Jay's Auditorium - ACCA P7, F8 and CAT T8

Timetable for P7 & F8 for June 2011 sitting

2012-01-02T20:25:00.000-08:00

The results for the last December 2011 examinations should be out in 13 February 2012, which is a week earlier than usual. The slots for J Pro will be starting on 15 Feb 2012 for F8 and for P7 will be starting on 26 Feb 2012.

This would be ideal given the holidays that are available in Malaysia at the early stage of the year.

The training below is designed from 0 to full exam status, which is the same for attending the normal classes at other locations. The only difference is that this is done in modular basis. This is suitable for those that are sitting for the first time, re-sitting the exam, or those that want to improve their chances of scoring by taking on additional guidance.

The training schedule for F8 is slotted on every Wednesday 1.30 - 5.30pm starting from 15 February 2012. Only exceptions is that on 22 February 2012, the class will be from 8.30 am to 5.30 pm. (Total contact time will be 86 hours @ RM 880 (inclusive of notes, refreshments and lectures)
Class dates
15/2, 22/2*, 29/2, 07/3, 14/3, 21/3, 28/3, 4/4, 11/4, 18/4, 25/4, 26/4*
Revision slots are 8.30 am to 5.30pm
4/5*, 5/5*, 6/5* with one additional slot in 5/6.
The dates above does not include the dates for the Mocks and Progress test, agreed later in training.

The training slots for P7 Advance Audit and Assurance are as follows - 8.30 am to 5.30 pm: Price is RM1100 for new students (returning students RM1050)
26 February 2012, 04 Mar 2012, 25 Mar 2012, 01 Apr 2012
22 Apr 2012, 28 Apr 2012, 29 Apr 2012
Revision slots
25 May 2012, 26 May 2012, 27 May 2012

For those that are interested to book now, you can do so since there is only a maximum of 18 seats available, making the class exclusive for those that attend it. SMS or call 0178786074 for mode details, if you are booking, just sms your name and acca student number to me.

ENJOY YOUR HOLIDAYS, FOR THOSE WORKING STICK AT IT, BRIGHTER ROADS WILL APPEAR.

Dec 2011 Mr Jays Tips for ACCA F8 and ACCA P7

2011-12-03T21:33:00.001-08:00

Apologies for the late tipping of matters.

Note - tips are not healthy within the study approach but at the last minute, it might be a good idea to focus a few of the following areas before going into the examination

The coming issues are possible for Dec 2011 ACCA Advance Audit & Assurance paper P7

Question 1 - mixed questions with ethics + ISQC1 + matters to consider + business risk / audit risk + procedures for intangibles / pension (IAS 19) - using experts (ISA 620)

Question 2 - PFI / Forensic auditing / engagement acceptance / Know - your - client + Money laundering

Question 3 - Matters to consider - Financial instruments + IAASB announcement on the complex transactions

Question 4 - Ethical consideration - focusing on confidentiality, fee matters and standard FASSI

Question 5 - Critical assessment of closing procedures + audit report + written representation

OTHER MATTERS THAT SHOULD BE COVERED

1. Materiality and ISA 450

2. ISA 610 usage of internal auditor

3. ISA 402 - Usage of service organisation / ISAE 3402

4. Risk auditing - covering the article by P1 examiner

5. Confirmation issues - articles by IAASB

Hope that helps for students preparing for the ACCA P7 paper.

The following are the possible areas that are relevant for ACCA F8 Audit & Assurance paper for DEC 2011 ACCA examination.

Students that are preparing for the F8 Exam.

Please read the latest article by the examiner AUDIT RISK and the articles by the assessor for the F8 examiner AUDIT SAMPLING & SUBSEQUENT EVENTS

Areas that should be coming out this time -

AUDIT PROCEDURES - WAGES, INVENTORY, NCA, PURCHASES TRANSACTION, CASH (BANK BALANCE)

AUDIT RISK - AS PER PREVIOUS YEAR + AUDIT STRATEGY + ENGAGEMENT ACCEPTANCE MATTERS TO CONSIDER + ISA 610

AUDIT CLOSING - SUBSEQUENT EVENTS / GOING CONCERN / AUDIT REPORT (ISA 720 - OTHER INFORMATION), ISA 706 - EOMP AND OMP

CONTROLS - GENERIC QUESTION ON CONTROL OBJECTIVES / CONTROL LIMITATIONS. SPECIFIC QUESTION ON ICEQ/ICQ ON PURCHASES/WAGES/SALES. [POSSIBLE FULL QUESTION ON MANAGEMENT LETTER FOR WAGES OR SALES SYSTEM]

ETHICS - STANDARD FASSI QUESTION / CONFIDENTIALITY

Other smaller areas that can be examined:

Assertions for disclosure

Audit procedures for depreciation charges verification

Explanation of ISA 705 modification

Internal auditor ISA 610 specific procedures + generic procedures

Audit sampling ISA 530 theory question on audit sampling risk and factors that increase or decrease it, projection of errors.

Accounting standards IAS 2,8,10,16,36,37,38

Those that are preparing for the exam - do not take the writing of audit response / ethical safeguards lightly since most of the students usually mess up and gain very little marks in those areas.

Well that is just my thoughts about what is possible.

For those that are planning to study ACCA P1 and P3 next semester - remember that JPro training slots will only start after the results are out in Feb 22 - Alternative Monday classes - 10 x 8 hours = 80 hours (which is more than enough), exclusive boutique training centre. Book your spots early to avoid disappointment - since I will only cater for the max of 18 pax.

OBU TRAINING IS ON DEC 15 / 2011 FOR THE NEXT SUBMISSION. DO BOOK EARLY TO GET A PLACE FOR THE TRAINING

P7 IMPORTANT MATERIALS

2011-11-19T19:02:00.001-08:00

Those taking the P7 ACCA DEC 2011 exams should ensure that you have covered the following materials before going to the exam hall, this could come out for 10 - 20 marks this semester
1. ISAE 3402 New assurance standard that can be examined together with ISA 402
2. XBRL Emerging landscape
3. Auditor consideration regarding significant unusual or highly complex transactions
4. Emerging practice with the use of confirmations
5. Challenges in auditing fair values
6. Audit consideration of going concern

This are the latest issues facing the auditing profession and should have a high level of probability in coming out in this semester

MESSED UP AUDITS

2011-11-10T05:29:00.001-08:00

The latest scandals in the world of audit - OLYMPUS & MF GLOBAL
In both of the companies you have 3 of the BIG 4 which are involved. In MF case, it is PWC - whether they had issued an appropriate emphasis of matter paragraph in the audit report regarding the material uncertainty (ISA 570) that existed in MF Global financial statements. This should have been done given the fact that IAASB had already issued a guidance note regarding the matter and how to manage through such a scenario. They should have also increased audit risk profile for the client given the amount of financial instruments that MF was involved in, the company was already not used to this type of investments (past understanding of the client).

On the other corner, we have KPMG which may have failed to detect material misstatement caused by fraud - ISA 240 that existed within the giant OLYMPUS. Whether there is a failure or not, we have to wait for the investigators and regulators to go through the audit firms approach. The worst part would the one holding the ball when the shit hit the ceiling EY, which has been the auditor since the removal of KPMG. In this case the CEO said that he "believed" that auditors involved were professional. Whether there is a poor quality audit done or not, again we will have to wait - but one thing for sure, it will be really messy in the audit world of Japan.

This brings us to Malaysian audit scenario - students that are studying for ACCA qualification, please ensure that you act professionally all the time, else we have the scandals that brought down PWC Japan in 2006/2007 - Reuters (2011)

Make sure if you are being pressure to act unethically or forgo an issue - do not just accept it, know your ethical grounds and stand up against it - contact ACCA via email for help.

This would also increase the need for ethical questions to be increased in the coming term say Dec 2012/June 2013 papers of P7 and F8 ACCA.

F8 IRC IN SUNWAY IPOH

2011-10-02T19:22:00.001-07:00

There will be a 2 day training for F8 in Sunway Ipoh, so for those that are staying in Ipoh, you can consider making the necessary enquiries with them, this would be highly focused only on the possible areas for the coming examination.

The dates are in Dec 1 & 2 2011, which means most of you have already prepared for the examination and this would be a fast recap and focused IRC on getting the MARKS!

F8 AND P7 IRC FOR J PRO

2011-10-02T19:18:00.000-07:00

SORRY, THIS TIME THE SLOTS HAVE BEEN FULLY BOOKED, AND THE IRC WAS NOT OPENED SINCE I HAVE ALREADY REACHED MAXIMUM CAPACITY OF 18 PAX FROM THE BEGINNING.

YOU COULD TRY OUT MR.JOEY OR MR.GOH AS AN ALTERNATIVE FOR P7 REVISION, WOULD NOT RECOMMEND THE OTHERS SINCE YOU WILL NEED TO BE FAMILIAR WITH THEIR ACRONYMS TO FULLY GRASP THEIR METHODOLOGY.

F8 AGAIN - MR.JOEY SHOULD BE OK, OTHERS WOULD BE PHILIP.

YOU MAY BE WONDERING ABOUT SHEILA, I SUPPOSE FOR THOSE THAT ARE USED TO HER ACRONYMS IT WOULD BE OK, BUT IF YOU ARE NEW, IT MIGHT BE A BIT HARD, ESPECIALLY IF YOU ARE TRYING ONLY FOR REVISION.

CLASS SIZE IS THE OTHER FACTOR TO CONSIDER, I SUPPOSE YOU WOULD WANT TO CLARIFY YOUR DOUBTS DURING REVISION, LARGE CLASSES ARE NOT THE PLACE TO DO THIS! - THAT IS WHY I LIMIT TO A MAXIMUM OF 18, SO THERE IS LESS INTIMIDATION FROM THE CROWD FOR CLARIFICATION.

GOOD LUCK ON THE REVISIONS.

REMEMBER - IT IS ALWAYS A GOOD IDEA TO SWITCH YOUR LECTURERS ONCE YOU HAVE TRIED OUT ONE STYLE, IT COULD BE THAT YOUR MIND NEEDS A NEW APPROACH FOR THE SAME PROBLEM - GOING BACK TO THE SAME PLACE, YOU GET THE SAME APPROACH AGAIN.

I HAD ONE STUDENT THAT HAD TRIED OUT 1 LECTURER 5 TIMES AND KEPT FAILING, FINALLY TRIED OUT A DIFFERENT APPROACH BY TRYING OUT MY METHODOLOGY OF ANSWERING AND THINKING - PASS. I SUPPOSE THAT ALL SHE NEEDED WAS A DIFFERENT PERSPECTIVE IN ANSWERING THE QUESTION.

THE POINTS ABOVE ARE JUST MY OPINION.

2011-09-15T22:13:00.000-07:00

The P7 class is already full and there will be no places for revision

There is 2 more seats available for F8

You can consider Sheila (Elite Jaya) or Joey (KDU) or Goh (Sunway) as an alternative lecturers for P7. There are others out there, but this is who I would consider recommending for now

P7 and F8 Class schedule

2011-08-21T21:41:00.000-07:00

For those that passed the papers last sitting - Congratulation!

But for those that are unfortunate to fail this paper, well there is still hope. The timing for P7 and F8 are provided below for those that want to be better prepared for the paper.

The F8 slot is currently at Wednesday and only 10 more seats are available. The revival class for those that did not pass the paper last sitting will be starting on 29/8/2011 (8.30 am to 5.30 pm) followed by a class on 1/9/2011 (8.30 to 5.30 pm)

P7 will only start on the following dates - registration for this is now open (8.30am - 5.30pm)

Sept 10/11/18

Oct 1/2/22/23/30

Total 8 x 8 hours = 64 hours for training time

Plus the revision timing - November 6/12/13 (8.30 - 6.30pm)

SMS or Call 0178786074 for booking and registration

UPDATE - F8 ACCA Progress Test

2011-08-03T04:40:00.000-07:00

The following will the specific issues that will be examined on Thursday - note the areas and prepare for it well

1. Internal auditing from Chapter 3

2. Corporate governance from Chapter 3

3. Ethics from Chapter 5

There is only 2 chapters being examined for total of 60 marks. See you at the MPH for the class.

Malaysian Audit salaries / firms

2011-07-07T10:06:00.000-07:00

The analysis of employment within the Big4 done from a survey of auditing and taxation staffs involved seems to indicate the following results. Those that are already in the BIG 4 can try to provide some additional feedback to improve this information so as to enable the others to make a more informed decision about which firm to join. In the market there is only the BIG 4 and not as claimed by some as the BIG 5......that would be false advertising / misleading. The measurement of BIG is related to gross fee income, which is very clear within the audit market. Anyone claiming that they are the BIG 5 have to be accepted by the audit industry as the 5th player.

Recent findings in Australia has cast significant doubt about the quality of audit scepticism within the industry with 17% of the audit reports being faulty (Imagine the levels within Malaysia) Recent conversations with some finance directors and managers seems to indicate that audit managers and partner are accommodating their clients since they are concerned abut the fee that would be earned. There are incidents where firms resign rather than give a qualified audit report (fear of damaging their reputation)

The incidents reported by the SUN paper on 7th of July 2011 indicates that there is significant audit failures within the China, resulting in many of the US and Canadian listed companies being de-listed and failing. This has already cast significant doubt about the quality control practiced by the "overseas firms", damaging the reputation of auditor further.

Given the current economic climate, with significant uncertainties within the global financial markets, 3F would be re-appearing faster now - Financial fraud, Financial instruments manipulation and Fair value manipulation. Auditors should be bold to question and be sceptical of the financial instruments and fair values used by management - question the assumptions and the basis on which values are derived.

New students for F8 and P7 - note

2011-07-05T08:12:00.000-07:00

The audit paper is one of the most challenging paper in Malaysia - since it requires the student to understand the accounting system in detail as well as the accounting standards that support them before getting into auditing issues.

Overall paper F8 is much more harder to pass compared to P7, mainly because it has more auditing specific questions whereas P7 has more accounting specific question (which the Malaysian students fair better).

Studying for this paper would require significant effort by yourself to make sure that you understand auditing concepts and evidence gathering methods clearly.

As a student studying for auditing - make sure that your effort starts from the first day of the class rather than the days before the exam. In this case - reviewing materials learnt after the class is a good idea.

You should look at the links at the side, I have provided some links that are could be helpful for students that are getting ready for the class. In terms of learning - the best source of reading up for the paper is the ISA itself (which is the logo given by the side)

Offer for F8 beginning WED 6/6/11

2011-07-05T08:07:00.001-07:00

F8 and P7 exams June 2011

2011-06-16T12:24:00.000-07:00

The papers for the JUNE 2011 ACCA exams are already out for viewing - so students that have just completed the exams should probably consider re-writing the answers and getting it reviewed by their lecturer - this should allow you to gauge your expected marks.

By gauging your expected marks - you can plan your next semester better.

Overall the papers for P7 was not that bad - it did have the new format to deal with - which was addressed by the article that was written by Lisa Weaver recently. The paper tested Financial statement risk, PFI (mixed with going concern), usual ethics question, due diligence, ISA 550, ISA 510, Consolidation process, Audit report.

This paper is considered a doable paper for students that had prepared well - reviewed all previous papers and considered studying up their P2 before going in - since it tested both IAS 11 and 37 in some detail.

On the other hand, paper F8 had the following issues to be considered - Q1 - sales system test of control, internal controls to reduce fraud, substantive procedures for revenue and AR balances.

(Well designed question that covered the essential elements that should be known by all auditing students)

Q2 - Theory question that brought in ISA 210 and Narrative notes advantage and disadvantages

Q3 - Balance question asking for audit procedures AEIOU for purchases and risk based question

Q4 - Ethical question + Internal audit outsourcing question

Q5 - An excellent question that tested ISA 450 (new standard), ISA 620 Experts and ISA 705 Modification of audit reports.

Overall the paper has a better feel compared to the previous paper and should provide a more favourable pass rate. If you had failed this paper - it would indicate that you did not do your basic work sufficiently and waited to the last minute to get the work done.

THIS SEMESTER JULY 2011 I WILL BE OFFERING THE FOLLOWING CLASSES

P7 ACCA - SUNWAY JB

F8 ACCA - SUNWAY JB

F8 ACCA - J PRO - EVERY WEDNESDAY 1.30 PM TO 5.00 PM (STARTS ON 6TH JULY)

P7 ACCA - JPRO - STARTS ON SUNDAY 17 JULY 8.30 AM TO 5.30PM (8 HOURS) , NEXT ON IS ON 28/8, 3 & 4/9, 23 & 30/10 MAIN CLASSES. QUESTION PRACTICE SLOTS WILL BE DISCUSSED DURING THE CLASS.

CONTACT ME ON FACEBOOK - J@ACCAMAIL.COM OR CALL MY 012 NO. (DO INFORM THE REST ABOUT THE CLASS TIMING - MAX IS 20 ONLY)

Audit procedures

2011-06-07T10:10:00.001-07:00

The diagram above does provide some idea about audit procedures that are done during the interim and final audit, not at the planning and review stage.

The basic idea is to understand that audit procedures are done to gather audit evidence.

