BPP House 142-144 Uxbridge Road London W12 8AA United Kingdom T 0845 075 1100 (UK) T +44 (0)20 8740 2211 (Overseas) E Learningmedia@bpp.com bpp.com/learningmedia • Banks of questions on every syllabus area • Answers with detailed guidance on approaching questions • Three mock exams with full answers and guidance For exams up to June 2015 Contact us One of a suite of products supporting Paper F8 Audit and Assurance, for use independently or as part of a package, this Kit is targeted at ACCA’s exams up to June 2015 and contains: Practice & Revision Kit Paper F8 Audit and Assurance This Kit provides material specifically for the practice and revision stage of your studies for Paper F8 Audit and Assurance that has been comprehensively reviewed by the ACCA examining team This unique review ensures that the questions, solutions and guidance provide the best and most effective resource for practising and revising for the exam Audit and Assurance BPP Learning Media is dedicated to supporting aspiring business professionals with top-quality learning material as they study for demanding professional exams, often whilst working full time BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials BPP Learning Media’s study materials are written by professionally qualified specialists who know from personal experience the importance of top-quality materials for exam success ACCA F8 ACCA approved content provider ACCA APPROVED CONTENT PROVIDER ACCA Approved Practice & Revision Kit Paper F8 Audit and Assurance Practice & Revision Kit for exams up to June 2015 Free access to our Exam Success site Look inside June 2014 £18.00 ACF8(INT)RK14.indd 1-3 05/06/2014 15:15 PAPER F8 AUDIT AND ASSURANCE BPP Learning Media is an ACCA Approved Learning Partner – content for the ACCA qualification This means we work closely with ACCA to ensure our products fully prepare you for your ACCA exams In this Practice and Revision Kit, which has been reviewed by the ACCA examination team, we: Discuss the best strategies for revising and taking your ACCA exams Ensure you are well prepared for your exam Provide you with lots of great guidance on tackling questions Provide you with three mock exams Provide ACCA exam answers as well as our own for selected questions Our Passcard and i-pass products also support this paper FOR EXAMS UP TO JUNE 2015 P R A C T I C E & R E V I S I O N K I T First edition 2007 &JHIUI edition JVOF 201 ISBN 9781 4727 1105 (previous ISBN 9781 4453 6649 4) e-ISBN 9781 4727 1169 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated Printed in the United Kingdom by Ricoh UK Limited Unit Wells Place Merstham RH1 3LG Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable, sustainable sources ii © BPP Learning Media Ltd 2014 Contents Page Finding questions Question index v Topic index x Helping you with your revision xi Revising F8 Topics to revise xii Question practice xii Passing the F8 exam xiii Exam information xvii Useful websites xviii Questions and answers Questions Answers 89 Exam practice Mock exam Questions 321 A plan of attack 329 Answers .330 Mock exam Questions 347 A plan of attack 357 Answers .358 Mock exam (Specimen paper) Questions 375 A plan of attack 385 Answers .386 ACCA examiner's answers Specimen paper 403 Review form iii A note about copyright Dear Customer What does the little © mean and why does it matter? Your market-leading BPP books, course materials and e-learning materials not write and update themselves People write them: on their own behalf or as employees of an organisation that invests in this activity Copyright law protects their livelihoods It does so by creating rights over the use of the content Breach of copyright is a form of theft – as well as being a criminal offence in some jurisdictions, it is potentially a serious breach of professional ethics With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media: Photocopying our materials is a breach of copyright Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to Facebook or emailing them to your friends is a breach of copyright You can, of course, sell your books, in the form in which you have bought them – once you have finished with them (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single user licence basis: we not supply ‘unlock’ codes to people who have bought them second-hand And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website A tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting organisations that If they act illegally and unethically in one area, can you really trust them? iv Finding questions Question index The headings in this checklist/index indicate the main topics of questions, but questions are expected to cover several different topics Questions set under the old syllabus Audit and Internal Review (AIR) paper are included because their style and content are similar to those which appear in the F8 exam The questions have been amended to reflect the current exam format Time Page number Marks allocation Mins Question Answer MCQs 47 85 89 Audit regulation 10 18 90 Regulation and ethics 10 18 91 Assurance and regulation 10 18 92 Corporate governance 10 18 93 Ethical issues 10 18 94 True and fair, ISAs and assurance engagements (6/10) (amended) 10 18 95 NorthCee (Pilot Paper) (amended) 10 18 96 International Standards on Auditing (AIR 6/06) (amended) 10 18 98 10 Jumper (AIR 6/06) (amended) 10 18 10 99 11 Conoy (6/09) (amended) 10 18 10 100 12 Goofy (6/11) (amended) 10 18 11 102 13 LV Fones (6/10) (amended) 10 18 11 104 14 Ethics 10 18 12 106 15 Code of Ethics and Conduct 10 18 12 108 16 Stark (12/08) (amended) 10 18 12 109 17 Governance 10 18 13 111 18 Serena (12/11) (amended) 10 18 13 113 19 Orange (6/12) (amended) 10 18 13 114 20 Internal audit function 10 18 14 116 21 Internal audit responsibilities 10 18 14 117 22 MonteHodge (6/08) (amended) 10 18 14 118 23 Avocado (6/12) (amended) 10 18 15 120 24 Wood Industries (AIR 6/05) (amended) 10 18 15 122 25 Regulations and limitations (12/12) (amended) 10 18 16 124 26 Brampton (12/09) 10 18 16 126 Part A: Audit framework and regulation Finding questions v Time Page number Marks allocation Mins Question Answer 27 MCQs 41 74 17 129 28 Audit risk and planning 10 18 21 130 29 Interim audit 10 18 21 131 30 Audit planning 10 18 21 132 31 Mason Air Services 10 18 22 133 32 Bingsby 10 18 22 134 33 Risks and professional scepticism 10 18 23 136 34 Sleeptight 10 18 23 137 35 Materiality and documentation (12/10) (amended) 10 18 24 139 36 Interim v final audit (AIR 12/04) (amended) 10 18 24 140 37 Donald (6/11) (amended) 10 18 24 142 38 Bridgford Products 10 18 25 144 39 Cinnamon 10 18 25 145 40 Cardamom 10 18 26 148 41 South 10 18 26 149 42 Planning, analytical procedures and interim audit 10 18 27 151 43 Specs4You (AIR 6/07) 20 36 27 152 44 Tempest (AIR 12/05) 20 36 28 154 45 EuKaRe (12/08) 20 36 29 158 46 Serenity (AIR 12/06) (amended) 20 36 29 160 47 Redsmith (12/10) 20 36 30 163 48 Abrahams (12/11) 20 36 31 166 49 Sunflower (12/12) 20 36 32 171 50 MCQs 36 65 33 175 51 Documenting internal controls (6/11) (amended) 10 18 37 176 52 Flowers Anytime (AIR 12/02) (amended) 10 18 37 178 53 North 10 18 37 179 54 Value for money audit (AIR 12/06) (amended) 10 18 38 180 55 ICQs and ICEQs 10 18 39 181 56 Smoothbrush (6/10) (amended) 10 18 39 182 57 Lily (12/12) (amended) 10 18 40 184 58 Shiny Happy Windows (6/10) 10 18 40 186 59 SouthLea (Pilot Paper) (amended) 10 18 41 188 Part B: Planning and risk assessment Part C: Internal control vi Finding questions Time Page number Marks allocation Mins Question Answer 60 Burton Housing 10 18 41 189 61 Matalas (12/07) (amended) 10 18 42 190 62 Bluesberry (12/10) (amended) 10 18 43 192 63 Chuck (12/11) (amended) 10 18 43 193 64 Rhapsody (AIR 6/07) (amended) 20 36 44 195 65 Fitta 20 36 45 198 66 Greystone (12/10) (amended) 20 36 45 200 67 Blake (12/08) (amended) 20 36 46 204 68 Tinkerbell (6/11) (amended) 20 36 47 206 69 Pear (6/12) (amended) 20 36 48 211 70 DinZee (12/07) (amended) 20 36 49 215 71 MCQs 46 83 50 219 72 Expert (12/08) (amended) 10 18 55 220 73 Audit techniques 10 18 55 221 74 Evidence and assertions (12/09) (amended) 10 18 55 222 75 External confirmations 10 18 56 223 76 Accounting estimates 10 18 56 224 77 Porthos (AIR 12/05) (amended) 10 18 56 225 78 Newthorpe 10 18 57 226 79 Analytical procedures and bank confirmations (6/08) (amended) 10 18 57 228 80 Zak (6/08) (amended) 10 18 58 229 81 Perpetual inventory system 10 18 58 231 82 Rocks Forever (AIR 12/05) (amended) 10 18 58 231 83 Whizee (12/07) (amended) 10 18 59 233 