P a p e r F 8
Section A – ALL 12 questions are compulsory and MUST be attempted
Plea u the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiple choice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet.
1Which of the following audit procedures for obtaining audit evidence is correctly described?
A Recalculation involves the auditor’s independent execution of procedures or controls which were originally
performed as part of the entity’s internal control
B Confirmation consists of eking information of knowledgeable persons, within the company or outside the
company
C Reperformance consists of checking the mathematical accuracy of documents or records
D Obrvation consists of looking at a procedure or process being performed by others
(2 marks)
2Auditors are required to undertake an overall review of the financial statements as the final step before they form their audit opinion. As part of this process they undertake a number of procedures.
Which of the following procedures would an auditor NOT undertake as part of the overall review of the financial statements?
A Reviewing the financial statements to ensure they are consistent with the auditor’s knowledge of the business
and the results of their audit work
B Performing analytical procedures on the financial statements to form an overall conclusion on the financial大学期末总结
statements
C Undertaking a review of subquent events to identify whether any adjustment or disclosure is required in the
financial statements
D Reviewing the financial statements to ensure compliance with accounting standards and local legislation
disclosure
(2 marks)
3Which of the following is NOT an inherent limitation of internal control systems?
A Insufficient gregation of duties
B Possibility that employees may collude together fraudulently
C Possibility of human error in undertaking tasks
(1 mark)
4Which of the following statements, relating to International Standards on Auditing (ISAs), if any, is/are correct?
(1)International Standards on Auditing (ISAs) are issued by the International Accounting Standards Board (IASB)
and provide guidance on the performance and conduct of an audit
(2)In the event that ISAs differ from local legislation in a specific country, auditors must comply with the
requirements of the ISAs
A 1 only
B 2 only
C Both 1 and 2
D Neither 1 nor 2
(2 marks)
2
5Which TWO of the following statements regarding the u of analytical procedures during the PLANNING stage of the audit are correct?
(1)Analytical procedures are uful when forming an overall conclusion as to whether the financial statements are
consistent with the auditor’s understanding of the company
(2)Analytical procedures can be ud to obtain relevant and reliable audit evidence
(3)Analytical procedures can assist in identifying the risks of material misstatement
(4)Analytical procedures can assist in identifying unusual transactions and events
A 1 and 2
B 2 and 3
C 3 and 4
D 2 and 4
(2 marks)
6Which of the following substantive procedures provides evidence over the COMPLETENESS of non-current asts?
A Select a sample of asts included in the non-current ast register and physically verify them at the client
premis
B Review the repairs and maintenance expen account to identify any items of a capital nature
C For asts dispod of, agree the sale proceeds to supporting documentation and cash book
(1 mark)
睡美人山7Which of the following is NOT a principle of the UK Corporate Governance Code?
A There should be a rigorous and transparent procedure for the appointment of new directors to the board
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B The board should u the annual general meeting (AGM) to communicate with investors
C The non-executive chairman should decide on the remuneration of all directors
D All directors should receive induction training on joining the board
(2 marks)
8Which of the following is a substantive audit procedure for wages and salaries?
A Inspect a sample of clock cards for evidence of authorisation by a responsible official
B Recalculate a sample of payroll deductions such as employment taxes to confirm accuracy
C Attempt to access and make changes to the payroll master file using the log on for a junior clerk
(1 mark)
3[P.T.O.
9Which of the following statements, relating to the auditor’s responsibilities regarding subquent events, if any, is/are correct?
(1)Auditors do not have a responsibility to perform procedures to identify subquent events after the date of the
auditor’s report
(2)Where a material adjusting subquent event is identified after the financial statements are issued, but prior to
approval by the shareholders, the auditor should include a qualified opinion in their audit report if management refus to adjust the financial statements for the event
A 1 only
B 2 only
C Both 1 and 2
D Neither 1 nor 2
(2 marks)
10Is the following statement true or fal?