Evidence that needs to be gathered can be about the reliability of the internal control system is achieved using test of control (as the audit procedure) - this means that control risk assessment is low

You will need to identify the control then write up the procedures to confirm if the control is working as designed. Good questions to look at includes Seelay and B-Star, which provides an idea about control testing and whether control testing is appropriate sufficient evidence.

Evidence that need to be gathered about the reliability of the accounting system (whether the audit assertions are being met) is achieved using substantive procedures - which includes test of detail and substantive analytical procedures.

This can be focused on the balance - Seelay part c and d + Westra part b, transaction - ASG part b + Westra part a or sometimes on a disclosure - not done yet.

The evidence can be gathered by using documentation - like Westra and ASG or it can be done using analytical procedure - like B-Star and Blake.

So far your examiner has not really asked questions that test audit procedures like the previous examiner, she focuses more on balance testing and control testing. There was a limited amount of emphasis on the transaction part in June 2010 and Dec 2010. This could indicate that either she does not like those areas or that it might hit you in June 2011. If nothing comes out this time, it would be a sign that she does not favour transaction testing (probably too easy).

She also has not asked questions for audit procedures that require a reason for the test (awarding 2 marks per point, rather than more reduce 1 mark per procedure approach)

On that note the other thing that has also been seen in the last two sitting is an over-emphasis in internal controls (some questions are more that unusual - it is good but it could be better question as seen in Bluesberry Dec 2010). I would expect that it would be possible for more unusual questions set within the context of internal controls.

Good luck in the exam

2011-05-28T08:13:00.001-07:00

F8 Possible exam scenarios this time

Well the examiner has had a love for the internal controls and balance testing, which indicates that this time around it will ........

1. Audit risk question with issues to be considered before accepting a new client

2. Internal controls - sales system or wages system

3. Balance testing - AR, Share Capital, NCA - PPE

4. Experts - ISA 620

5. Audit of subsequent events - refer to the article that came out in April

6. Audit report - OMP and EOMP

7. Internal audit - outsourcing / using internal audit work

8. Audit sampling - ISA 530

9. Audit for

Comparatives
Opening balances
Outsource services - ISA 402
ISA 505 - Confirmation

Limitations of internal controls

Objectives of internal controls

ICEQ and ICQ for sales, wages and purchases system

You should also know the following

IAS 8,10,16,36,37,38

Note for students that are planning for the next semester, I am starting J Pro - P1 and P3 papers earlier - July 4th. Those that are interested can book now, since I will only have limited seat.

2011-05-28T08:13:00.000-07:00

F8 Possible exam scenarios this time

Well the examiner has had a love for the internal controls and balance testing, which indicates that this time around it will ........

1. Audit risk question with issues to be considered before accepting a new client

2. Internal controls - sales system or wages system

3. Balance testing - AR, Share Capital, NCA - PPE

4. Experts - ISA 620

5. Audit of subsequent events - refer to the article that came out in April

6. Audit report - OMP and EOMP

7. Internal audit - outsourcing / using internal audit work

8. Audit sampling - ISA 530

9. Audit for

Comparatives
Opening balances
Outsource services - ISA 402
ISA 505 - Confirmation

Limitations of internal controls

Objectives of internal controls

ICEQ and ICQ for sales, wages and purchases system

You should also know the following

IAS 8,10,16,36,37,38

Note for students that are planning for the next semester, I am starting J Pro - P1 and P3 papers earlier - July 4th. Those that are interested can book now, since I will only have limited seat.

Answers for mock

2011-05-28T07:57:00.000-07:00

P7 ACCA Exam areas

2011-04-22T19:47:00.001-07:00

Based on the past analysis of the P7 paper, it would appear that what is indicated above are the core area of knowledge that should be known by Advance auditing students that are sitting for the international variant paper.

A review of what is the most like issues to be examined in the coming paper will be done later, but for now, if you are preparing for the paper - you should be know the areas highlighted above.

If you are planning to study for the P7 paper this round - from what I know about the market in Klang valley - this are the best lecturers that can handle the paper:

Jay (Available in J Pro only)
Joey Wong (Available in KDU and Inti
Jackson Chan (Kasturi only)
Goh Hong Lim (Available in Sunway PJ only)
Sheila (Available in McOrange)

That is a summary of the lecturers in Klang valley that are involved in the paper, but there could be others - if I had missed out any, please do inform me using the comments

Auditing job kills - whose mistake is it?

2011-04-14T22:21:00.000-07:00

Recent news about an auditor in China working for the Big 4 audit firms dying due to possible overworking during the peak periods have highlighted the lack of awareness of the professional regarding simple professional behaviour.

http://english.cri.cn/6909/2011/04/14/2021s631992.htm

One of the fundamental rules for accountants is the need to ensure that you are professionally capable of handling the job, by accepting too much on the plate and not requesting for additional time or additional support does indicate a failure in application of professional principles.

I would have to blame 3 parties for this incident - the staff, the firm and the government.

Firms

- Lack of risk assessment, since this is a basic risk factor to be considered. Over-working a staff will significantly increase their health risk. European regulations regarding working hours have already addressed this issue - overworking the staff increases the social cost to the society significantly, hence the need for regulation to reduce the risk of this happening.

- Unfortunately, for countries in the Asian hemisphere, this is a slow and steady process, since they want to use "cheap labour" as a source of competitive advantage

- Firms should adopt a more globalised approach in managing risk, but once again the geographic divisionalisation would allow each groups to have different manner in which they approach risk and ethics.

Staffs

- When there is a clear signal that your body is tired - listen to it, there is no point pushing it further

- Jobs and the career is just one aspect of material gains, there are many other ways to financial freedom

- Gaining an experience should not be done at the expense of the health.

Government

Overall at the end of the day, we can only blame the government, who are appointed to take care of their citizen (all of them) not only from external threats (foreign occupation) but also internal threats from companies that exploit the citizens. Lack of understanding of the human resource department regarding the pressures that companies exert on their intellectual capital may be the source of this problem.

This is just my opinion on the matter - since there is significant buzz about this matter in facebook.

About the audit industry

2011-03-29T12:06:00.001-07:00

This post was originally published at Going Concern.com on August 19, 2009.

The Top Ten Reasons You Still Want To Work for the Big Audit Firms:

10. “A career in Tax at KPMG is dynamic and intellectually demanding. Could you take the pace?” Perhaps… Unfortunately, the pace has slowed considerably for everyone cut yesterday.

9. “[At Deloitte] audit isn’t what it used to be. Our clients expect more of us. And our risk-based approach, experienced professionals, comprehensive methodologies and technical resources deliver.” Yes, at least 50 billable hours a week, meaning you’re on the clock at least 80, managing the risk of falling asleep, your face landing in leftover stuffed pizza scattered all over the conference table.

8. “PricewaterhouseCoopers is all about you. Your personal and professional development, your achievement, your life long learning, your individuality and your choices. “ Actually, PwC is all about PwC.

7. “I’m going to Disney World!” I think we’ve seen the last of first year training blowouts at Disney World. Prepare yourself for Houston in August.

6. “[At EY] your base salary compensates you for the value you bring to the firm and for meeting our everyday high expectations. Our goal is to make base pay externally competitive, internally equitable and related to performance.” If only you knew what your salary was going to be. Job offers made with no start dates, no salary info. Previous salary commitments retroactively “adjusted for market conditions.” Or is it the inevitable overtime pay requirements? Sign up, forsake all others. Don’t call us, we’ll call you with the details.

5. “At PricewaterhouseCoopers, we are committed to ensuring women have the opportunity to build a rewarding career. Not just because it’s the right thing to do, but because it’s a business issue that affects our bottom line.” Yes, ladies, you are a business issue. You can make us money or cost us money. Especially when you’re a whore.

4. “BDO Seidman offers a distinctly different option for talented professionals as they evolve their careers.” Unless or until they shrink enough to cry “too poor to pay” the pending $571 million judgment.

There are some Tax positions open, however.

But don’t expect to make partner soon in the UK.

3. PwC is blogging! Yea! They embrace social media! Well…Yes… If you’re interested in the “Gender Agenda.” Because gender issues are a business issue. Just don’t try to make it a real conversation or you’ll get banned.

2. Deloitte Wants You! “For U.S. junior military officers transitioning to the business world, Deloitte offers an unparalleled opportunity to create a challenging and rewarding career.”

Unfortunately, the BearingPoint professionals just acquired may not have as easy of a time fitting in. Some of them actually started at KPMG!

1. You want to work with the best. “The people of KPMG are committed to corporate citizenship; they want to lead change and be involved in dynamic solutions that improve the societies in which they live and work,” says Tim Flynn, Chairman, KPMG. Yes, at clients such as Citigroup, New Century, Countrywide, Fortis, Fannie Mae, Rentokil, HSBC…

Sourced from re: auditor

Well it seems that the industry itself is suffering from a weird form of self delusion

Recent issues about bus drivers in Malaysia that have been over worked resulting in accidents that cause lives would have highlighted the risk for audit firms in Malaysia regarding staffs working long hours (just because the partner did it, therefore all the others have to do it)

In my opinion I think the partners are just taking revenge on the staffs by maintaining a culture that they had endured - legacy in the firms.

The long hours of work increases the risk that audit staffs will do the following:

- doing the job to get it complete rather than be through

- missing out on items that should be investigated because they were too sleepy or just too tired

- increasing the stress levels significantly - leading to poorer health conditions later on

When a firm talks about their staff as their assets and then has a very high level of staff turnover (which they are willing to accept) it seems to indicate that the staffs are just a disposable diaper that is to be used and discarded after that.

Knowledge based organisation treasure their staffs by trying their best to retain them, but in the audit industry it seems that most of them are trying to get you out faster by increasing the pressure. Keeping partners money growing or people working constantly or just eeeh yuck about the work seems to be focused in partners income ability.

I have heard of audit partners and managers making statements like this

- if I can work during Hari Raya, that means you can work during CNY or vice versa. Now is that the most lame excuse given to justify asking the staff to work. The partner reaps the profits which increases with the work, the staff gets nothing (only negative remarks from other family members).

What is wrong with the CULTURE? I suppose that clients and audit committee should actually review the work plan prepared by the firms to identify the possibility of this happening - since it is their duty to safeguard the profession. Alternatively it would be MIA, the regulators that should own up to this task, since a failure due to human error would lead to negative reputation not only for the profession but also the regulators.

If you want to know about the so called best firm around in Malaysia and the level of greed that is involved by them to get to the top irrespective of consequences : visit

http://zarinahtakesapaycut.blogspot.com/2011_03_01_archive.html

I suppose that the most important thing for you to do as a student of accounting

Select the path that will result in the best possible outcome for you, the firm should be seen as a tool for you to get your required experience and exposure to reach your destination - don't get too emotionally attached to the firm, don't get blinded by the pay - stay focus on your career goals and get there.

This means that you should possibly try your best to get the most experience and select the line that best suits you - which is very hard for many.

Good luck in planning your career.

P7 Update

2011-03-06T09:12:00.000-08:00

The major issue for the coming exam

- new format being adopted for P7 Case materials

- if you want to practice in UK, you must do the UK variant paper (which now has an additional element of insolvency)

- examiner clarified that you cannot expect to get more than 1-2 marks from the ISA/IAS name dropping, principles are more important

- current issues - will be current issues, which means that you will now have to read up the new materials that have been popping up in the Business Times or any other relevant news

The new syllabus has dropped some elements of Internal audit but has retained most of the other elements.

If you have failed this paper from the previous attempt - examiner said that there was quite a number that was in the 44 - 49 range (it means that you have to put in a bit more effort only) but any lower means that you have a serious problem with the examination or did not prepare sufficiently.

As one examiner said - "It seems people were walking out of the road and taking the paper" meaning that there was Zero preparation.

The biggest problem the examiner noted was that most of the answers were repeating materials from the previous papers - memorized answers.

This is quite an easy option for the students that have studied all the past papers, but then again it is very dangerous for you to try to recall past answers to help you answer new papers.

Overall - No major changes in the paper

F8 Good News

2011-03-06T09:03:00.000-08:00

Meeting up the F8 examiner recently in UK I had a chance to clarify some issues

1. The F8 paper is still about the same as the previous sitting, there is not that much changes

2. Accounting standards that you must know for this paper are:

IAS 2

IAS 7

IAS 8

IAS 10

IAS 16

IAS 36

IAS 37

IAS 38

So that reduces you stress level a bit for the students. On the other hand, students are expected to prepare for this paper with some additional effort, especially for those that are not actually in the audit world - you will need to learn with all your might and ability to grasp the world of accounting in reality.

I have just come across a new book that seems to be easy reading and extremely suitable for the students who are about to sit for the F8 paper. trying to get the publisher to release the books here.

Overall the emphasis of the paper is the same, calculations are expected in every paper, either for ratio, materiality or sample errors.

It would appear that there will not be a 20 mark question focusing on audit report after all, it will be part of something else (Subsequent event, going concern, errors or lack of evidence)

Good luck for those that are preparing for the coming JUNE 2011 ACCA F8 Exams

JPro Classes for P7 and F8

2011-02-23T06:18:00.000-08:00

The following is the class schedule for P7 and F8. Students that are taking F8 - there is 2 slots currently which I will be observing

F8 Classes and P7 classes will only start in March since I will have to go down to UK for ACCA train the trainer (meeting up the examiners).

The current time schedule for F8 is 2 slots

Tuesday Evening slots from 6.15 pm to 9.15 pm starting from 15 March 2011

AND the

Wednesday slot from which starts from 9 March (9 am to 5pm)

The P7 will start on 12th of March

The timing for the rest of the class will be provided on that day

Regarding the

Results are coming out for DEC 2010 Exam

2011-02-17T17:15:00.000-08:00

Well for the students that attempted the F8 and P7 papers in Dec 2010, the current period will be stressful - results are coming out - Feb 21.

It is time for you to reflect back on what was your strong points during the last sitting and what was the weak points, this should help you learn about your own abilities and use them better for the coming examination.

In terms of pass rates, Malaysian students are inherently weak in written papers and stronger in the calculation papers, hence that is why students love to studying for F5, F6, F7 and F9 and dislike the F4 and F8 papers. The historical pass rates for Malaysia has always been lower than the average pass rate for the world for theory papers.

I suppose that the only way for the students to perform better is to accept this facts and find a way to overcome this inherent perception of theory papers. A simple shift in your mind about the papers can make a significant difference in the manner in which you acquire knowledge.

The other reason for poor performance in students - cramming everything in the last minute. Well it is possible to do this, but then you will never appreciate the subject matter that is being studied and studied only to pass the exam. Appreciation of the subject matter and understanding the variability of contextual application would allow for improved overall performance in professional papers.

Depending too much on question spotting is a bad idea, since it narrows down your scope and may impair you ability to fully appreciate a situation that draws on other areas of knowledge.

Overall a review of the past papers for P7 and F8 seems to indicate that you need to approach the audit paper with an integrated approach (using knowledge studied in F7, P1 and P2) to support your answers. In my opinion, both the papers were set at a fairly reasonable intellectual level for ACCA students.

If you did not get a pass - decide the reasons for failure

1. Lack of understanding

2. Lack of reading and review of studied material

3. Lazy

4. Distracted

5. Last minute studies = High risk of fundamental error (since you will answer what you have studied last minute rather than what the question was asking for)

Students that are interested in improving your chances for the papers F8 and P7, you can attend the classes for them in Jpro training

Good luck on the results

F8 & P7 for JUNE 2011

2011-01-03T00:59:00.000-08:00

The new year has already started and the everyone is busy getting their classes in order. This year ACCA brings some changes for the syllabus for F8 - the introduction of F7 standards into the audit paper, which makes the paper even more testing.

In the past, this paper only had F3 moving into the F8 paper, but the new examined Pam Bahl has decided to ensure that accounting standards are examined in the audit paper, this doubles the effect of the accounting standards.

It can be seen that this paper also has some flow over from F4 Law paper, which means that having a sound legal knowledge should improve your understanding of audit.

Well whats the impact in terms of amount of knowledge in the paper - actually there was some reduction in the new syllabus

Reduction in some issues about internal audit reporting and operational audits that cover marketing, HR and treasury

There is also a removal of the IT aspect of the audit issues that was initially increased due to the previous syllabus change but was never ever examined properly- so that is good news.

The increase is the implication of the accounting standards on risk

such as IAS 2 - Risk that inventory may be valued wrongly (higher of cost or NRV), but now you have to go into the exam with all the standards in F7, hopefully with the exception of group based standards (which is only examinable in P7)

I am currently only teaching this paper in KDU, Sunway JB.

The DATE F8 will be held for JPro is provided below:

Those that are staying near to Shah Alam and Klang can consider my centre for easy of access (since there is a new exit that links the Kesas direct to my centre)

The classes for my centre is usually 7 hours per week on Wednesday, classes will start after results are out from (9 - 5 pm)

24 Feb x 7

2 Mar x 7

16 Mar x 7

30 Mar x 7

13 Apr x 7

27 Apr x 7

(9 - 6 pm)

25 May x 8

26 May x 8

27 May x 8

Complete coverage of the paper + revision will be RM1,000 - SMS your name to 0178786074 to confirm your seats.

For the P7 Paper - I will only be teaching in Sunway JB and my centre.

