Vandana
03-12-07, 05:28 AM
Hi there,
Just a few pointers to help you GET THROUGH the exam:
1) In case study questions, where they ask you to list the cause for concern, factors for planning etc, READ through the question LINE BY LINE and ask yourself if any of the information is a factor/point of concern. Normally, each paragraph will usually have at least 1 point that you can mention
2) Ensure that you ANSWER THE FULL QUESTION! if you are asked eg in the pilot paper Q3 to identify factors which may threaten independence, you must also explain HOW each threat should be managed. It might make sense to split your page in half and on the left side identify the threat (explaining WHY it is a threat - think about the IMPACT on the financial statements) then on the right side, put down HOW you would manage the threat.
eg the last point given in the Q is that you have inherited shares. So your answer could be:
I have inherited shares in the client company. This is a threat to my independence as it would be in my interest for the company to make as much profit as possible. As I am working on the audit, I have the ability to influence which adjustments could increase profits.
I would manage this threat by reporting the inheritence to the partner on the job and resigning from the audit or immediately selling my shares before I started any work on this client. However, as I have internal knowledge of the company, I would need to seek professional advice before I sell the shares.
3) Whenever you are explaining an audit procedure, always explain it in such a way that a very inexperienced audit junior would understand
a) EXACTLY how to do the procedure by himself - eg what he is looking for, which figures should match etc etc
b) WHY he is doing the procedure
eg, do not write, ' I would check the purchase invoice to see if it was correct' - this is will get no marks!
Instead, write, 'I would obtain the purchase invoice and match to the purchase order - I would check that the same goods on the purchase order were also on the purchase invoice. I would also check that the price matched the price agreed on the order or in other correspondence with the client, eg the price had been agreed in an email. I would physically cast the invoice, to ensure it is arithmetically correct and that the date of the invoice is in the year we are auditing. This is to ensure that the correct amount has been included in purchase for the year'
GOOD LUCK!
Please let us know how the exam went!
Regards,
Vandana and the GTG team
Just a few pointers to help you GET THROUGH the exam:
1) In case study questions, where they ask you to list the cause for concern, factors for planning etc, READ through the question LINE BY LINE and ask yourself if any of the information is a factor/point of concern. Normally, each paragraph will usually have at least 1 point that you can mention
2) Ensure that you ANSWER THE FULL QUESTION! if you are asked eg in the pilot paper Q3 to identify factors which may threaten independence, you must also explain HOW each threat should be managed. It might make sense to split your page in half and on the left side identify the threat (explaining WHY it is a threat - think about the IMPACT on the financial statements) then on the right side, put down HOW you would manage the threat.
eg the last point given in the Q is that you have inherited shares. So your answer could be:
I have inherited shares in the client company. This is a threat to my independence as it would be in my interest for the company to make as much profit as possible. As I am working on the audit, I have the ability to influence which adjustments could increase profits.
I would manage this threat by reporting the inheritence to the partner on the job and resigning from the audit or immediately selling my shares before I started any work on this client. However, as I have internal knowledge of the company, I would need to seek professional advice before I sell the shares.
3) Whenever you are explaining an audit procedure, always explain it in such a way that a very inexperienced audit junior would understand
a) EXACTLY how to do the procedure by himself - eg what he is looking for, which figures should match etc etc
b) WHY he is doing the procedure
eg, do not write, ' I would check the purchase invoice to see if it was correct' - this is will get no marks!
Instead, write, 'I would obtain the purchase invoice and match to the purchase order - I would check that the same goods on the purchase order were also on the purchase invoice. I would also check that the price matched the price agreed on the order or in other correspondence with the client, eg the price had been agreed in an email. I would physically cast the invoice, to ensure it is arithmetically correct and that the date of the invoice is in the year we are auditing. This is to ensure that the correct amount has been included in purchase for the year'
GOOD LUCK!
Please let us know how the exam went!
Regards,
Vandana and the GTG team