • Complex items - audit team not sufficiently
• Disclosure omitted/misleading qualified to value
• Loss of client accounting info/systems • Loss key client personnel (finance director)
Impacts the Financial Statements Impacts the smooth running of audit
Auditor’s Response
ACTION/REASON WHAT
• Test of control • Listings
o Document and assess o Breakdowns/Analysis
o Attend/Observe o Schedules
• Detailed testing • Supporting document
o Enquiry/Discuss to understand • Accounting records
o Agree/Trace between documents • Internal control systems
o Inspect/review/compare • Judgements made
▪ For evidence
▪ To confirm/ensure/verify/determine
o Assess assumptions/adequacy
o Calculate
• Assess impact made on materiality
• Check for compliance
WHO WHEN
• Opening/Closing
• Auditor • Interim/Final
• Management • Stocktake
• Board • Post year end
• 3rd party • Previous year
F8 AUDIT & ASSURANCE
EXAM SCENARIO COMPILATION/TEMPLATE
, Contents
Audit Risk ..................................................................................................................................... 3
INVENTORY ..................................................................................................................................... 5
WIP ................................................................................................................................................... 7
ASSETS ............................................................................................................................................ 8
RECEIVABLES ............................................................................................................................... 10
REVENUE ....................................................................................................................................... 11
EXPENSES ..................................................................................................................................... 12
PAYABLES...................................................................................................................................... 12
LIABILITIES..................................................................................................................................... 13
CONTINGENT LIABILITIES ............................................................................................................ 14
CONTINGENT ASSET .................................................................................................................... 14
CAPITAL ......................................................................................................................................... 15
FRAUD ............................................................................................................................................ 15
CONTROL ....................................................................................................................................... 16
misc ................................................................................................................................................. 17
OUTSOURCING ............................................................................................................................. 18
GOING CONCERN ......................................................................................................................... 18
AUDIT SIDE .................................................................................................................................... 19
Test of control ............................................................................................................................ 20
Cover letter ...................................................................................................................................... 21
MISCELLANEOUS .......................................................................................................................... 22
SALES ............................................................................................................................................. 24
PURCHASES .................................................................................................................................. 30
PAYROLL ........................................................................................................................................ 36
INVENTORY ................................................................................................................................... 44
CASH .............................................................................................................................................. 52
NCA ................................................................................................................................................. 58
FRAUD ............................................................................................................................................ 60
Audit Evidence ........................................................................................................................... 61
GENERAL AUDIT PROCEDURES ................................................................................................. 62
, NCA - Tangible ................................................................................................................................ 63
NCA – Intangible ............................................................................................................................. 66
Inventory.......................................................................................................................................... 67
Receivables ..................................................................................................................................... 73
Revenue .......................................................................................................................................... 76
Bank and Cash ................................................................................................................................ 78
Payables and Accruals .................................................................................................................... 81
Purchases and other expenses ....................................................................................................... 84
Payroll ............................................................................................................................................. 86
Tax .................................................................................................................................................. 88
Capital ............................................................................................................................................. 89
Directors’ emoluments ..................................................................................................................... 90
Contingent Liability .......................................................................................................................... 91
Going Concern ................................................................................................................................ 92
Internal control records – Flowcharts etc ......................................................................................... 93
Auditor’s Report......................................................................................................................... 94
Subsequent Event...................................................................................................................... 95
Section A .................................................................................................................................... 96
Knowledge-based questions .................................................................................................... 97
Watch this video from ACCA to understand answering techniques:
https://www.youtube.com/watch?v=OzWioAYhYII
, Audit Risk
Audit Risk
1. Restate the scenario of the question (1/2 marks)
2. Explanation: (1/2 marks)
What risk is created/increased
What specific account is affected? What direction? (over/under)
Client side Auditor side
• Assertions • Detection Risk
• Balance over/understated • Time pressure/ tight reporting schedule
• Inherent/Control Risk • Complex items - audit team not sufficiently
• Disclosure omitted/misleading qualified to value
• Loss of client accounting info/systems • Loss key client personnel (finance director)
Impacts the Financial Statements Impacts the smooth running of audit
Auditor’s Response
ACTION/REASON WHAT
• Test of control • Listings
o Document and assess o Breakdowns/Analysis
o Attend/Observe o Schedules
• Detailed testing • Supporting document
o Enquiry/Discuss to understand • Accounting records
o Agree/Trace between documents • Internal control systems
o Inspect/review/compare • Judgements made
▪ For evidence
▪ To confirm/ensure/verify/determine
o Assess assumptions/adequacy
o Calculate
• Assess impact made on materiality
• Check for compliance
WHO WHEN
• Opening/Closing
• Auditor • Interim/Final
• Management • Stocktake
• Board • Post year end
• 3rd party • Previous year