DATE P7 for Jpro is as follows [8hours per day (8.30 - 5.30)]

19 & 20 Feb

12, 13 & 19 March

2, 9, 10 April

Revision - 28,29,30, 31 May

Areas that may be examined in the coming F8 exam

2010-12-07T00:48:00.001-08:00

Well it would appear that the following issues may be making an appearance

ISA 620 (expert)
ISA 530 (sampling)
ISA 230 (audit documentation)
ISA 210 (engagement letter)
ISA 705 (audit report - modification)
ISA 560 (subsequent events)
ISA 450 (material misstatements)
ISA 402 (Outsourcing)
ISA 610 (Internal audit)

It would suppose that there will be a question that has the following aspects

Audit evidence for the balance (NCA / Payable / Receivable / Inventory)
Audit evidence for transaction (Sales / Wages / Purchases)
Test of controls over purchases or sales system
Deficiencies in the sales or purchases system
Internal audit procedures - VFM audit, need for internal audit, internal audit importance.

Answers for mock question

2010-12-07T00:44:00.000-08:00

Your firm was appointed as auditor to Indigo Co, an iron and steel corporation, in September 2005. You are the manager in charge of the audit of the financial statements of Indigo, for the year ending 31 December 2005.

Indigo owns office buildings, a workshop and a substantial stockyard on land that was leased in 1995 for 25 years. Day-to-day operations are managed by the chief accountant, purchasing manager and workshop supervisor who report to the managing director.

All iron, steel and other metals are purchased for cash at ‘scrap’ prices determined by the purchasing manager. Scrap metal is mostly high volume. A weighbridge at the entrance to the stockyard weighs trucks and vans before and after the scrap metals that they carry are unloaded into the stockyard.

Two furnaces in the workshop melt down the salvageable scrap metal into blocks the size of small bricks that are then stored in the workshop. These are sold on both credit and cash terms. The furnaces are now 10 years old and have an estimated useful life of a further 15 years. However, the furnace linings are replaced every four years. An annual provision is made for 25% of the estimated cost of the next relining. A by-product of the operation of the furnaces is the production of ‘clinker’. Most of this is sold, for cash, for road surfacing but some is illegally dumped.

Indigo’s operations are subsidised by the local authority as their existence encourages recycling and means that there is less dumping of metal items. Indigo receives a subsidy calculated at 15% of the market value of metals purchased,

as declared in a quarterly return. The return for the quarter to 31 December 2005 is due to be submitted on 21 January 2006.

Indigo maintains manual inventory records by metal and estimated quality. Indigo counted inventory at 30 November 2005 with the intention of ‘rolling-forward’ the purchasing manager’s valuation as at that date to the year-end quantities per the manual records. However, you were not aware of this until you visited Indigo yesterday to plan your year-end procedures.

During yesterday’s tour of Indigo’s premises you saw that:

(i) sheets of aluminium were strewn across fields adjacent to the stockyard after a storm blew them away;

(ii) much of the vast quantity of iron piled up in the stockyard is rusty;

(iii) piles of copper and brass, that can be distinguished with a simple acid test, have been mixed up.

The count sheets show that metal quantities have increased, on average, by a third since last year; the quantity of aluminium, however, is shown to be three times more. There is no suitably qualified metallurgical expert to value inventory in the region in which Indigo operates.

The chief accountant disappeared on 1 December, taking the cash book and cash from three days’ sales with him. The cash book was last posted to the general ledger as at 31 October 2005. The managing director has made an allegation of fraud against the chief accountant to the police.

The auditor’s report on the financial statements for the year ended 31 December 2004 was unmodified.

Required:

(a) Describe the principal audit procedures to be carried out on the opening balances of the financial statements of Indigo Co for the year ending 31 December 2005. (6 marks)

(b) Using the information provided, state the audit risks arising and justify an appropriate audit approach for Indigo Co for the year ending 31 December 2005. (14 marks)

(c) Comment on the matters to be considered in seeking to determine the extent of Indigo Co’s financial loss resulting from the alleged fraud. (6 marks)

(d) Matters to be considered before experts are used in the audit (4 marks)

(30 marks)

INDIGO CO

(a) Opening balances – principal audit procedures

■ Review of the application of appropriate accounting policies in the financial statements for the year ended 31 December 2004 to ensure consistent with those applied in 2005.

■ Where permitted (e.g. if there is a reciprocal arrangement with the predecessor auditor to share audit working papers on a change of appointment), a review of the prior period audit working papers.

■ Current period audit procedures that provide evidence concerning the existence, measurement and completeness of rights and obligations. For example:

❑ after-date receipts (in January 2005 and later) confirming the recoverable amount of trade receivables at

31 December 2004;

❑ similarly, after-date payments confirming the completeness of trade and other payables (for services);

❑ after-date sales of inventory held at 31 December 2004;

❑ review of January 2005 bank reconciliation (confirming clearance of reconciling items at 31 December 2004).

■ Analytical procedures on ratios calculated month-on-month from 31 December 2004 to date and further investigation of any distortions identified at the beginning of the current reporting period. For example:

❑ inventory turnover (by category of metal);

❑ average collection payment;

❑ average payment period;

❑ gross profit percentage (by metal).

■ Examination of historic accounting records for non-current assets and liabilities (if necessary). For example:

❑ agreeing balances on asset registers to the client’s trial balance as at 31 December 2004;

❑ agreeing statements of balances on loan accounts to the financial statements as at 31 December 2004.

■ If the above procedures do not provide sufficient evidence, additional substantive procedures should be performed. For example, if additional evidence is required concerning inventory at 31 December 2004, cut-off tests may be

reperformed.

(b) Audit risks

Assets

■ There is a very high risk that inventory could be materially overstated in the balance sheet (thereby overstating profit) because:

❑ there is a high volume of metals (hence material);

❑ valuable metals are made more portable;

❑ subsidy gives an incentive to overstate purchases (and hence inventory);

❑ inventory may not exist due to lack of physical controls (e.g. aluminium can blow away);

❑ scrap metal in the stockyard may have zero net realisable value (e.g. iron is rusty and slow-moving);

❑ quantities per counts not attended by an auditor have increased by a third.

■ Inventory could be otherwise misstated (over or under) due to:

❑ the weighbridge being inaccurate;

❑ metal qualities being estimated;

❑ different metals being mixed up; and

❑ the lack of an independent expert to identify/measure/value metals.

■ Tangible non-current assets are understated as the parts of the furnaces that require replacement (the linings) are not capitalised (and depreciated) as separate items but treated as repairs/maintenance/renewals and expensed.

■ Cash may be understated due to incomplete recording of sales.

■ Recorded cash will be overstated if it does not exist (e.g. if it has been stolen).

■ Trade receivables may be understated if cash receipts from credit customers have been misappropriated.

Liabilities

■ The provision for the replacement of the furnace linings is overstated by the amount provided in the current and previous year (i.e. in its entirety).

Tutorial note: Last replacement was two years ago.

Income statement

■ Revenue will be understated in respect of unrecorded cash sales of salvaged metals and ‘clinker’.

■ Scrap metal purchases (for cash) are at risk of overstatement:

❑ to inflate the 15% subsidy;

❑ to conceal misappropriated cash.

■ The income subsidy will be overstated if quantities purchased are overstated and/or overvalued (on the quarterly returns) to obtain the amount of the subsidy.

■ Cash receipts/payments that were recorded only in the cash book in November are at risk of being unrecorded (in the absence of cash book postings for November), especially if they are of a ‘one-off’ nature.

■ Expenditure is overstated in respect of the 25% provision for replacing the furnace linings. However, as depreciation will be similarly understated (as the furnace linings have not been capitalised) there is no risk of material misstatement to the income statement overall.

Disclosure risk

■ A going concern (‘failure’) risk may arise through the loss of:

❑ sales revenue (e.g. through misappropriation of salvaged metals and/or cash);

❑ the subsidy (e.g. if returns are prepared fraudulently);

❑ cash (e.g. if material amounts stolen).

Any significant doubts about going concern must be suitably disclosed in the notes to the financial statements.

Disclosure risk arises if the requirements of IAS 1 ‘Presentation of Financial Statements’ are not met.

■ Disclosure risk arises if contingent liabilities in connection with the dumping of ‘clinker’ (e.g. for fines and penalties) are not adequately disclosed in accordance with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’.

Appropriate audit approach

■ A risk-based approach is suitable because:

❑ inherent risk is high at the entity and financial assertion levels;

❑ material errors are likely to arise in inventory where a high degree of subjectivity will be involved (regarding quality of metals, quantities, net realisable value, etc);

❑ it directs the audit effort to inventory, purchases, income (sales and subsidy) and other risk areas (e.g. contingent liabilities).

■ A systems-based/compliance approach is not suited to the risk areas identified because controls are lacking/ineffective (e.g. over inventory and cash). Also, as the audit appointment was not more than three months ago and no interim audit has been conducted (and the balance sheet date is only three weeks away) testing controls is likely to be less efficient than a substantive approach.

■ A detailed substantive/balance sheet approach would be suitable to direct audit effort to the appropriate valuation of assets (and liabilities) existing at balance sheet date. Principal audit work would include:

❑ attendance at a full physical inventory count at 31 December 2005;

❑ verifying cash at bank (through bank confirmation and reconciliation) and in hand (through physical count);

❑ confirming the accuracy of the quarterly returns to the local authority.

■ A cyclical approach/directional testing is unlikely to be suitable as cycles are incomplete. For example the purchases cycle for metals is ‘purchase/cash’ rather than ‘purchase/payable/cash’ and there is no independent third party evidence to compensate for that which would be available if there were trade payables (i.e. suppliers’ statements). Also the cycles are inextricably inter-related to cash and inventory – amounts of which are subject to high inherent risk.

■ Analytical procedures may be of limited use for substantive purposes. Factors restricting the use of substantive analytical procedures include:

❑ fluctuating margins (e.g. as many factors will influence the price at which scrap is purchased and subsequently sold, when salvaged, sometime later);

❑ a lack of reliable/historic information on which to make comparisons.

Extent of alleged fraud – Matters to be considered

■ Details reported to police: The managing director may have made some estimate of the possible extent of the fraud in reporting the chief accountant’s disappearance to the police.

■ The minimum loss (assuming no insurance) would be sales for the three days before he left. If not known (e.g. because the only record of them was in the cash book) a simple estimate might be 3/20 × total recorded revenue for a typical month.

■ The pattern of cash bankings extracted from bank statements: A falling trend starting during the year might mark the time from which the chief accountant began to misappropriate cash.

■ Whether other managers have voiced their suspicions, if any, on the chief accountant’s behaviour. For example, if there was any marked change in his lifestyle (what he appeared to spend his money on, the hours he worked, etc).

■ The prior year auditor’s report was unmodified. If this was appropriate the chief accountant’s alleged fraudulent activities may have only started in the current year.

■ The amount of fidelity insurance cover (i.e. against employees handling cash) that Indigo has taken out to meet any claim for fraud.

■ The likelihood, if any, of recovering misappropriated amounts. For example, if the chief accountant has assets (e.g. a house) that can be used to settle Indigo’s claims against him in the event that he is caught/successfully prosecuted.

d) Matter to be consider for ISA 620

n Whether there is internal experts for the area

n The level of risk associated to the matter – higher risk would require expert involvement

n The materiality of the matter at hand – if matter is material experts should be used

n Level of experience the auditor has with the area

n The availability of the resources within the firm to support the area

Question 2

Engagement letter

(a) Contents of an engagement letter

– Objective of the audit of the financial statements

– Management’s responsibility for the financial statements

– The scope of the audit with reference to appropriate legislation

– The form of any report or other communication of the results of the engagement

– The auditor may not discover all material errors

– Provision of access to the auditor of all relevant books and records

– Arrangements for planning the audit

– Agreement of management to provide a representation letter

– Request that the client confirms in writing the terms of engagement

– Description of any letters or reports to be issued to the client

– Basis of fee calculation and billing arrangements.

(b) Types of audit evidence

– Inspection – examination of records or documents in whatever form eg manual computerised, external or internal.

– Observation – looking at the processes or procedures being carried out by others.

– Inquiry – seeking information from knowledgeable persons, both financial or non-financial, either within or outside the entity being audited.

– Confirmation – the process of obtaining a representation of an existing condition from a third party eg a receivables letter.

– Recalculation – checking the mathematical accuracy of documents or records.

– Reperformance – this is the auditor’s independent execution of procedures or controls that were originally performed as part of the entity’s internal control system.

– Analytical procedures – evaluation of financial information made by a study of plausible relationships among both financial and non-financial data.

(c) Modification of audit reports

Qualification – inability to obtain appropriate sufficient evidence. Used where the audit cannot obtain sufficient evidence regarding an item in the financial statements.

Qualification – material misstatement. Used where the auditor disagrees concerning the amount or disclosure of an item in the financial statements.

Adverse – material & pervasive misstatement. Used where auditor disagrees concerning the amount and disclosure of an item in the financial statement which is significant to the financial statement

Disclaimer of opinion – material and pervasive inability to obtain appropriate sufficient evidence. Used where auditor cannot verify a significant element in the financial statement

Question 3

(a) Materiality

· It is never appropriate to apply the prior year's materiality figure to the current year figures.

· Materiality shou ld be assessed in each year.

· If the financial position has not changed much, and the results are very comparable with the prior year, it is possible that the materiality assessed year-on-year is very similar, but this does not mean that the auditors should not assess it for each audit.

· When assessing materiality, the auditor must consider all known factors at the current date. In this case, the position has changed considerably, increasing the risk of the audit, which may lower materiality itself.

· As the SOFP position has changed considerably, when materiality is assessed, it is unlikely that it will be similar to the prior year.

· Using the information available, materiality is likely to be assessed extremely low in monetary terms, due to the overall decrease in assets and the loss that appears to have been made in the year.

· It is also possible that given the current SOFP position, the SOFP figures will not be used to assess materiality in this year.

(b) Audit risk

Audit risk is the risk that the auditor will give an inappropriate opinion on financial statements. It is made up of three different elements of risk:

• Inherent risk: the risks arising naturally in the business and specific accounts/transactions

• Control risk: the risk that the accounting system will fail to detect and prevent errors

• Detection risk: the risk that the auditors will not detect material misstatements

Detection risk comprises sampling risk (the risk that the auditors' conclusion drawn from a sample is different to what it would have been, had the whole population been tested) and non-sampling risk (the risk that auditors may use inappropriate procedures or misinterpret evidence).

Inherent and control risk are assessed by the auditors. Detection risk is then set at a level which makes overall audit risk acceptable to them.

A review of SOFP suggests that audit work should be directed to the following areas:

Going concern

The balance sheet has reduced considerably in value since the previous year. Total assets have fallen from $373,000 to $165,000. Although the income statement has not been reviewed, the SOFP shows a retained loss for the year of $211,000.

Net assets show a reduction in both inventory and receivables, which suggests a decrease in activity, although trade payables do not seem to have fallen so considerably.

However, this could be accounted for by Glo-Warm not paying its suppliers in a similar fashion to the previous year. It will be necessary to review the income statement to substantiate whether activity has reduced.

The cash position has also worsened, with cash falling by $22,000. The cash flow statement should reveal more detail about this fall. However, the company has paid off $5,000 of its bank loan, reducing overall net debt.

In summary, audit work should be directed at going concern as several indicators of going concern problems exist on the balance sheet. This will be further amplified when the income statement is available.

Inventory

Inventory has been mentioned above in the context of going concern. Audit work should be directed at inventory specifically as this balance has fallen significantly from the previous year, which seems odd in a manufacturing company. There is no suggestion on the balance sheet for why this should be so (for example, receivables are not correspondingly high, suggesting high pre-year end sales, and payables are not correspondingly low, suggesting low pre-year end purchases). It may be that the inventory count did not include every item of inventory. Alternatively it could simply point to a fall in activity (discussed above).

Warranty provision

A provision of $20,000 has been included in 2006 for warranties. The reasons for this must be investigated and the auditors must check that it has been accounted for correctly.

It seems odd that a warranty provision should suddenly appear in a balance sheet. It suggests a change in the terms of contracts given to customers, or a change in the customers themselves (with different terms then applying). Alternatively it suggests that IAS 37 has been wrongly applied in the current year, or should have been applied in the previous year, and was not.

Other material items

As stated above, given the indications of loss and the reduction in total asset value, it is likely that materiality will be assessed low in monetary terms. In this case, most balances on the balance sheet are likely to be material (excluding investments and cash-in-hand which appear to be very low risk).

However, as the bank loan is likely to be substantiated by good audit evidence, the most risky of the other balances are trade receivables and trade payables, for reasons discussed above in going concern. More detail is required to make a judgement about the risk of tangible non-current assets.