84 CAATs (12/12) (amended) 10 18 59 234 85 Redburn (12/09) (amended) 10 18 60 236 86 Tirrol (6/09) (amended) 10 18 60 237 87 Obtaining evidence 10 18 61 239 88 Letham (12/09) (amended) 10 18 61 240 89 Springfield Nurseries (AIR Pilot Paper) (amended) 10 18 61 242 90 Duck (12/11) (amended) 10 18 62 243 91 Audit procedures 10 18 62 245 92 MistiRead (AIR 6/07) (amended) 10 18 62 246 Part D: Audit evidence Finding questions vii Time Page number Marks allocation Mins Question Answer 93 First Light 10 18 63 248 94 Mickey 10 18 63 249 95 Panda (6/13) (amended) 10 18 63 251 96 Delphic (12/07) 20 36 64 252 97 Tam (AIR 12/06) (amended) 20 36 64 255 98 BearsWorld (AIR 6/05) 20 36 65 257 99 Wear Wraith (AIR 6/06) 20 36 66 260 100 Tracey Transporters (AIR 6/05) 20 36 67 262 101 Duckworth Computers 20 36 67 264 102 Metcalf (AIR 6/07) (amended) 20 36 68 266 103 Have a Bite (12/09) (amended) 20 36 69 269 104 FireFly Tennis Club (AIR 12/06) (amended) 20 36 69 272 105 Walsh (AIR 12/06) (amended) 20 36 70 274 106 Pineapple (6/12) 20 36 71 276 107 Rose (12/12) 20 36 72 280 108 Textile Wholesalers 20 36 72 283 109 MCQs 46 83 74 284 110 Evaluating misstatements and responsibilities 10 18 78 285 111 Written representation and going concern (12/07) (amended) 10 18 78 287 112 Corsco (AIR 12/03) (amended) 10 18 79 289 113 Going concern and auditor's reports (AIR 12/03, amended) 10 18 79 290 114 Greenfields (12/10) (amended) 10 18 79 291 115 Tye (6/09) 10 18 80 293 116 EastVale (amended) 10 18 80 295 117 ZeeDiem (12/08) (amended) 10 18 81 296 118 Green (AIR 6/07) (amended) 10 18 81 298 119 Minnie (6/11) (amended) 10 18 82 300 120 Medimade (6/10) 10 18 82 302 121 Reporting (12/11) (amended) 10 18 83 304 122 Hood Enterprises (AIR 6/05) (amended) 10 18 83 306 123 Galartha (12/07) 10 18 84 307 124 Humphries (12/11) (amended) 10 18 84 309 125 Boggart (12/11) (amended) 10 18 85 311 126 Strawberry (6/12) (amended) 10 18 85 313 Part E: Review and reporting viii Finding questions Mock exam Mock exam Mock exam (Specimen paper) Finding questions ix 404 ACCA examiner's answers: Specimen exam ACCA examiner's answers: Specimen exam 405 406 ACCA examiner's answers: Specimen exam ACCA examiner's answers: Specimen exam 407 408 ACCA examiner's answers: Specimen exam ACCA examiner's answers: Specimen exam 409 410 ACCA examiner's answers: Specimen exam ACCA examiner's answers: Specimen exam 411 412 ACCA examiner's answers: Specimen exam Notes Notes Notes Notes Review Form – Paper F8 Audit and Assurance (06/14) Name: Address: How have you used this Kit? (Tick one box only) During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) Home study (book only) On a course: college Our advertisement in Student Accountant With 'correspondence' package Our advertisement in Pass Other Our advertisement in PQ Our brochure with a letter through the post Why did you decide to purchase this Kit? (Tick one box only) Our website www.bpp.com Which (if any) aspects of our advertising you find useful? (Tick as many boxes as are relevant) Have used the complementary Study text Have used other BPP products in the past Recommendation by friend/colleague Prices and publication dates of new editions Recommendation by a lecturer at college Information on product content Saw advertising Facility to order books off-the-page Other None of the above Which BPP products have you used? Text Passcards Kit i-Pass Home Study Package Your ratings, comments and suggestions would be appreciated on the following areas Very useful Useful Not useful Good Adequate Poor Yes No Passing F8 Questions Top Tips etc in answers Content and structure of answers Mock exam answers Overall opinion of this Kit Excellent Do you intend to continue using BPP products? The BPP author of this edition can be e-mailed at: Yen-peiChen@bpp.com Please return this form to: Pippa Riley, ACCA Publishing Manager, BPP Learning Media Ltd, FREEPOST, London, W12 8AA Review Form (continued) TELL US WHAT YOU THINK Please note any further comments and suggestions/errors below [...]