A significant change in the ownership of an existing audit client is a factor which makes it appropriate for the auditor
to review the terms of engagement.
A T rue
B Fal
(1 mark)
11Which of the following statements relating to internal and external auditors is correct?
A Internal auditors are required to be members of a professional body
卡丁车技巧B Internal auditors’ scope of work should be determined by tho charged with governance
C External auditors report to tho charged with governance
D Internal auditors can never be independent of the company
(2 marks) 12Which TWO of the following controls of a sales system ensure that all goods despatched are completely and accurately invoiced?
(1)Good despatched notes are matched to sales invoices
(2)Sales invoices are quentially numbered
(3)Sales invoices are matched to customer orders
o站长工具(4)Regular review of unfulfilled orders
水库钓鱼技巧A 1 and 2
B 2 and 4
C 2 and 3
花篮的折法D 1 and 4
(2 marks)
(20 marks)
4
Section B – ALL SIX questions are compulsory and MUST be attempted
Plea write your answers to all parts of the questions on the lined pages within the Candidate Answer Booklet.
1You are an audit nior of Beech & Co and have been allocated to the audit of Willow Wands Co (Willow), a listed company which has been an audit client for eight years and specialis in manufacturing musical instruments.
Bethan Oak was the audit engagement partner for Willow and as she had completed ven years as the audit engagement partner, she has recently been rotated off the audit engagement. The current audit partner, Sandeep Pine, has suggested that in order to maintain a clo relationship with Willow, Bethan should undertake the role of independent review partner this year. In addition Willow has requested that Bethan assist them by attending their audit committee meetings, as a non-executive director has recently left the company.
Willow has also asked Sandeep and the other partners at Beech & Co to help them in recruiting a new non-executive director.
The total fees received by Beech & Co for last year equated to 16% of the firm’s total fee income. The current year’s audit fee has not yet been confirmed, but along with taxation and other possible non-audit fees the total income from Willow this year could be greater than for last year. Last year’s audit fee was being paid monthly by Willow but no payments have been made for the last three months.
The audit manager for Willow has just announced that he is leaving Beech & Co to join Willow as the financial controller.败成语
Required:
Using the information above:
(i)Identify and explain FIVE ethical threats which may affect the independence of Beech & Co’s audit of Willow
Wands Co; and
(ii)For each threat explain how it might be reduced to an acceptable level.
Note: The total marks will be split equally between each part.
(10 marks)
5[P.T.O.
2(a)ISA 315 Identifying and Asssing the Risks of Material Misstatement through Understanding the Entity and Its Environment describes the five components of an entity’s internal control.
Required:
Identify and briefly explain the FIVE components of an entity’s internal control.(5 marks)
(b)Bonsai T rading Co (Bonsai) manufactures electrical equipment, and its year end is 30 September 2015. You are
the audit supervisor of Poplar & Co and are developing the audit programmes for the forthcoming interim audit.
The company’s internal audit department has provided you with documentation relating to the non-current asts cycle including the related controls listed below.
–Bonsai has a capital expenditure committee and all purcha orders for capital items are required to be authorid by this committee.
–On receipt, each ast is assigned a unique rial number and this is recorded on the ast and in the non-current asts register.
–When the ast arrives, a goods received note (GRN) is completed which details the nature of the expenditure (i.e. whether it is capital or revenue), and the GRN classification is reviewed and initialled by a
responsible official.Copies of the GRNs relating to capital expenditure are then submitted to the finance
department for updating of the non-current asts register.
–Periodically, internal audit undertakes a review of asts in the register and compares them to asts on site, using the rial number to confirm existence of the ast.
–Access to the non-current asts register is restricted through passwords to a small number of staff in the finance department.
Required:
Describe a test of control which the auditor of Bonsai Trading Co would perform to asss whether or not each of the non-current ast controls listed above is operating effectively.(5 marks)
(10 marks)
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