Question 4

Deficiencies	Implication	Controls
No review of the sales ledger is done	There is a risk that some of the customers may have not paid and may be missed out – leading to wasted interest cost	The sales ledger should be reviewed on a monthly basis and customer statements be sent out
Miss Jones opens the mail and post all the transactions	There is a risk that Miss Jones may pocket some of the receipts – teeming and lading fraud	The mail opening should be done with the 2 accounting staffs
Sales reps takes orders directly from the client	There is a risk that orders may be accepted from non-creditworthy customers	Orders should only be accepted from clients that have a credit check verified
Invoices are filled alphabetically	There is a risk that invoices may be omitted leading to possible omission from records	Invoices should be filled in sequential numbers and regular sequence checks should be performed
Order are accepted before the checking availability of the invoice	This could result in losses if the possible item is not in stock and needs to be ordered urgently	Orders should only be accepted by sales staff after checking the availability of inventory

Question 5

The following issues are still pending in the audit of Builder Merchants, all other matters related to the audit has been completed.

a) Some of the inventory sheets have been lost before you could confirm them. There is no alternative way for you to confirm $75,000 of the inventory included in $640,000

b) In the receivable value of $580,000, there is a debt amounting $45,000 from a customer that has gone into liquidation. Liquidators have confirmed that there is no distribution possible but the directors have resisted including a provision for this. The profit before tax is $100,000

c) The accounts of Builder Merchant does not include a cash flow statement

d) A substantial claim has been lodged by a customer against Builder Merchant. The matter has been included in the notes No provision has been included since value cannot be estimated reliably. Lawyers have confirmed that the claim can be defended successfully.

(a)

This represents an inability to obtain appropriate sufficient evidence because the 'missing' inventory represents 12% of the total. The auditor would expect all inventory counting sheets to be available. The auditor’s report would be modified.

The basis of opinion paragraph would refer to the fact that the inventory counting sheets for this depot were lost. The opinion would state that "except for" adjustments that may have been necessary in relation to these inventory, the financial statements give a true and fair view.

The auditor’s report would also state that in relation to inventory quantities:

- all information and explanations considered necessary were not obtained; and

- the auditor was unable to determine whether proper accounting records were kept.

(b)

This represents a material misstatement. The debt represents 8% of the total receivables balance and 45% of the profit for the year.

The auditor’s report would be modified with qualified opinion.

The opinion paragraph would refer to the fact that the customer is in liquidation and there is little prospect of payment. It would also state that net assets and profits are overstated by $45,000.

The actual opinion would state that "except for" the absence of this allowance the financial statements give a true and fair view.

(c)

As the client is listed, its accounts should include a cash flow statement. The audit opinion should therefore be qualified on the grounds of material misstatement.

This misstatement is not pervasive to the accounts, it is limited to the cash flow statement, so this would be an except for qualification.

The opinion section should be headed 'Basis of Qualified Opinion'. It should state that the accounts give a true and fair view and have been properly prepared in accordance with an applicable financial reporting framework except for the omission of a cash flow statement.

The omission should be detailed in a paragraph above the opinion section, where the auditors should give details of the net cash flows and state that in their opinion, information about the cash flows is necessary for a proper understanding of the company's affairs.

(d) The auditors need to determine whether the legal claim is a material matter and even whether it is pervasive to the accounts as a whole. For example, if the customer involved is a major customer, it could be that an adverse outcome could affect the going concern basis of the company.

It appears that the disclosure in the financial statements is adequate and there appears to be no basis on which to make a provision in the financial statements.

Therefore there is no question that there is a material misstatement in the FS.

However, the audit report will be affected by the fact that there is an uncertainty affecting the business. The auditors will have to decide whether the inherent uncertainty is material or fundamental.

If material, it does not need to be mentioned in the audit report. However, if they decide that it is fundamental, the report should contain an emphasis of matter paragraph giving the appropriate details.

It should also state that the opinion is not qualified in relation to this matter.

Thereafter, no reference should be made to the legal claim in the opinion section of the report.

F8 & P7 Tips for the DEC 2010

2010-11-30T07:31:00.000-08:00

P7 Tips from Kaplan for DEC 2010 ACCA Exams

• Engagement planning and risk assessment (Do not spot the type of risk question be prepared for all the 3 types that examiner may want to ask)
• Ethics and professional issues
• Auditing in a Computer Based Environment
• Discontinued operations
• Due diligence
• Forensic audit

P7 Tips from BPP for DEC 2010 ACCA Exams

• A risk-based and/or planning scenario in the compulsory section
• Questions based on articles published in Student Accountant in the past six months
• A number of requirements asking for audit procedures and required evidence in respect of specific financial reporting issues
• A practice-based scenario looking at professional, ethical and quality control issues
• A reporting scenario of some sort – probably testing either emphasis of matter or other matter paragraphs

F8 tips from Kaplan for DEC 2010 ACCA Exams

• Regulation of audit, governance; (IAASB, ISA, Tela)

• Small/not for profit organisations; (EukaRe)

• Systems: purchases, sales, payroll (Rhapsody, KLE, Blake)

• Specific standards, e.g. ISA 210, ISA 260, ISA 530

• Completion and auditor’s reports. (All reports - ISA 705)

F8 Tips from BPP for DEC 2010 ACCA Exams

Audit planning (analytical procedures)
The assessment of audit risk
Audit procedures (both substantive and tests of control) relevant to key audit assertions
Not for profit organisations (EukaRe)
Subsequent events - ISA 560
Audit reporting and materiality

Always include the standard question on audit risk/report for 10 marks referring to either IAS 1, 2, 8, 16, 18, 36, 37, 38

You should also cover the following areas - NCA, Payables, Receivables audit

Good luck in preparing for the coming exam

Answers for objective questions

2010-11-30T07:14:00.001-08:00

Materials relevant for F8 ACCA

2010-11-17T11:35:00.000-08:00

The following materials are likely to help you get a better pass in the paper. It would appear that technology is making it easier for the self-studying students to actually spend less and actually pass the paper. This means that if you are disciplined you can actually study from the net for almost free.

Resources available for F8 online include in the following materials

1. ONLINE LECTURES FOR FREE

2. ONLINE E-BOOK FOR ACCA F8

3. RE-CAP NOTES FOR F8 ACCA - JUST GO TO YOUTUBE AND TYPE F8 ACCA (YOU CAN ALSO TYPE F9 FOR F9 ONLINE LECTURE NOTES)

This materials have been prepared by the colleges, I suppose to help them do marketing for their colleges but at the same time I belief they are also doing the profession and "lower income brackets" a much needed break to study the subjects without too much money.

This is true CSR by the colleges - BRAVO FOR THEM AND GOOD FOR THE STUDENTS THAT CAN BENEFIT FROM THIS.

I SUPPOSE THE MATERIAL IS AVAILABLE FOR A LIMITED PERIOD OF TIME [ WINDOW OF OPPORTUNITY ]

Must review for F8 ACCA and P7 ACCA

2010-11-17T09:17:00.000-08:00

The following links are relevant for students attempting the current P7 Advance audit and assurance paper as well as F8 paper Audit and assurance

Paper P7 ACCA

Paper F8 ACCA

Business risk answer for RT

2010-11-14T00:22:00.002-08:00

Risks
Old planes
– Older planes will cost more to run due to higher repair costs
– They may fail causing disruption to business and possible injury to passengers. This could lead to fines and loss of licences.
– Customers want new planes and will not fly with RT.
 Lease airplanes rather than buy secondhand planes.
– The old planes do not comply with new environmental regulations. This could damage RT's image. The company will also incur large cost to update system and potential fines and loss of flight slots if they fail to comply. Potentially prevent RT from servicing routes.
 Lease new planes.
 Investigate alternative methods of compliance, better or new fuels to reduce pollution.
Airport locations
– Neither of the airports are in the city, reducing tourist and business travel. Not convenient for users.
– All airports are north of London. Not good for customers in the south. Very poor national coverage.
 Strategic alliance with bus/train operator.
 Offer discounted or free tickets on purchase of flight.
 Open new f m,.k,,acilities in other parts of the country to improve national coverage.
Public relations
– RT operates in the airline industry which is very competitive. Bad press would be very damaging. RT would incur large switching costs as customers move to the
competition.
– Seating policy alienates passengers. Fear they will not get a seat and use alternative carrier.
– Role of LR, she may be a fantastic business woman but she is not good at customer relations.
 Appoint PR managers to give all press releases.
 Advertising campaign to move focus away from LR.
 Change ticket policy. Only sell one ticket per seat, combine with new marketing campaign.
 Ensure L’oR takes a back seat. Use the new PR manager for all press contact.
New booking system
– The system may put off users who like to talk to sales staff. Some customers may not have Internet access.
– Failure to pay tax may be illegal. At the least could force RT to pay tax after a test case. As RT reduced price there may not be the money to pay the tax, causing going concern problems.
 Maintain a parallel phone system. Use discounts for all Internet bookings to encourage its use.
 Test system with tax authorities. Take legal advice.
 Do not pass on full discount to customers.
 Ensure liquid resources are available to pay tax in the future.

Staff
– High staff turnover very costly, recruitment cost and loss of knowledge.
– Temporary staff who don't speak English well will not provide a good face of RT to the passengers, leading to loss of customer goodwill.
– Staff may not be trained sufficiently to safeguard passengers in the event of a crash or terrorist attack.
– Terrorists may breach security and hijack planes.
– Low wages to foreign staff potentially illegal and demotivational to staff.
 Introduce staff incentive schemes. Free flights or bonuses.
 Steward and check-in staff given English classes.
 Always have an English speaking supervisor on hand.
 Use more full-time staff where possible.
 Increase staff training.
 Liaise more closely with airport operator over security arrangements.
 Ensure pay minimum wage. Review wage, ensure they are fair.
New long haul routes
– The long haul market, different business to short haul. RT has no experience of long haul market. What is the strategy? -price, differentiation etc.
– Large cost already incurred on licences. Must still find new funding for planes.
– Long haul, increased risk of terrorism.
– Very competitive market.
 Strategic link with tour operator or hotels to generate business.
 Continue using same economy strategy.
 New funding rights issue.
Military airbases
– Customers may not want to fly to remote bases with poor facilities.
– Difficult for transfers to hotels etc as mentioned above.
 Undertake market research.
 Advertising/marketing campaign.
 Provide courtesy bus.Solution

Business risk answer for RT

2010-11-14T00:22:00.001-08:00

Business risk answer for RT

2010-11-14T00:22:00.000-08:00

Revision classes for F8 and P7 ACCA

2010-10-11T03:06:00.001-07:00

The dates for the F8 and P7 revision have been set and those that are interested can sms my numberto book your seat, since there is a limited number of seats.

F8 Revision is on the following dates: Nov 2, 3, 4 (8.30 am to 5.30 pm) - 10 seats available at RM 350

P7 Revision is on the following dates: Nov 29, 30 and Dec 1 & 2 (8.30 am to 5.30 pm) - 10 seats only at RM 380

P3 Revision is on the following dates: 8, 9, 23, 24, 25 (8.30 am to 5.30 pm)
- 15 seats RM 400

P1 Revision (for really last minute students): Dec 10 and 11 (8.30 am to 6.30 pm) and on DEC 12 (8.30 am to 12.30 pm) - 15 seats RM 380

ACCA Exams in 3 months - get ready.

2010-09-23T09:07:00.001-07:00

Its about that time when you are midway thru your studies and must decide which strategy are you going to adopt for your final exam. Burst strategy or Drip strategy of studying.

There are some pointers that you should be aware when you are preparing for the current ACCA F8 examination - the examiner has already provided some new articles for you consideration and you should be aware that this arrangement of articles was done deliberately to ensure that certain areas get highlighted.

You should approach studying for audit like doing an audit.

You should gain an understanding of the subject matter and the risk related to the paper by reading the examiner reports

You should then proceed to assess risk and prepare a response plan for the examination .

Your response for the examination could be:
1. Study burst at the last minute (high risk option)
2. Drip studying (moderate risk option)- a bit everyday and cycle back once finished

Doing past year papers for this paper is a good idea but you should be careful in terms of not memorising the answers for a given question - then it has moved to rote learning - which can be spell disaster for this paper.

The following issues are very important for those studying the F8 and P7 papers for the coming sitting
1. Know you IAS before going into the examination, since the audit paper is based on the accounting framework
2. Risk assessment will be a hot topic in both papers
3. Audit reporting should have equal attention since the lapse for the new standard is more then sufficient time for all lecturer to have taught the new "words"

The previous P7 examination has already highlighted the issue with the ISA 706 which was updated with the clarity project - Other matter paragraph and Emphasis of matter paragraph.

Preparing for the audit exams in Malaysia is hard since, historically we have always performed baldy in this area, so additional care is needed.

On that note my F8 revision for KDU is on 26,27 and 28 November 2010, F8 revision for Sunway JB is on 11 and 19 November 2010 and J Pro is on 2,3 and 4 November 2010

The P7 revision for Sunway JB is on 13, 14 and 15 of November 2010 and J Pro is on 29 & 30 November and 1 of December 2010.

J Pro timing is 9.00 to 6.00 pm
KDU timing is 10.00 to 5.00 pm
Sunway College JB timing is 8.30 am to 5.30 pm

OBU students that are interested in doing their OBU next semester, make sure that you have opted in before you sit for F7, F8 and F9 since there is a very slim chance that ACCA will opt you in once you have sat for the exams.

Those that want to book for the OBU May 2011 submission can start by SMSing their names to my number above, make sure you get a reply SMS, else there is no confirmation that you spot is booked. I am limiting to maximum of 18 students this time only.

Review of T8 paper June 2010 and P7 paper June 2010

2010-08-31T07:07:00.000-07:00

Going over the T8 paper for June 2010 - I was quite taken back on the level of difficulty that was dished out by the examiner - Brian Pine, this is because the depth of emphasis placed on internal audit was a bit heavy. The paper was difficult, comparing it to F8. I suppose that examiner may have wanted to possibly test aspects of the paper that is usually not tested.

The P7 paper on the other hand was a more balanced paper, with the examiner Lisa Weaver actually sticking to her initial statement that P2 Accounting standards would be examined. This makes P7 a paper that should be done with dual capabilities - ISA and IAS.

Overall the previous assessment of papers for auditing by ACCA -

Hardest - T8 (given the level of failures)
Optimum level F8 and P7

On that note, pass rates for a college is usually the effort of all the people that was involved in preparing the students for the exam, I suppose that if you had a strong T8 foundation, passing the F8 paper should be easier, but on the other hand, if you have a weaker T8 foundation or no T8, there is a high chance that you may not get thru the F8 paper (even if it was a very doable paper)

I remember teaching my T8 students to the level of F8,whenever I teach auditing - my objective is that if you have to prepare someone - it should be sufficient and appropriate for the overall outcome.

On that note Sunway JB achieved 80% pass rates in P7 for the previous June 2010 sitting - congratulations to all the students.

To all the other students that did get thru T8, F8 and P7 - well done, if you did not get thru, do not despair, keep at it.

For T8 students that did not get thru this time - consider whether you had put in continuous effort or last minute, if continuous - consider T10, which is a much easier paper to do compared to T8.

For F8 students that did not get thru this time - do not give up the paper, its best to do it this time since the next semester, the F8 paper will be examined with F7 IAS, currently it only covers F3 standards.

Up date on J - Pro

2010-08-26T04:39:00.001-07:00

The interest for P3 and F8 was sufficient for me to initiate a class for the 2 papers

The current schedule for p3 and f8 class is as follows:

P3 - Monday and Tuesday (10.00am - 1.00 pm)- RM1,000 (includes revision)

F8 - Wednesday (10.00 - 2.00 pm)- RM800 (includes revision)

The class will start on 6 th of September for P3 and F8 will start on 8th of September.

Both classes will cater for students that have some background in the paper, studied before but need some form of clarity in handling the exam questions. I will still do a re-cap of the theories and models for each paper, higher emphasis will be on exam techniques.

Please make your registration by sending an sms with your name and paper to my number. The class size is limited to 18 only (maximum that I want to tutor), confirm early.

P7 classes will be starting this Saturday 28th, those that have confirmed your seats please take note, there is still some room for others to join in (8 more seats only)

Results are out

2010-08-22T21:49:00.000-07:00

Well the results for the audit papers are out, it seems that F8 had more passes compared to fails, but then there are cases of students getting the dreaded 49 marks.

For those that got a pass, well keep up the good work, those that took P7 and graduated - welcome to ACCA membership.

Overall do not despair if the results are not what you expected, since many factors can contribute towards the marks that hold in your hand. The following are the main contributors
1. Effort allocated for studying
2. Mental state at the exam date
3. Spots
4. Perception of the paper (hard/easy)
5. Reading and understanding the questions
6. Lecturer

If you go the ACCA Forums, there is a lot of discussion regarding the lecturers and whether they can help you pass the paper - answer will be yes and no, since there are so many other factors that impacts your ability to pass.

So making a correlation analysis between pass and lecturer is dangerous, since if you do that, it would imply that student passing is dependent on the lecturer and nothing else.

So, now that you know what are the factors that can contribute towards the marks, you should plan to move on with a better view of reality.

I would emphasis the need for some of you to sit back and reflect the journey for that marks, what is it that you did well and what is it that you had done poorly to improve yourself for the future.

The results should be a reflection tool to inform you on what to do for the future.

Review of F8 June 2010 - Pam Bahl examiner

2010-08-05T22:13:00.001-07:00

Reading the previous paper for F8 seems to indicate that the paper was set at a more doable basis compared to the Dec 2009 paper. The examiner has also included in the examiner answer, reference to IAS, which was not something unexpected.