... you with your revision BPP Learning Media – Approved Learning Partner – content As ACCA s Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use exam team reviewed revision materials By incorporating the examination team's comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA- approved support... answer Consider the formats you’ll use and discussion points you’ll make Step 5 xvi Revising F8 Write your answer Exam information The F8 examiner The examiner's approach article to F8 was published in 2010 You must make sure you read this article on the ACCA' s website as it provides useful information about the F8 exam from the examiner’s perspective It includes a description of the format and style... Revising F8 xvii Useful websites The websites below provide additional sources of information of relevance to your studies for Audit and Assurance www.accaglobal.com ACCA' s website The students’ section of the website is invaluable for detailed information about the qualification, past issues of Student Accountant (including technical articles) and a free downloadable Student Planner App www .bpp. com... exam, and Mock exam 3 is the Specimen paper Helping you with your revision xi Revising F8 Topics to revise The F8 paper assumes knowledge of Paper F3 Financial Accounting It is important, therefore, that candidates can apply the knowledge they have gained in this paper to the audit and assurance context of Paper F8 All questions are compulsory so you must revise the whole syllabus Since the exam includes... well as doing the calculations Avoid looking at the answer until you have finished a question Your biggest problem with F8 questions may be knowing how to start, and this needs practice Also ensure that you attempt all three mock exams under exam conditions xii Revising F8 Passing the F8 exam Displaying the right qualities and avoiding weaknesses In order to pass this paper it is important that you get... Practice and Revision Kit provides excellent, ACCA- approved support for your revision Tackling revision and the exam Using feedback obtained from ACCA exam team review: We look at the dos and don’ts of revising for, and taking, ACCA exams We focus on Paper F8; we discuss revising the syllabus, what to do (and what not to do) in the exam, how to approach different types of question and ways of obtaining... how different areas might be examined An examiner’s approach interview is also available on the F8 area of the ACCA website along with an examiner’s analysis interview looking at student performance in various exam sittings, which highlights how students can improve their performance The exam paper The F8 exam is a three-hour paper with 15 minutes of reading time and consists of two sections Section... comments from the examiners to show you where students struggled or performed well in the actual exam We refer to the 2014 BPP Study Text (for exams up to June 2015) for detailed coverage of the topics covered in questions In a bank at the end of this Kit we include the official ACCA answers to the Specimen paper Used in conjunction with our answers they provide an indication of all possible points... provides information about BPP products and services, with a link to the ACCA website www.ifac.org This website provides information on international accounting and auditing issues www.ft.com This website provides information about current international business You can search for information and articles on specific industry groups as well as individual companies xviii Revising F8 Questions 1 2 AUDIT... industry groups as well as individual companies xviii Revising F8 Questions 1 2 AUDIT FRAMEWORK AND REGULATION Questions 1 – 26 cover Audit framework and regulation, the subject of Part A of the BPP Study Text for F8 1 Multiple choice questions 1 85 mins Is the following statement regarding stewardship true or false? Directors are stewards of the investment made by shareholders in a company A B True False ...PAPER F8 AUDIT AND ASSURANCE BPP Learning Media is an ACCA Approved Learning Partner – content for the ACCA qualification This means we work closely with ACCA to ensure our products... Step xvi Revising F8 Write your answer Exam information The F8 examiner The examiner's approach article to F8 was published in 2010 You must make sure you read this article on the ACCA' s website... for this book is available from the British Library Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www .bpp. com/learningmedia All rights reserved No part of this publication