The new style of examining of audit, which includes an emphasis on the accounting standard is consistent with P7 paper, where Lisa Weaver/Kim Smith has already examined the P2 standards in the P7 paper.

The transition from Alan to Pam, should be one that moves the paper to be more dreaded paper, to one which is of similar standards to F7 and F9 paper. This I believe is in the best interest of the students, since it would allow for a more balance approach when studying for ACCA examinations.

That said and done, Malaysian students will always find written papers harder compared to computation papers.

I did enjoy reading the previous paper for F8, it seems more direct compared to previous testing - where the knowledge required is clearly stated. There was a sufficient balance of procedure based questions that required understanding as well as knowledge based questions.

The questions that was asked in the previous F8 paper are summarised below:
Planning 4
Risk 10
Substantive procedures 6
Controls 10
Regulatory 5
Materiality 5
Procedures 14
Controls 6
Acceptance procedures 5
Ethics 15
Going concern 10
Procedures 6
Reporting 4

The paper had a total of 31 marks allocated for procedures based questions
The balance was well spread to cover the overall syllabus, with sufficient coverage of controls and ethical matters.

Overall a reasonable paper

Good luck on the results

P7 Training Schedule for AUGUST - NOVEMBER 2010

2010-08-01T09:47:00.000-07:00

TRAINING FOR P7 2010 IS SCHEDULED AS BELOW:

August 28 8.30 am to 5.30 pm Ethical & Regulatory framework
September 10,11 and 12 8.30 to 5.30 Risk, Groups & Other Assignments
September 18 8.30 to 5.30 Reporting
September 26 6.00 to 9.00 Current issues
October 2,3,9,10,16,17,25,31 6.30 to 9.30 Case studies

Please note that training is limited to 15 participants only, so sms to my number to confirm your seats. Training timetable can still be modified a bit but tentatively this is the dates, block out the calender for those days.

CURRENTLY BOOKINGS 4, BALANCE AVAILABLE 11

PRICE PER PARTICIPANT: RM 1,000

Welcome to new students

2010-07-14T08:51:00.001-07:00

Students studying for F8 in Sunway College JB and KDU College, the links in the side are important for you to connect. The most important link is the download for the International Auditing Standards that is located in the side (ISA logo)

Studying for auditing requires some discipline as well as focus, my suggestion is to ensure that you are focused in the class - ask the questions that puzzle you and make notes beyond the notes from the class. I have already illustrated the use of number based mind-mapping, which is a technique useful for most theory based issues.

The initial chapters for the paper tends the be more memory orientated rather than application orientated, so you will require the discipline to review frequently to ensure that you have sufficient recall.

Mad Hatter to Alice just before she slays the Jabberwocky : Nothing is impossible unless you believe it is impossible

J Pro Business Training

2010-06-29T00:12:00.001-07:00

Well after some time analysing my students, I have come to the following conclusions about the students and tuition providers

About the students
1. 80% are the lazy last minute kind and 20% are the hard working types
2. REAL Studying only starts after the results have been released
3. Students want to have full attention from their lecturers but large classes can be intimidating
4. Students need real feedback regarding their performance

About the tuition providers
1. Spread the classes to achieve utilisation of space & lecture cost
2. Assume that students can absorb from day 1 of the class till the end
3. ACCA is a volume game, the more students the higher the profit - capping the student numbers is difficult.

This has led to the development of J Pro Business Training - solution for last minute type.

I belief that students should only study nearer to the exam, increasing the overall retention of materials studied - hence the training for the students only starts in September 2010

I also belief that students need to be guided and require focused attention by the trainer, hence there must be a limit to the amount of students being taught - quality of learning is enhanced when there is focus.

I consider weekly classes are tedious on the student as well as the environment. The amount of time used in travelling to and from the lecture locations could be better utilised in self-studying and relaxation - hence classes should be clustered into "block training" (4D + 4D) x 8 hours = 64 hours

Most of the students said that the revision is the most important aspect of the overall preparation process for the ACCA examination - hence revision should be packed to the maximum (3D x 9 hours)= 27 hours

I am currently establishing the training centre in Kemuning Utama area - near the new KFC, this should take another 1 month. Once that is completed - this semester I will be offering P3 and P7 as the initial papers. For the June 2011, I should be getting the centre registered with ACCA and offering the F5 - P7 range of papers, as well as the CAT papers.

Hope my former students can spread the word and be supportive of this venture. Thanks for you support in advance.

Comment on which paper to select for P level ACCA Optionals

2010-06-20T10:19:00.000-07:00

Actually this is hard for me to comment on. I can give my opinion but final decision is yours.

If your ACCA F5 paper was great and you are good with your ACCA P3 paper, this provides a good basis for attempting the ACCA P5 paper - which I feel is CONSULTANT paper - since it involves designing performance management systems for the company.

If your ACCA F6 & ACCA F4 was great and you fancy a career in the tax department in the future, then ACCA P6 looks like a possible choice (only if you are studying the same variant as your country - not worthwhile for o'seas students)

On the other hand if you liked ACCA F9 and fancy a job in the investment banking side, ACCA P4 would be ideal paper.

Finally the paper that I would be biased towards - ACCA P7 is a great paper if your ACCA P2 and ACCA F8 is in great shape. The F8 part is not that critical since, this paper is a partner level paper, whereas the ACCA F8 was manager level paper. I belief that all audit firms would want their audit staff to have ACCA P7 background.

So which is the easier paper? - Actually all are equally easy and hard, it depends on the level of previous knowledge, your understanding of what you have already studied and finally your career destination. If you are clear with what you want, studying it is easier, but if you select a paper because it is easy, more likely you are "following the letter rather than spirit" of studying, increasing the risk that you might actually fail the paper.

My final advice - use the force in selecting the path (Obi-Wan Kenobi to Luke Skywalker in Star Wars Episode 4)

Do you think crash courses for ACCA should be better?

2010-06-15T04:11:00.000-07:00

It has come to my attention that most of the students seems to be asking questions about what they had studied only after the final revision (which usually focuses on questions practice) rather than full blow studies.
This indicates that most of the students are only really studying last minute - is this a generational effect or the norm of the ACCA/CAT student? I would suppose that it is a norm, but you can comment on this.
There is a study approach which has been used by other certification programmes - like SAP or ORACLE, which crams everything for the exam (0 to 100%) in say 7 - 16 days 8 hours class just before the exam. This seems to be in alignment with the current mentality of the students that take the examination - fast certification. Do you think that this is feasible within the ACCA or CAT tuition market?
Comment on this matter - since I am thinking of creating this crash courses for ACCA/CAT students.
A pilot test was done for P7 ACCA last round, where the classes only started after the results, and students had sessions over a 2 month period - which it seems to have worked so far.
Do you think say 64 hours of classes + 18 hours of revision (8 days of 8 hours + 3 days of 9 hours) is more than enough?
Well for F8/P7 if you think that is ok, comment here and I will arrange a class in KL or in Shah Alam.
Your views on this matter is appreciated.
I will be posting my view of the JUNE 2010 papers soon after the real exam papers have been released by ACCA
Overall comments that I can make for now
P7 - was a doable paper and designed for this level of knowledge
F8 - was a doable paper with most of the matters coming from within the syllabus (technically challenging)
T8 - was doable but I believe that paper was set a bit on the harder side
Most of the students that had a hard time are those that did not study the whole syllabus but rather spot only and had not fully grasp the paper
Mr.Jay MSc FCCA

Tips for T8 CAT June 2010

2010-06-02T10:20:00.001-07:00

The analysis of the past papers has indicated that the following will definitely be present

Question

1. Internal controls question - could include general internal controls, limitations, ICEQ or ICQ on any system, general internal control objectives, internal control objectives for specific areas - sales, cash, nca or inventory. Consideration of weakness is most likely.

Question

2. Planning question focusing on audit risk related to specific area - AR, Inventory, Cash or general question like Finch. Audit acceptance procedures, include considerations for client risk, audit planning matters

Question

3. Audit procedures, audit assertions, audit of NCA, Bank, Bank letter, Written representation letter

Question

4. Audit report, reasonable assurance, confidentiality, materiality, ISA 540, ISA 520

The above are purely speculative and your examiner does not support topic spotting for the T8 examination, you should make sure that you have covered all the issues in the study guide. The best approach to study for T8 is to go through the slides that you got in class and review of the past year papers.

F8 & P7 ACCA tips for JUNE 2010

2010-05-30T10:07:00.000-07:00

Well the below are the tips for both the auditing papers at ACCA from all the providers from the internet.

P7 Advanced Audit & Assurance ACCA JUNE 2010 by Kaplan
• Auditing in a Computer Based Environment
• Audit of employee benefits and discontinued operations
• ISA 570 Going Concern
• Engagement planning and risk assessment;
• Engagement reporting (ISA’s 700, 705, 706 in particular).

P7 Advance Audit & Assurance ACCA JUNE 2010 by BPP
• A risk-based and/or planning scenario in the compulsory section (Questions based on articles published in Student Accountant in the past six months - such as the article on Going Concern from February 2010 0
• A number of requirements asking for audit procedures and required evidence in respect of specific financial reporting issues
• A practice-based scenario looking at professional, ethical and quality control issues
• A reporting scenario of some sort - probably testing either emphasis of matter or other matter paragraphs
• Legal and regulatory issues affecting assurance providers, especially in the context of firms’ professional liability and the UK Companies Act 2006
• Specific procedures for obtaining evidence (such as analytical procedures and other ISAs that have changed following the Clarity Project) and evaluating the quality of audit work carried out, both for components and groups
• The requirements of other forms of assurance engagement, such as Value for Money (VfM) studies or agreed upon procedures
• The correct treatment of more complex accounting issues (such as employee benefits and adoption of IFRS) than has been seen before
• Specific ISAs may be examined in sufficient detail to warrant learning the key elements for regurgitation in the exam, such as comparatives (ISA 710) other information (ISA 720) or opening balances (ISA 510)
• Discrete topics that we have not yet seen such as questions using the context of internal audit or examples of other non-audit engagements
• The need to understand current issues such as globalisation, the impact of the recession on auditors, corporate governance, risk management and auditor liability - especially relevant in the context of the going concern article from February 2010

TIPS for P7 ACCA for JUNE 2010 by Open tuition

1. Audit risk ( 12/02, 6/03, 6/04 )

2. “Matters to consider and evidence you would expect to find / audit tests to be performed” ( 12/01, 6/02, 12/03, 6/05, 6/06, 12/06, 6/07, 6/08, 12/08 )

3. Going concern – Article from March Student Accountant ( 6/02, 12/08 )

4. Ethics ( Pilot paper, 6/02, 6/03, 6/04, 6/05, 6/06, 12/06, 6/07, 6/08, 12/08, 6/09 )

5. Audit reports including environmental issues, groups (Pilot paper ) and key performance indicators ( 12/08 )

Paper F8 Tips from BPP for JUNE 2010

• Not for profit organisations
• Risk assessment
• Ethics
• Computer based auditing
• Analytical procedures
• Fraud

Paper F8 ACCA tips for JUNE 2010 Exams by Open tuition
1. Sales system/receivables, including audit planning.
2. CAAT
3. Analytical procedures
4. Reasons for qualifying – Clarity statement
5. Events after the period end
6. Ethics and risk/client acceptance

Well thats all the papers that I have compiled to now. Students wanting to ask questions should probably ask in the blog, since the hand phone is going to be tedious, with the smsing.

Question sessions are available all the time at the comments sections.

New Standard - possible for P7 this sitting

2010-05-26T06:11:00.000-07:00

Updates for T8/F8/P7 ACCA coming exams in June 2010

The latest standards for reporting

1. ISA 705 introduces the term - inability to obtain appropriate and sufficient evidence as opposed to the term limitation of scope (ISA 701)
2. ISA 705 introduces the term - material misstatement as opposed to disagreement (ISA 701)
Reason - increases the clarity of the issues that causes problems to the financial statement. Previous terms were deemed to be confusing since layman do not understand what those terms mean.
3. ISA 706 - emphasis of matter is no longer called modified (previously was parked under ISA 701), it just emphasis of matter paragraph. It only applies for limited situation (those that affects current year financial statements only)
It has provided the following as the conditions where it applies:
An uncertainty relating to the future outcome of exceptional litigation or regulatory action. (ISA 570 GC issues)
Early application (where permitted) of a new accounting standard (for example, a new International Financial Reporting Standard) that has a pervasive effect on the financial statements in advance of its effective date.
A major catastrophe that has had, or continues to have, a significant effect on the entity’s financial position.
It means that EOMP has limited application compared to the previous standard. ISAAB is trying to reduce the widespread usage of EOMP since it diminishes the value of communication and using it implies that matter is not properly disclosed in the FS (which constitutes a MM)

4. ISA 706 - other matter paragraph (OMP) is a new addition to the world of reporting. This is used for matters that are not within the scope of financial statement.
Matters that would be included in the OMP are
- comparatives have not been audited (ISA 710)
- comparatives have been audited by another auditor (ISA 710)
- material inconsistency with other information (ISA 720)
- modification in auditor report for comparative financial statement (ISA 710)

5. ISA 450 - Evaluation of misstatements found during the audit (critical for P7 students since impacts your audit report question and materiality issues significantly)
- Auditor is responsible to evaluate the identified misstatement found during the audit and aggregate uncorrected misstatement
- Auditor must perform additional procedures to determine if correction performed by management has reduced the misstatements in the stated accounts
- Auditor is responsible to obtain a written representation from the management whether they believe the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole.
- Auditor must include in the audit documentation (ISA 230):
(a) The amount below which misstatements would be regarded as clearly
trivial (ISA 320 - Planning materiality x 5 - 10%)
(b) All misstatements accumulated during the audit and whether they have
been corrected
(c) The auditor’s conclusion as to whether uncorrected misstatements are
material, individually or in aggregate, and the basis for that conclusion
- Misclassification misstatement should be evaluated in terms of quantitative and qualitative basis - if a misclassification error is material but does not change the nature of the FS significantly, it could be classified as not being material (this is an example of auditor using qualitative factors to override quantitative materiality)
- Circumstances when misstatement is considered material when it lower than quantitative
a) Affects compliance with regulatory requirements;
b) Affects compliance with debt covenants or other contractual requirements;
c) Relates to the incorrect selection or application of an accounting policy that
has an immaterial effect on the current period’s financial statements but is likely to have a material effect on future periods’ financial statements;
d)Masks a change in earnings or other trends, especially in the context of general economic and industry conditions;
e) Affects ratios used to evaluate the entity’s financial position, results of
operations or cash flows;
f) Affects segment information presented in the financial statements (for
example, the significance of the matter to a segment or other portion of
the entity’s business that has been identified as playing a significant role
in the entity’s operations or profitability);
g) Has the effect of increasing management compensation, for example, by ensuring that the requirements for the award of bonuses or other incentives are satisfied;
h) Is significant having regard to the auditor’s understanding of known
previous communications to users, for example, in relation to forecast
earnings;
i) Relates to items involving particular parties (for example, whether external parties to the transaction are related to members of the entity’s management);
j) Is an omission of information not specifically required by the applicable financial reporting framework but which, in the judgment of the auditor,
is important to the users’ understanding of the financial position, financial performance or cash flows of the entity; or
h) Affects other information that will be communicated in documents containing the audited financial statements (for example, information to be included in a “Management Discussion and Analysis” or an “Operating and Financial Review”) that may reasonably be expected to

ISA 320 Materiality
- Standard materiality - planning and final materiality is based on turnover, PBT, TA or NA %
- Performance materiality - used in conjunction with ISA 450 to determine if uncorrected misstatement are material *note there are qualitative factors that can override the performance materiality
- Threshold materiality - level used to determine if error is trivial

Spots for the P7 paper - since I have completed all the revisions for this paper.
Based on my review, nothing has come to my attention that causes me to believe that the accompanying spots are not reliable

1. Forensic audit (proactive nature)
2. Internal controls
3. Risk question - either BR/AR/FSR -suppose higher aspects of issues impacting going concern since article is out + issues that had impacted Lehman Brothers, implies that BR question should include financial instruments as a source of business risk impacting going concern - do not talk about IAS 32/39 if it is BR question!
4. Group audit (ISA 600 + ISA 550)
5. Audit report (ISA 450 + ISA 705 + ISA 720 + ISA 710)
6. Current issues - new IFAC 2011 or note for going concern
Other tips were given directly in the class.

Note for JUNE 2010 EXAM - the exam question for part A will no longer be directly asked as in previous examination since there was a requirement to make the paper more practical (as per P6 paper)

DO NOT PANIC -when the exam question is:
Required:
(d) Respond to the email from your partner
(16 marks)
Requirement (d) contains professional marks which will be awarded for the format of the answer and for the clarity of the assessment provided (2 marks)

This means you have to read the emails from the manager, partner or client and determine the requirements.

Your professional marks will be:

Dear X

Responding to your email dated xx/xx/xx, I have put together an analysis of the business risk that is relevant for the planning of audit of ZZZ Plc. I have included the analysis in the attachment labelled XX.doc

Attachment

Issues - Explain the risk

Completed

Thats all for now - if there are questions shoot away, I will discuss the issues later. I still have one more revision to do - P1 in PAAC this friday.

Prepared by Mr.Jay MSc FCCA (lecturer for audit)

Question and answer

2010-05-16T03:30:00.000-07:00

The following will be the first round of questions and answers for T8,F8 and P7 students. Please ask your questions about the knowledge aspect of the paper. I will try my best to answer them as soon as possible

OBU Mentoring

2010-04-27T23:07:00.000-07:00

Top Audit firms for 2009

2010-03-11T07:46:00.000-08:00

1- PWC =26.2 Billion USD

2-Deloitte =26.1 Billion USD

3-Ernest Young- 21.4 Billion USD

4-KPMG=20.11 Billion USD

The big 4 have been defined with close to 100 billion in gross fee collected

5-BDO= 4.9 Billion USD

6-Grant Thornton= 4.1 Billion USD

7-RSM International 3.8 Billion USD

The following are the second tier firms
Source of information regarding the fees - IAB 2009 and Accountancy age

The ranking has been the same for the year ending 2008 too.

The top 20 firms in the world according to Accountancyage is as follows:
* Baker Tilly
* BDO Stoy Hayward
* Bentley Jennison
* Deloitte
* Ernst & Young LLP
* Grant Thornton
* Hacker Young
* Horwath Clark Whitehill
* HW Group
* Kingston Smith
* KPMG
* Mazars
* Menzies
* Moore Stephens
* PKF
* PricewaterhouseCoopers
* Saffery Champness
* Smith & Williamson
* Tenon
* Vantis

Now that you know the top firms to be aiming for once you complete your ACCA, the next thing for you is to learn as much as possible regarding the firm and their operations before going to the interview.

Make sure that you have a clear knowledge regarding you audit, accounting, taxation and some simple essay writing about why you should be selected to work with this firm.

I wonder how the firms are going to cope with the latest IFAC ethical guidelines that has made taxation services that are material to be considered to be a clear "self-review" threat. Will they be using the weak "Chinese wall" defense against this requirements or are the big 4 going to come to some form of arrangement. We will have to wait and see, but till then it should be one of the issues that should come out in P7 ACCA Question 5 - Current development.

Mr.Jay FCCA
Lecturer

Changes for the coming audit examination

2010-02-28T09:15:00.000-08:00

Results are out and the Malaysian pass rate for F8 is 22%, whereas the global pass is standing at about 40%. This means that most of the Malaysian students did not get thru the paper. The pass rates for the paper had actually improved from 34% to 40% and yet the Malaysian pass rate is way below.

The reasoning for this, wrong strategy being adopted in the study of audit paper. It would seem that reviewing the past year papers and expecting similar items to repeat (which works for F4, F7 and to some level in F5 and F9) does not seem to work at this paper. In fact it can lead to a disaster.

The only advice for students that did not get thru the paper - get your basics understood not memorized. Sure there are things to memorize but getting the basics clearly understood is critical.

On the subject of changes in the coming F8 paper, there is no real change in the syllabus, only updates in the world of auditing due to revised ISA being applied. In this case the ISA 2009 becomes operational in the coming sitting. Core issues to be clear about

1. Audit reports - modifications have changed (ISA 705/706, previously ISA 701)
Disagreement is now known as material misstatement
Limitation of scope is now known as insufficient and inappropriate evidence
There is an additional item included in modified unqualified reports
- Previously there was only a "emphasis of matter paragraph" but now there is also a "other matter paragraph"

2. Materiality (ISA 320)
Inclusion of performance materiality

3. New standard - ISA 450

Other standards have not been changed dramatically

My old notes are still applicable, need some updates which can be obtained by downloading the ISA from the picture at the right of the blog.

Students who did not get through the T8 paper, should seriously consider whether you should still re-attempt T8, since the world pass rate for this paper is the lowest among all the CAT papers.

Students who have to make a decision about jumping to T10 due to failures in T5, make the jump now, since Sunwaytes has already stated that Monday is the close off period for the jump.

Stay focus on your goal and you should be able to overcome the obstacles in your path.

Studying for audit paper

2010-02-05T21:49:00.000-08:00

It seems that most of the students seems to think that memorizing is not needed in an audit paper, only understanding the matter is sufficient. Well that is not true, you must memorize some matter, understanding it is the next point and finally you must be able to apply the memorized facts that you understand to the case to solve the problems.

You will need to memorize for all the papers in ACCA, there is always some rules and principles that need to be memorized. Therefore the slides that you have must be memorized if they have key words only, once you have memorized the terms, next understand where,why and how it was applied to questions.

This means you must have 2 stages in terms of "studying"

Memorize the terms (Review slides

Recall

Memorize the terms (Review slides)

Recall

Review questions that apply the terms

Recall

Compare the question with the slides and prepare short notes to aid in final review

So for the areas that you should be studying for the coming PT1 for T8 CAT audit paper would be:

Audit ethics
Audit risk
Audit reports

Slides from C1 - C6

Manage your time efficiently

Tips for T8, F8 and P7 for DEC 2009

2009-12-06T02:07:00.000-08:00

The following are the tips that are available for the following papers, this is only an opinion which could be wrong, best strategy is to cover all the slides and the related class notes.

T8 Dec 2009 Exam
Q1 Purchases system (control weakness / control objective / controls that should exist for ordering , receiving, invoicing) OR a general internal control question covering objectives, limitations, TOC

Q2 Audit risk for sales or inventory or general, engagement procedures, letter of engagement contents, audit procedures to verify bank, NCA and inventory (value)

Q3 Audit procedures for payables, test of controls, materiality

Q4 Management representation letter, Audit report contents, Qualified report

+ General controls and Application controls
+ CAAT (Test data and audit software)

F8 Dec 2009 Exam
Q1 Purchases audit, NCA audit, Bank audit, test data, test of detail, experts procedure

Q2 ISA 500 ISA 210 ISA 230 ISA 510 ISA 720.

Q3 Internal audit - value for money audit / operational audit - marketing, finance, purchasing, production

Q4 Engagement risk, assessment of audit risk for company, acceptance procedures.

Q5 Management representation, additional audit procedures for error / ISA 720, Audit report - Qualified / Modified (ISA 701/700)

P7 Dec 2009 Exam

Q1 Audit risk or Financial statement risk + audit of financial instrument (procedures)

Q2 PFI and accepantance of engagement, Forensic audit procedures to be undertaken for suspected fraud, Difference in forensic report and audit report

Q3 Ethics - FASSI, Ads, Using ACCA logo, Confidentiality

Q4 Audit report and related financial standards
- IAS 32/39
- IAS 18
- IAS 37
- IAS 38
- IAS 41
- IAS 19
+ ISA 620 experts

Q5 Latest issues - Clarity project (article by examiner)
- Going concern issues in current times - need for additional guidance
- ISA 450
- ISA 265
Management representation letter

Well that is all the tips, oh ,yeah for T8 sunway students with the answers for ICAEW question pack, could you do me a favour and dump in the answers for that chapter asked in the comments made.

I am now in overseas and have no access to the materials anymore.

OBU Research Workshop 22, 23 and 24 DEC (Price RM950 includes a RM500 discount for mentoring) to be held in KL contact 0326943919 or 0326946606 for information.

I am back

2009-12-01T00:51:00.000-08:00

It has been some time since the last blog.....reason being, I was swamped with enormous amounts of work

- I had just completed the last of the revision course on 30 November in KL.

Update, during the same period, I completed my MSc Accounting and Finance, which also took away time away from blogging

My apologies to T8 student regarding the class on 30th, those that manage to SMS or call me got to see me on the 1st.

The rest of you who have question, shoot away in as comments.

Regarding the coming exam, tips will be placed here soon, for T8, F8 and P7 as far as I can see into the future, but then again tips are bad way to study.

A new apple for MOCK

2009-10-13T05:06:00.000-07:00

The coming mock paper is more focused on audit procedures and internal controls with some aspects of audit reporting.

There is more marks in the internal controls part therefore the recommended approach is to ensure that you fully cover the internal controls in detail from Chapter 7 and 8. Substantive audit procedures are very important so cover the last few chapters properly.

The paper difficulty is set at T8 level as opposed to previous PT which had included the harder F8 questions inside them. The balance of the PT answers will be posted soon, but they will have little bearing on the outcome for the MOCK.

Make sure you have covered all the slides and try your best to understand the process of writing up audit procedures.

Audit procedures = TOC + TOD + SAP

The beast reappears

2009-08-04T05:02:00.001-07:00

T8 CAT Students - get ready for your battle

Requirements for reading before going into the exam

Read the article by ACCA on FRAUD
Read the article by ACCA on working papers
Read up ISA 700

Make sure you have fully covered the slides for C1 - C6 before going into the exam.

Permanent file contents

a) Copy of initial appointment letter if the engagement is of recurring nature
b) Record of communication with the retiring auditor, if any, before acceptance of the appointment as auditor
c) Clearance from previous auditor
d) Information concerning the legal and organisational structure of the entity.
In the case of a company, this includes the Memorandum and Articles of Association.
In the case of a statutory corporation, this includes the Act and Regulations under which the corporation functions .i.e.
i. In case of partnerships- Partnership deed
ii. In case of trusts- Trust deed
iii. In case of societies- Certificate of registration/ Rules and Bye-laws.
e) Organisational structure of the client
f) List of governing body including Name, Address and contact details. For Instance, the List of Directors in case of a company, List of partners in a partnership and list of Trustees in a Trust.
g) Extracts or copies of important legal documents, agreements and minutes relevant to the audit.
h) A record of the study and evaluation of the internal controls related to the accounting system. This might be in the form of narrative descriptions, questionnaires or flow charts, or some combination thereof.
i) Copies of audited financial statements for previous years
j) Analysis of significant ratios and trends
k) Copies of management letters issued by the auditor, if any.
l) Notes regarding significant accounting policies.
m) Significant audit observations of earlier years.
n) Assessment of risks and risk management
o) Major policies related to Purchases and Sales
p) Details of sister concerns
q) Details of Bankers, Registrars, Lawyers etc
r) Systems and Data Security policies
s) Business Continuity Plans

Current file has the following items

a) Correspondence relating to acceptance of annual reappointment.
b) Extracts of important matters in the minutes of Board Meetings and General Meetings, as are relevant to the audit.
c) Evidence of the planning process of the audit and audit programme
d) Analysis of transactions and balances.
e) A record of the nature, timing and extent of auditing procedures performed, and the results of such procedures
f) Evidence that the work performed by assistants was supervised and reviewed.
g) Copies of communications with other auditors, experts and other third parties.
h) Copies of letters or notes concerning audit matters communicated to or discussed with the client, including the terms of the engagement and material weaknesses in relevant internal controls.
i) Letters of representation or confirmation received from the client.
j) Conclusions reached by the auditor concerning significant aspects of the audit, including the manner in which exceptions and unusual matters, if any, disclosed by the auditor’s procedures were resolved or treated.
k) Copies of the financial information being reported on and the related audit reports.
l) Audit review points and highlight.
m) Major weakness in Internal control

Why audit working papers is needed
a) They aid in the planning and performance of the audit;
b) They aid in the supervision and review of the audit work and to review the quality of work performed, in accordance with ISA 220
c) They provide evidence of the audit work performed to support the auditor’s opinion
d) They document clearly and logically the schedule, results of test, etc.
e) The working papers should evidence compliance with technical standards
f) They document that Internal control has been appropriately studied and evaluated; and
g) They document that the evidence obtained and procedures performed afford a reasonable basis for an opinion.
h) They retain a record of matters of continuing significance to future audits of the entity;
i) They enable an experienced auditor to conduct quality control reviews
j) The process of preparing sufficient audit documentation contributes to the quality of an audit.
k) They fulfil the need to document oral discussions of significant matters and communicate to those charged with governance, as discussed in ISA 260.

Guidance on working paper
a) Filing/keeping of working papers
b) Checklist of documents to be obtained and maintained
c) Indexing of documents/ working papers
d) Proper numbering/ sequencing of working papers
e) Summarizing of overall findings
f) Writing of queries
g) Discussing with seniors on matters of importance
h) Disposing of Query -at staff level/ senior level/ partner level
i) Importance of the working papers to be signed, dated and approved by relevant level of audit staff with sufficient cross reference
j) Importance of depicting the client’s name, file number, accounting period, subject of working paper and reference of working paper with current or permanent file

Guidelines for working papers

a) Clarity and Understanding -As a preparer of audit documentation, step back and read your work objectively. Would it be clear to another auditor?
Working papers should be clear and understandable without supplementary oral explanations. With the information the working papers reveal, a reviewer should be able to readily determine their purpose, the nature and scope of the work done and the preparer's conclusions.
b) Completeness and Accuracy – As a reviewer of documentation, if you have to ask the audit staff basic questions about the audit, the documentation probably does not really serve the purpose.
Work papers should be complete, accurate, and support observations, testing, conclusions, and recommendations. They should also show the nature and scope of the work performed.
c) Pertinence – Limit the Information in working papers to matters that are important and necessary to support the objectives and scope established for the assignment.
d) Logical Arrangement – File the Working papers in a logical order.
e) Legibility and Neatness – Be neat in your work. Working papers should be legible and as neat as practical. Sloppy work papers may lose their worth as evidence. Crowding and writing between lines should be avoided by anticipating space needs and arranging the work papers before writing.
f) Safety- Keep your work papers safe and retrievable
g) Initial and Date- Put your initials and date on every working paper
h) Summary of conclusions- Summarize the results of work performed and identify the overall significance of any weaknesses or exceptions found.

Read about ethics

Read your standards ISA or IAS

2009-07-27T19:49:00.000-07:00

For some of you, it might seem that reading the auditing standards is a waste of time and better spent watching tv or roaming the shopping malls.

If you are studying for medicine - reading the medical text is necessary, if you are studying law - reading the cases is necessary and if you are studying for accountancy - reading the standards is absolutely necessary.

If you cannot read the standards slowly - skim read, shallow read, speed read but make sure you READ THEM.

You are not required to memorize all of them, just read, don't take the dictionary for every word that troubles you, skip and move on - but READ THEM

P7 students - ISA 210, ISA 240, ISA 250 and ISA 260 are a must with ISA 700, 701, 705and 706, IFAC Code of ethics, ACCA Code of Conduct

F8 students - ISA 240, 260, 700, 701, 300, 315, 330, ACCA Code of Conduct

T8 students - ISA 700, 701, 240, 210, 315, 330, 300, ACCA Code of conduct

Where is the standards - download it from the big ISA picture on the right bar.

P7 Advance Audit & Assurance ACCA

2009-07-16T07:02:00.000-07:00

Is this as more harder paper compared to F8, obviously it should be, since it is set at final level of ACCA. P7 examiner Lisa Weaver has already stated that the paper has some difference with the previous 3.1 paper - in terms of the accounting standards expected knowledge.

In the past, 3.1 was immediately after 2.5 but before 3.6(P2). This had limited the ability of Kim Smith (former examiner) to used P2 standards when setting the exam, but the situation has now changed, Lisa might be setting questions that test P2 standards.

In that sense, it would be wise to attempt P7 with P2 or after P2. P7 is also a preferred paper by the audit firms when it comes to options assessment, since the paper can be considered to be most testing audit paper around after F8.

Many that have taken F8 might be afraid of doing P7, since the difficulty of grasping the basics of audit, but basic audit is actually harder to grasp compared to advance audit aspects.

This was the same when I used to teach Chartered Institute of Marketing, the final level papers were sometimes rated as easier compared to the Level 2 by the students.

Finally, many students have asked me if the other P level papers are harder? Well it all depends on the following:

P5 is a move up from F5, P3 and sometimes P1, Shane Johnson the examiner might mix the elements to create "real" situations.

P4 has F9 and bits of P1 here and there.

P6 - only if you love tax and planning work.

In my opinion, you should select the papers that you feel you have a better grasp, review the past year papers for each one, make an assessment, ask friends that have done the paper. You cannot make a decision based on rumors and hearsay, nor can you attend a few "trial classes" to see if you understand the paper. You should be hungry for the knowledge when you attempt the paper and go for the class.

Final note for those that are interested in working in the audit firms, the P7 and P6 is seen as an added advantage. Do your best to add one into your examination diet.

New Classes

2009-07-06T17:04:00.000-07:00

For all the new classes for F8 or T8, the following will be important matters for you to look into

1. You will need to download the ISA from IAASB

2. You should consider understanding note taking techniques and other techniques to improve you passing ability
CALPOLY STUDENT ACADEMIC SERVICES - Academic Skill library - MUST READ

Day to Day
A.
Take good notes. Very few students leave high school with this skill. College of DuPage's Learning Lab can help you here. Some suggestions and observations.
1.
Always take the notes for a particular class in the same notebook. Spiral bound notebooks were invented because they solved the problem of keeping related information consolidated in one place. Take advantage of this.
2.
Date each entry into your notebook.
3.
It is usually best to keep the notes for different classes separate from each other. Spiral notebooks with built in dividers are excellent for this purpose.
4.
Your notes should contain as complete a record of what the instructor said as possible. Of course, you should not try to write every word spoken, but don't leave out ideas. When you study, your notes should call back to your mind the entire sequence of ideas presented. Take care to spell all new words carefully. It you don't know how to spell a word, ask your instructor to write it on the board. Most will automatically do so for new or difficult terms.
5.
Anything the instructor writes on the board should appear in your notes. If the instructor took the time to write it out, he or she considers it important. You should do the same.
6.
If possible, try to take your notes in some kind of outline form. The organization of ideas is as important as the content of those ideas, especially when it comes to learning the material for an exam.
7.
You might find it useful to have a second color of pen or pencil available for highlighting important ideas or indicating vocabulary.
B.
Be involved in your classes. Don't simply pretend you are a sponge, ready to soak up whatever the instructor says. You are there to learn, not to be taught.
1.
If the instructor is moving too rapidly for you, or if you don't understand what is being said, say something!
2.
Ask questions if you are confused. Confusion is definitely your worst enemy.
3.
If your class includes group activities, participate as fully as you can. Such exercises are done for your benefit, not to provide a break for the instructor.
C.
Review your notes every day. This suggestion is one which we have all heard a thousand times. Unfortunately, most of us never really believe it until we actually try it. Spend 30 minutes or so each evening going over the notes from each class. There are at least two tremendous benefits to be gained from this discipline.
1.
Research has shown that reviewing new material within 24 hours of hearing it increases your retention of that material by about 60%. This means that you will be 60% ahead of the game the next time you walk into class. If you want to significantly reduce the time necessary to prepare for exams, this is the way to do it.
2.
Reviewing material before the next class period enables you to identify points of confusion or omission in your notes, which prepares you to ask the questions you need to ask before the next lecture. Again, confusion is your worst enemy.
D.
It is excellent policy to give high priority to new vocabulary. Language is the most fundamental tool of any subject, and it can seriously handicap you to fall behind in this.
E.
Keep up on your reading. Unlike most high school teachers, many college instructors don't give specific reading assignments. You are expected to go to your text for the reading related to the materials covered in class. Be independent enough to do this without being told.

II.
Using Your Textbook
A.
Don't expect your instructor to give you detailed, page by page textbook assignments. While some may do so, many do not. College teachers are much more likely to expect you to use your own initiative in making use of the text.
B.
In most cases, it will be most useful for you to at least skim the relevant chapters before each lecture. You should receive a course outline/syllabus at the beginning of the quarter, which will tell you the subject for each day. You may receive chapter references (or even page references), or you instructor may expect you to be perceptive enough to refer to the Table of Contents.
1.
When you first approach a chapter, page through it fairly quickly, noting boldface headings and subheadings, examining figures, illustrations, charts, etc., and thinking about any highlighted vocabulary terms and concepts. Also take note of the pedagogical aids at the end of the chapter--study questions, summary, etc.
2.
When you have finished surveying the chapter, return to the beginning and read in more detail. Remember to concentrate upon understanding. Don't simply read through the words. Any words which you don't understand you should look up. If you own the book and intend to keep it, you may want to write definitions of such words in the margins. You may also find it helpful to make observations and other useful notes in the margins. If you don't intend to keep the book yourself, you should carry out similar activities on a page in your class notebook.
3.
On this first trip through the chapter, you should concentrate upon catching the major subjects and points of the material. Also take note of those things which you don't understand. If the lecture on the material doesn't clarify those points, you should ask your instructor to explain.
C.
Following coverage of the chapter's material in class, you should go back to the book and read it again. It will probably be helpful to skim through it first, as you did when you first looked at it. The tables and figures should be more readily read in detail. If you are a truly conscientious student, you will outline the chapter and prepare a vocabulary list of the terms which are pertinent.
D.
At this time you should think seriously about the review and study questions at the end of the chapter. Do your best to answer all fo them as if they were a take-home exam.
E.
You may also want to develop a system of cross referencing symbols to use when comparing your class notes to your notes from the text.
F.
Remember that your instructor will probably not use the same words which you find in the text book. nothing is more frustrating than to discover that what you hear in class is no more than a rehash of what you read in the book. However, if your instructor knows his/her subject, and the author of your text knows his/her subject, the meat of what they say should be the same. NOTE: Nobody is infallible. Your instructor may make mistakes. Don't expect him or her to be more than human.

On that note, the notes for the classes are already in the following order

The notes for T8 is availabe from the following links

1. New class
2. Set 2 of notes
3. Set 3 notes
4. Set 4 notes
5. Set 5 notes
6. Set 6 notes
6.1 Set 6 extra
7. Set 7 notes
8. Set 8 notes
9. Set 9 notes

Mr Jay FCCA at KL

2009-07-02T00:21:00.000-07:00

Well the July - December 2009 Semester is about to start and I have decided to enter the KL market for audit after some time away.

The location that I will be in KL is PAAC Wisma Kraftangan Jalan Tun Perak, City Centre, 55000 Kuala Lumpur, Kuala Lumpur, Malaysia, but the classes are only on Saturdays and some Sundays

Slides that were promised and balance of the questions

2009-06-04T11:09:00.000-07:00

Sir, can you please explain what is the difference between test of controls and substantive procedures.For TOC we can use EIOU, so what should we use for SP?

Answer given
TOC means we are testing the control system of a organisation to make sure the data which are procced in that systam is correct and no error or any fraud had occured. and it can de done by EIOU

SP is the situation whare the auditor does not rely on internal control system and reperform all the duties done by the internal staff in sampling basis. reperform and TVMC can be used.
The explanation is acceptable but a bit weak

TOC is testing the control system, it is done when the controls have been evaluated to be effective. It usually uses the EIOU

SP covers the range of procedures that verifies the financial transactions have been correctly accounted by the accounting system. It covers the TOD and SAP

sir, can u let us know how to determine the materiality ? i mean the presentage . Like revenue 0.5% is consider as material...thanks~

It is in my notes, how to calculate is based on % and judgement by the auditor

sir ~ i got confuse between ICEQ ICQ and TOC ~~ T.T

Mr.ARC-ET-LOW
ICQ is used at R & E
ICEQ is used at E only
Both are for evaluation of the controls
TOC is at T level only

sir ~~ i still cnt understand the question is asking TOC or TOD ~~ i need help ~~~ reply ASAP ~

If the question asked for audit procedures - TOC and TOD is acceptable, only being limited by the availability of controls to write out TOC.
If the question asked for Substantive procedures then it is only TOD

Mr Jay
what do that mean by
'an increase in the extent to which the risk of material misstatement is reduced by operating effectiveness of control will increase the sample size'? can you please explain

- Without the context of the following words it will be hard to explain this statement.

sir, if the management repesentation did not agree with other evidence then all of the representation by the management cannot be trust is it?
- NO, that implies that more work needs to be done on that area only, not all representation cannot be trusted, but if there is management fraud suspected then all management representation cannot be trusted

if the assessed risk of material misstament is high for receivebles, why we use negative method of direct confirmation of receivables?
- No, when the RMM is high, we will always perform a positive confirmation, not a negative method.

can please explain what is meant by the term negative assurance?
Negative assurance report implies a lower level of assurance, less work is undertaken and the wording goes like "nothing came to our attention that indicates that the financial statement is not true and fair view"

mr jay may i know what is fee capping and also written representation?
Fee capping is the 15% AND 10% LIMITS that you studied in the ethics part
Written representation = MRL = ISA 580

sir ,if the fee basis changes( fee charges , example : fee increase by 10 percent ) ,then do the auditor issue a new engagement letter to the client ?
Yes

sir, can you provide a more detail description on the corresponding figures and the comparative financial statement?
Read the ISA 720 which can be downloaded from ISAAB in the link above

Sir, how to differentiate what is a transaction, balance or disclosure?
A transaction is Income Statement item
A balance is Balance Sheet item
A disclosure is Notes to financial statement item

if the materiality is high then the audit risk is low is it?
Audit risk is based on IR and CR evaluation. It is actually 2 stand alone item. AR influences materiality setting

I wanna ask is audit programme and audit procedure are the same ?
Audit programmes contains the audit procedures to be executed in the audit

mr.jey what is diffrent between management letter and management representation letter?
Management letter = Letter of weakness, is an output from the audit, management representation letter = evidence

what is meant by management threat to independence. i din't see this in ur slides
- Management threat implies that auditor behaves like management, and starts to give advice which makes them have management capacity

T8 Tips for June 2009 Exams

2009-06-04T10:46:00.000-07:00

Well since the exam is a new paper, it would be hard to tip this semester

I suppose that the following is possible

1. Internal controls general theory - COSA, Mr.ERIC, MACCHOP, $1COAcH, SPAMSOAP or ACCAMAPS
2. Writing up specific control objective for any area - Sales, Purchases, Cash
3. Knowing the core control functions for inventory, sales, purchases and cash
4. Know the aspects of perpetual inventory takes, benefits
5. Application and general controls - concepts and examples

Possible for the audit procedure question
1. TOC for sales or purchases system
2. Audit procedures could be broad ranging question with all areas being asked
3. NCL, Bank, AP audit have the basics in your hand and be able to write out 5 procedures for each without too much thinking
4. Inventory audit - before, during and after
5. Specific work for internal audit - reliance on department and on work of IA
6. Assessment of expert evidence
7. Financial statement assertions and examples
8. Audit procedures and examples

Possible for the planning question
1. Ethical issues - FASSIM and possible safeguards
2. Confidentiality
3. Accepting the client and contents of engagement letter
4. Client screening matters
5. Finch type question - assessment of inherent risk
6. Explanation of audit risk and business risk approach - use the article
7. Audit documentation ISA 230, purpose, types, what should be kept

Finally the general question that covers a wide range of topical issues
1. Analytical procedures
2. Sampling issues - type of sampling and +/-
3. Audit report - contents
4. ISA scope and reason for development
5. Advantage & Disadvantage of audit
6. Going concern
7. Management representation letter - contents, purpose

Well that is what you should have covered, but make sure you have completed the following
1. Past year papers
2. Slides
3. Know all the short-cuts
4. Past year papers

Good luck

Questions answered & tips for JUNE 2009

2009-06-02T06:58:00.000-07:00

Long time no news. Sorry I have been out recovering from long revision periods. I am still under the weather

Spots for the current F8 exam are as follows:
Be warned that spots are very dangerous and can lead to a disaster if they do not come out. You should cover all areas and be prepared for anything.

Purchases system or sales system - TOC / TOD

Inventory - Complete coverage - All (TOD / TOC) - perpetual inventory system weakness

NCA audit (refer to an old question that was done by Alan Lewin)

Audit report - qualification, components, how it closes expectation gap

Confidentiality

Audit committee (roles / responsibilities, adv / disadv)

Internal audit - Report format, ISA 610 (using internal audit), Operational audit

Issues at the closing of an audit - Errors and impact on audit report ( IAS 37 & 16)

Knowledge of business, Client screening, Tendering

CAAT - possible test data and the purpose for them, adv & disadv for them

General controls and application controls - specifically the type of controls that should exist at the following stage
1. Development of system development - Segregation, authorisation, documentation, testing, training for users, data entry confirmation
2. Application letter - specific for sales system

Non-current liabilities testing

ISA 240 (Fraud - the article) & ISA 250 Legal requirement and finally ISA 260 Communication with those charged with corporate governance

Pilot paper
Westra

Part a
-trace from the design software(list of parts) to the orders placed by staffs in ordering dept. to confirm completeness of records while transfer electronically.
(Orders were not made by the staffs, but automatically by the system, so it cannot be traced to "orders placed by staffs"

-enquire with the management as to list parts still in orders placed file but no goods received. comfirm completeness of records.
Correct

-reperform sequence check on the orders placed file. completeness of records, ensure no orders are missing/ unrecorded.
(This is a test of control confirming that order placed file is kept in sequence, this is not an SP)

-match grn with invoice to comfirm that purchase occured (vouch from invoice to GRN)
Correct

-match year end purchase orders raised with grn to ensure purchases are recorded in the correct period. cut off
No this is not valid, since cut-off is focused on the entry in the ledger, GRN, Invoice and entry into the purchase ledger is the valid approach

-match grn with payments made before and after ye to ensure cut off done properly.
Not a valid cut off, since GRN is related to Invoice, Matching the Invoice with the payment indicated that purchase occurred.

-for a sample of dates, match the orders placed file with invoice. comfirms completeness.
OK

-for a sample of number order, match against the invoice/ grn for which it has been raised to comfirm the transaction occured.
The invoice is not raised by the company but the supplier
-match invoice with pl ( tracing-completeness)
-trace from pl to gl
-vouch from grn to design sys/ list of parts to confirm the occurence of such an order.

-obtain supp list from client and match it with the gl to comfirm completeness.
Matching it provides an indication of accuracy, tracing a sample of names from the list to the purchase ledger indicates completeness

-match total on gl and match with tb / f/s
Match GL value for payables to Financial statement

-obtain list of authorised supp and match against supp which order places. (for purc)
Not valid, no logical purpose

-price list as compared to price on invoice/ paid(purc)
Price list is for sales system, this is the purchases system - not valid

-comfirm with supp statement and balance on gl/pl
You can confirm, it is obtain a sample of payables from the list and reconcile them to the supplier

Sir does any company which having turnover more then $5.6mil but not having any shareholder need an external auditor?
In UK there is an exemption for audit, this companies can opt not to have an audit done.
If so what is the purpose of auditing them?
Advantages of audit
- assurance
- advice about the internal controls
- bank loan application
- shareholders have more faith in reports

What is meant by audit trail?
The document trail that auditor uses to follow a transaction from the beginning to the end. This provides the evidence needed for auditor to proof values in the financial statement, this is limited when dealing with computerised system, which might lack audit trail.

sir...i haven't really understand the overlapping item in toc and sp...especially those assertion.ie accco,cver and coca....can u help us to distinguish them from the overlapping item in toc??
In TOC = it aims to proof that control objectives are achieved, like "Ensure all sales are made to credit worthy customers" OR "Ensure that all sales are recorded correctly"
The ACCCO, COVER and OROCCUVA are designed for Accounting system, not internal controls, therefore used as objective in substantive procedures

sir, is that sales is being recognized when the sales order are raised or when the sales invoived are raised?
When goods have been delivered the risk and rewards have been transferred to the buyer in a normal, there will be no continuing managerial involvement by the seller (IAS 18)
When goods have been delivered.
Not when the invoice is raised or the sales order being created.

Sir, is the customer order is accepted first then it is being approved for credit granting or vice versa?
Customer order comes into the organisation before credit review is done. If the sales is cash basis or credit card charged (like Atlantis) there is no credit granting done - so can skip.

sir...can u name me so common word used in tod,toc,sp,audit test,audit procedure?eg.agree,confirm,vouch,trace,inquiry.....which one should be used in those above?

TOD - Test of detail
TOC - Test of control
SP - Substantive procedures
Audit test - is broader but usually the same as audit procedures

AGREE,VOUCH, TRACE fall under the Inspection category of evidence
CONFIRM and INQUIRY are another category of evidence, where INQUIRY is used for internally gathered information and CONFIRM for externally gathered information.

mr j i dont know how to define following term

toc and general control.
Test of control

General controls
1. Where applicable, review prior year external audit report findings and recommendations of information technology activities and determine whether appropriate corrective action has been taken. Document the action taken for each recommendation and determine whether any prior year's comments should be carried forward to the current year's comments.
2. Where applicable, review the findings and recommendations of internal audit reports of information technology activities. Determine whether any of the findings and recommendations noted in the internal audit report was considered significant and whether the issues were satisfactorily resolved.
3. Where applicable, review the findings and recommendations of regulatory agency reports resulting from the review of the Company's information technology activities.
4. Document the computer platforms used by the Company and the applications processed on each computer platform. Information for computer platforms should include:
• Equipment model
• Manufacturer's name
• Quantity
• Information for software applications should include:
1. Name of the application
2. Vendor name
3. Current version number
IT Organization and Operations
1. Obtain the current organization chart for the information technology organization and evaluate the organization to determine that key functions (i.e., computer programmer, system analyst, computer operators) within the IT department are appropriately segregated.
2. Through discussion with information technology personnel, evaluate the proper segregation of critical processing functions.
3. Assure that the IT department is a support group within the organization and it does not initiate or authorize transactions.
4. Determine whether there is an effective IT steering committee or an equivalent committee within the organization.
Data Center (Environment and Physical Access)
Note: The physical environment should be reviewed in the context of the size of the operations and the type of computer equipment used by the client. Also, consideration should be given to the area in which the data center is located and whether the location presents risks such as tornadoes, lighting, and floods.
1. Evaluate the location of the data center in the building that houses it. Ensure that no combustible materials are stored on the floors above or below the data center. If combustible materials are stored above, evaluate the fire suppression system, i.e. sprinkler system will result in water damage to floors below.
2. Tour the data center. Document what measures have been taken to control physical access to the areas such as the data center, computer room and telecommunications room.
• Identify all doors into the data center and ensure that each adequately restricts access.
• Make sure all visitors are required to sign-in when entering the data center. This provides a record of visitors to the data center.
3. Determine whether surveillance cameras, security guards or electronic card keys are used to restrict data center access.
4. Determine whether the following computer environmental controls have been installed:
• Fire suppression equipment (e.g., halon system or dry line water suppression and extinguishers)
• Uninterruptible power supply (UPS)
• Emergency Power System (EPS) (e.g., generators)
• Temperature and humidity controllers (ensure a backup A/C Unit exists)
• Emergency power cut-off switches
• Smoke and water detectors
• Emergency lighting
Determine if the above are regularly tested and that maintenance contracts exist.
5. If applicable, determine how the computer system is cooled. If water-cooled, via inquiry, ensure that a backup chiller exists to cool the water.
6. Determine if maintenance is regularly performed on the system equipment to ensure equipment is operating at its expected level of performance.
7. Determine the location of the system consoles used to operate the system. Ensure they are all located within the confines of the data center.
Access or Security Controls
1. Physical Access
a. Assure that actual access to the computer room is limited to the computer operators and IT department supervisor.
o Locked computer labs that require coded ID cards or keys for entry
o Manual key locks on the computer
o Program librarian restricted access to programs as well as a written user log for all programs checked out
2. Electronic Access
a. Determine whether a data security policy exists and is communicated to individuals in the organization. Obtain a copy of the policy to review and evaluate it. Consider whether the policy addresses data ownership, confidentiality of information, and use of passwords.
b. Determine how system resources (i.e., batch, on-line transactions, datasets, and sensitive utilities) are protected on the mainframe, minicomputer and microcomputer. Identify all applications that provide their own security mechanisms. Ensure the following capabilities have been implemented:
• Unique user ids are assigned to all users.
• Unattended terminals are automatically logged off after 30 minutes of inactivity.
• Users are forced to change passwords at least every 90 days.
• Old passwords cannot be reused.
• Passwords are properly masked on the system.
c. Determine if the system uses a call backs on dial-up systems that allow users to access files from remote terminals via phone modems, system security should require the system to automatically look up the phone number of the authorized user and call that user back before access is allowed.
d. Document the procedures to request and delete access to the system. Ensure proper authorization is obtained prior to granting user access to the system resources. Evaluate the procedures established to remove user ids or passwords from the system when an employee leaves.
e. Select 5 users defined to the system's security package and ensure that system access has been properly authorized.
f. Select 5 sensitive datasets and ensure that appropriate access has been established.
g. Identify those users that have been granted privileged authorities on the security package. Document the procedures for monitoring the activity of the privileged user ids.
h. Determine if security related events and/or security violations are logged by the security package and reviewed by the data security administrator.
Systems Development and Documentation Controls
1. Obtain an understanding of the systems development and program change process.
2. Determine if a set of written procedures (in the overall policies and procedures manual) outlining the steps that must be followed by client personnel to modify the IT system. These steps should include
• proper approval to implement any program changes;
• appropriate documentation describing the nature and logic of the proposed changes;
• proper methodology for testing and debugging all changes on a test system before incorporating the changes in an operable systems; and
• a log of all system enhancements and modifications is maintained.
3. Determine if the organization has implemented a methodology for the development of new application systems. Determine if this methodology is applied to the installation of a purchased system.
4. Document the aspects of the Systems Development Life Cycle performed by the IT personnel. Consider the following:
• User participation and sign-off
• Acceptance Testing
• Proper review and approval at the completion of key stages in the development process and documentation requirements
5. Select 2 systems in the development life cycle process and review the development documentation to determine compliance to the SDLC methodology used by the organization.
6. Document the application program change process. Review the procedures to ensure the following critical functions are performed:
• No changes should be made to programs and files until authorization is given in writing.
• Only the computer programmers should make changes;
• Documenting the program change request;
• User approval of the change request;
• Users periodically assigns priority to outstanding change requests
• User accepts the change via sign-off, prior to implementation of the change into production; and
• The change is implemented into the production environment by personnel not responsible for making the changes (adequate segregation of duties).
7. Select 5 recently completed program changes and review the change documentation for compliance to the organization application program change procedures.
8. Test for unauthorized or undocumented programming changes by running a comparison of the working program to the source code.
9. Determine if a test environment exists on the processing system to develop, make changes and test application systems prior to their implementation of the change into the production environment.
10. Review the application program change turnover procedures performed by the independent group responsible for implementation of the application changes into the production environment.
11. Document the organization's emergency program change procedures. Consider whether emergency changes are migrated through segregated libraries to enable review and approval of the change by management.
12. Select 5 emergency program changes to determine compliance to the organization's established procedures.
13. Document the organization's procedures for making rate changes (i.e., tax rates) to the application program.
14. Determine if programming standards have been developed. Consider whether the standards include naming conventions and use of structured code.
15. Determine if a software package (i.e., CA-Librarian) has been installed on the processing system that provides security over production libraries containing source programs, JCL, and other files.
Hardware and System Software Controls
1. Identify hardware controls built into the computer equipment by the manufacturer which may include the following
• Self-diagnosis
• Regular maintenance
• Echo check
• Duplicate process check
• Parity check
2. Identify any software errors that may occur in the operating system.
• Logic occurs before the operational stage
• Coding detected during the program’s testing (debugging) stage
• Modification can occur at any time, even while processing. If not handled properly, program modifications can produce unexpected operations and invalid output and data
o Make inquiry of any unauthorized program modifications which is the most ominous type of software error
o Complete records should be kept of all modifications and a record for any post modification debugging
Computer Operations (Job Scheduling)
1. Determine through inquiry the process for scheduling production batch processing. Ensure users authorized all changes to the production schedule. Select 5 changes and review them for compliance to the scheduling procedures.
2. If an automatic scheduler has not been installed on the system, determine how production processing is controlled.
3. Determine how the computer operator ensures that production processing properly completes.
4. Determine how production-processing output is distributed to the users. Ensure sensitive data is properly controlled.
Backup/Recovery
1. Review the client's system backup and recovery procedures. Document the procedures to ensure that system and incremental backups are performed on a regular basis. Document the frequency of the backups and determine through inquiry and review of documentation whether all files and programs are being backed up properly. Ensure on-line transaction journals are backed up to provide recovery on transactions that updated the databases.
2. Document the procedures to ensure that backup copies of system, programs and data files are rotated to a secure offsite storage location on a scheduled basis. Consider whether an inventory of the backup copies is taken periodically.
3. Determine if a tape management system (TMS) has been installed on the processing system that provides an inventory of tapes by location. Observe that the tapes that are maintained offsite have been properly segregated on the TMS.
Contingency Planning/Disaster Recovery
1. Determine if a written business resumption plan has been developed. Through discussions with management and review of the business resumption plan, determine whether the plan is up-to-date and includes the key components of a business resumption plan.
2. Document whether the business resumption plan has been tested and how often the tests are performed. If the plan has been tested, inquire as to the scope of the tests performed and obtain the results of the last test.
3. Determine if Management of Information Technology (IT) Division has developed a plan for the recovery of information technology resources. Determine if the plan includes recovery of information technology at a hot-site. If so, obtain the contract between the client and the hot-site provider.
4. Evaluate the disaster recovery plan for the IT division. Ensure that application recovery is based on risk (Those applications critical to the organization are recovered first).
5. Evaluate the hot-site contract to ensure that the hot-site vendor to recover the organization’s information technology resources will provide adequate equipment. Ensure that the telecommunications to the hot-site has been considered.
6. Determine if a recovery test of information technology operations has been performed at the hot-site. Obtain the results from the test and evaluate them to ensure test objects were completed.
Telecommunications
1. Determine whether telecommunications provide a reliable and secure environment. Consider dial-back devices, redundant systems, and alternate procedures for the continuation of telecommunication operations.
2. Determine if EDI (Electronic Data Interchange) is utilized. If so, evaluate security and authenticity of interchange.

What is meant by evidential material in the audit process. i cant understand
Evidential materials indicates the process of gathering evidence, documentary, physical, visual, external and internal evidence.

sir what is meant by management threat to independence.
The threat occurs when the auditor acts like management by making managerial decisions.

sir,at the final stage of audit we need to deal with sp and assertion.what is meant by these?
SP = Substantive procedures that includes the AEIOU and the assertions relates to COVER, ACCCO.

sir, in march 2009 Student accounting magazine (page 50)
it says that 'watch dog and not a bloodhound' philospohy regarding the extent of auditor responsibilities for fraud detaction is no more valid in context of the requirements of the redrafted ISA.

does this apply to us in this june papers al
YES, the watch dog and bloodhound case is from the Kingston Cotton mill CASE, which is very very old, the current ISA 240 has already made this invalid. YES it can come out for the coming exam, do read the ISA 240

Revision pointers

2009-05-10T19:45:00.000-07:00

Most students underestimate the importance of sleep for their exam performance. I believe that sleep is the last item that should be sacrificed for the exam, the first is all the other elements that take up the time.

Recent studies by the harvard medical division highlighted the importance of sleep to task performance, the results indicated that those that slept after learning the task could perform the task better than those that did not sleep right after learning the task.

Sleeping one day later, even as much as you want, will not allow the task to be performed any better.

REVISION POINTERS - MAXIMIZATION OF THE REVISION CLASS

1. Do sleep after revisions - get a good night sleep before and after the revision classes
2. Do not play any computer games during the revision period - it tires out your mental ability and forces more consolidation to take place at the sleep time
3. Reduce all other inputs to zero, cut off TV, movies and all other elements that can increase your brains requirements for memorization and organisation
4. Attend the revision, and before going to sleep review the materials that was done for the day
5. When you wake up, review the materials again
6. Go to the next revision, listen, pay attention to what you want, do not assume that you know everything
- if there is an area that you are well versed with that is being revised, use it to test whether the knowledge is valid and what you know fits the scenario
- if there is a weak area being revised, be prepared to ask the question that has been confusing you all this time - make additional notes after getting the explanation from the lecturer
- if the area is new, pay more attention to what, why, how of the area.
7. Avoid distractions during the revision. It is easy for your friend to start talking about irrelevant issues that is not going to help you pass the paper, and it will add to your brains requirement to consolidate information in the sleep.
7.1 Remember, the more focused you are in the revision class, the less work will be involved later on, the less focused = more work ~ maybe causing a marginal failure since you may not get everything in your head
7.2 Every revision class - ask yourself, WHAT DO I WANT, WHY AM I HERE, WHAT ARE THE DISTRACTIONS?

THE RULE IS
1. CONTROL THE INPUT DURING THOSE CRITICAL DAYS
2. REDUCE THE NOISE (DISTRACTIONS) THAT CAN GO INSIDE YOUR HEAD TO MINIMUM
3. HAVE AN OBJECTIVE FOR THE CLASS AND THE TIME PERIOD
4. DO NOT DISTRACT OTHERS AND DO NOT LET OTHERS DISTRACT YOU
5. BORING IS A TERM USED BY PEOPLE WITHOUT AN OBJECTIVE........IF YOU KNEW EVERYTHING THAT WAS DONE IN REVISION IS GOING TO COME OUT, YOU WILL STAY 100% FOCUSED
6. SLEEP

T8 MOCK EXAM THIS FRIDAY

2009-04-23T00:29:00.000-07:00

There are some that want some areas to focus for the coming exams
1. Make sure you cover inventory in detail
2. Something that was examined in the past PT1 and PT2 will repeat
3. Make sure you know your INTERNAL CONTROLS
4. Make sure you know your ASSERTIONS
5. Make sure you know your AUDIT PROCEDURES
6. Be ready for pleasent SURPRISE

There is no luck in the MOCK it is pure skills and knowledge, make sure you do your best.......cause I know that you are capable of higher performance that what you believe you can.

New

2009-04-23T00:14:00.001-07:00

Computers in Audit

2009-04-14T15:14:00.001-07:00

Computers in audit

Describe the uses of computers for the audit by the auditor
Uses in audit are as follows:
a.Flowcharting can be done much faster and can be updated quickly.
b.Assessment of audit risk can be done quickly by using an expert risk assessment system
c.Audit programmes can be updated quickly and completed faster. It facilitates the creation of standard audit programmes that can be copied and paste into new files.
d.Using spreadsheets allow the auditor to perform analytical procedures quickly
e.Audit working papers can be prepared using word processing software (MS WORD) increasing legibility.
f.Audit working papers can be transmitted for review through email to the HQ, saving cost and time
g.Spreadsheets like MS EXCEL can be used to set up budgets for the audit to control cost
h.Software that can be used
i.Commercially available – EXCEL/WORD/POWERPOINT/OUTLOOK
ii.Bespoke programmes – written specifically for auditor (Audit software)

What are the controls that auditor need to maintain on computer files created during the audit?
CONTROLS BY AUDITOR ON FILE
i.Back-up – needs to be kept for 7 years – ISA 230 requirement
ii.Security – sensitive data from the audit must not be openly available for client staff to manipulate / breach confidentiality
iii.Documentation kept – manual papers must exist, not only the digital version
iv.Testing programs – error free, whatever software used must be reliable

Describe the main features of computerized accounting system that can be used by the client
Features of CAS
a.Concentration of controls in the EDP department implies that there is a risk technical experts can override the system
b.Lack of primary records may make the audit difficult especially the loss of physical documents to support transactions
c.There is a danger that transposition error in data input by staffs
d.Loss of audit trail due to the manner in which data is processed may cause a problem in tracing and vouching documents
e.Data needed for the audit may be overwritten accidentally
f.Sufficient internal controls should be set up to ensure that transactions are complete and accurately processed
g.Computer system depends on database administrators who are experts may increase the cost of the system

Describe the implication of computerized accounting system on the auditors approach
Auditing in CAS
a.Auditor has the 2 approaches in auditing in CAS environment – auditing through the computer and auditing around the computer
b.Audit approach is dependent on the assessment of internal controls for the system, the more reliable it is, the higher the chance of auditing through the computer
c.Auditor will need to have significant knowledge of the system and may need the use of experts to assist in the audit (increasing cost of audit)
d.ISA 402 may need to be applied if the client has outsourced the computerized system development

Describe the internal controls that should exist in the computerized accounting system
Internal controls for CAS >>>>>>> HR area
a.Application controls – specific to an individual application, covering inputs, processes, output and master file controls
i.Inputs controls – ensures that transactions are complete, accurate & authorize. Achieved by using one-to-one check, hash totals, document count, sequence check, match master file to transaction file, check digit, existence check, reasonableness check and program check on authorization
ii.Processing controls – file labeling, batch reconciliation, run to run totals
iii.Output controls – Matching batch totals from input to output, summary totals, end of report message and exception reporting
iv.Masterfile – record counts, periodic printout and matching with independent printout, independent control totals

b.General controls – related to the environment to which the system is developed, maintained and operated.
i.Ensure that system development is authorized, standards are followed and changes are tested and documented
ii.Ensure that errors are noted and resolved
iii.Ensure changes in data files are authorized and made accurately
iv.Ensure that system can continue even if there is a failure
v.Ensure that system access is controlled and amendment are authorized
vi.Ensure that system documentation is sufficient
vii.Controls that can be used to achieve the above
1.System should report errors in the hardware and software
2.Job of programmers need to be properly supervised and reviewed
3.Changes to data files will require authorization before it is done
4.Data files need to be backed up frequently
5.Back up data files need to be kept in secure location
6.Amendments to data files need to be recorded and reviewed after changes are made
7.Standby arrangement needs to be made available
8.System needs to be physically secured and protected against theft and fire
9.Sufficient insurance should be taken on the system
10.System should be tested before it goes live
11.System should be documented following proper protocols for future references
12.Program changes need to be authorized
13.Those involved in system development should not be involved in daily operation of system
14.Regular rotation of work for system development and maintenance staff
15.Changes to the program should be tested and reviewed

Describe the implications of control evaluation on computerized accounting systems controls on the audit.

Describe the CAAT available for auditors to test the computerized accounting system
CAAT
a.Auditor can use either test data or audit software as computer assisted audit technique
i.Audit software
1.Type – general package, specially written and clients system
2. Uses – calculation check, system violation detection, exception detection, analysis, selection, completeness check
3.Difficulties – cost, changes in client system, output volume, small installation, file version tested
ii.Test data
1.Uses – live data, dummy data in normal run, dummy data in special run
2.Difficulties – Cost of designing, only for TOC, danger of corrupting system, problems of observation.
iii.Other techniques
1.ITF – Integrated test facilities (test data that is moved to dummy accounts)
2.Embedded audit facility – Auditor writes the system and incorporates it with client system
3.Parallel simulation – auditor writes the program that does the same thing as client system and compare results
4.Application program examination – auditor reviews the clients program codes
5.System software data analysis – review of system log

Explain the impact of small computer on the audit
Small computer system
a.Little controls since few system with multiple access issues
b.Limited segregation of duties with most of the data entry done by 1-2 staffs
c.Limited computer expertise making it hard for auditor to gain any information
d.May face data conversion problems due to limited staffs and controls
e.Lack of audit trail since the small systems might not provide a clear flow

Internet
a.Impact the way transactions are processed – sales are made online
b.May require specialist skills to aid in auditing
c.Requirement for evaluation of impact of virus and hacking on the system controls
d.Change in the way in which substantive procedures – instead of documents, view the document on screen
e.May need to test the system by accessing the online system and making orders

Manual controls in the system
- Physical controls
- Back-up disk
- Data filing
- Documentation of system
- Staff training
- Proofing of the codes
- Batching processing