AAA p7 BPP advanced audit and assurance INT

lOMoARcPSD|4453900 S T U D Y ADVANCED AUDIT AND ASSURANCE (AAA) (INTERNATIONAL) T E X T BPP Learning Media is an ACCA Approved Content Provider This means we work closely with ACCA to ensure this Study Text contains the information you need to pass your exam In this study text, which has been reviewed by the ACCA examining team we:  Discuss the best strategies for studying for ACCA exams  Highlight the most important elements in the syllabus and the key skills you need  Signpost how each chapter links to the syllabus and the study guide  Provide lots of exam focus points demonstrating what is expected of you in the exam  Emphasise key points in regular fast forward summaries  Test your knowledge in quick quizzes  Examine your understanding in our practice question bank  Reference all the important topics in our full index BPP's Practice & Revision Kit also supports the Advanced Audit and Assurance syllabus FOR EXAMS IN SEPTEMBER 2018, DECEMBER 2018, MARCH 2019 AND JUNE 2019 Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 First edition 2007 A note about copyright Eleventh edition January 2018 Dear Customer ISBN 9781 5097 1684 (Previous ISBN 9781 5097 0849 9) What does the little © mean and why does it matter? e-ISBN 9781 5097 1714 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 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 Published by With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media: BPP Learning Media Ltd BPP House, Aldine Place 142-144 Uxbridge Road London W12 8AA www.bpp.com/learningmedia Printed in the United Kingdom Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable sustainable sources 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, unless otherwise stated BPP Learning Media is grateful to the IASB for permission to reproduce extracts from the International Financial Reporting Standards including all International Accounting Standards, SIC and IFRIC Interpretations (the Standards) The Standards together with their accompanying documents are issued by: The International Accounting Standards Board (IASB) 30 Cannon Street, London, EC4M 6XH, United Kingdom Email: info@ifrs.org Web: www.ifrs.org Disclaimer: The IASB, the International Financial Reporting Standards (IFRS) Foundation, the authors and the publishers not accept responsibility for any loss caused by acting or refraining from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise to the maximum extent permitted by law  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 e-mailing 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 secondhand 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? Copyright © IFRS Foundation All rights reserved Reproduction and use rights are strictly limited No part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the IFRS Foundation Contact the IFRS Foundation for further details The IFRS Foundation logo, the IASB logo, the IFRS for SMEs logo, the “Hexagon Device”, “IFRS Foundation”, “eIFRS”, “IAS”, “IASB”, “IFRS for SMEs”, “IASs”, “IFRS”, “IFRSs”, “International Accounting Standards” and “International Financial Reporting Standards”, “IFRIC” “SIC” and “IFRS Taxonomy” are Trade Marks of the IFRS Foundation Further details of the Trade Marks including details of countries where the Trade Marks are registered or applied for are available from the Licensor on request © BPP Learning Media Ltd 2018 ii Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Contents Page Introduction Helping you to pass v Studying AAA vii The exam xiii Part A Regulatory environment International regulatory environments for audit and assurance services Part B Professional and ethical considerations Code of ethics and conduct 41 Professional liability 79 Part C Practice management Quality control 109 Obtaining and accepting professional appointments 119 Part D Planning and conducting an audit of historical financial information Planning and risk assessment 139 Evidence 189 Evaluation and review – matters relating to specific accounting issues 231 Group audits and transnational audits 299 Part E Completion, review and reporting 10 11 Completion 333 Reporting 377 Part F Other assignments 12 13 14 15 Audit-related services and other assurance services 415 Prospective financial information (PFI) 447 Forensic audits 461 Social, environmental and public sector auditing 473 Part G Current issues and developments 16 Current issues 503 List of articles by the examining team 519 Practice question bank 525 Practice answer bank 547 Bibliography 607 Index 613 Review form Contents Downloaded by Anil Kumar (ak324h7@gmail.com) iii lOMoARcPSD|4453900 iv Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Helping you to pass BPP Learning Media – ACCA Approved Content Provider As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use study materials reviewed by the ACCA examining team By incorporating the examining team's comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Study Text provides excellent, ACCA-approved support for your studies These materials are reviewed by the ACCA examining team The objective of the review is to ensure that the material properly covers the syllabus and study guide outcomes, used by the examining team in setting the exams, in the appropriate breadth and depth The review does not ensure that every eventuality, combination or application of examinable topics is addressed by the ACCA Approved Content Nor does the review comprise a detailed technical check of the content as the Approved Content Provider has its own quality assurance processes in place in this respect The PER alert Before you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a three year practical experience requirement (PER) To help you to recognise areas of the syllabus that you might be able to apply in the workplace to achieve different performance objectives, we have introduced the 'PER alert' feature You will find this feature throughout the Study Text to remind you that what you are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement Your achievement of the PER should now be recorded in your online My Experience record Tackling studying Studying can be a daunting prospect, particularly when you have lots of other commitments The different features of the Study Text, the purposes of which are explained fully on the Chapter features page, will help you while studying and improve your chances of exam success Developing exam awareness Our Study Texts are completely focused on helping you pass your exam Our advice on Studying AAA outlines the content of the exam, the necessary skills you are expected to be able to demonstrate and any brought forward knowledge you are expected to have Exam focus points are included within the chapters to highlight when and how specific topics have been examined, or how they might be examined in the future Testing what you can Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content Introduction Downloaded by Anil Kumar (ak324h7@gmail.com) v lOMoARcPSD|4453900 Chapter features Each chapter contains a number of helpful features to guide you through each topic Topic list Topic list Syllabus reference Tells you what you will be studying in this chapter and the relevant section numbers, together with ACCA syllabus references Introduction Puts the chapter content in the context of the syllabus as a whole Study guide Links the chapter content with ACCA guidance Exam guide Highlights how examinable the chapter content is likely to be and the ways in which it could be examined Knowledge brought forward from earlier studies What you are assumed to know from previous studies/exams FAST FORWARD Summarises the content of main chapter headings, allowing you to preview and review each section easily Examples Demonstrate how to apply key knowledge and techniques Key terms Definitions of important concepts that can often earn you easy marks in exams Exam focus points Tell you when and how specific topics have been examined, or how they may be examined in the future Formula to learn Formulae that are not given in the exam but which have to be learnt This is a new feature that gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER) vi Question Essential practice of techniques covered in the chapter Case Study Real world examples of theories and techniques Chapter Roundup A full list of the Fast Forwards included in the chapter, providing an easy source of review Quick Quiz A quick test of your knowledge of the main topics in the chapter Practice Question Bank Found at the back of the Study Text with more comprehensive chapter questions Cross referenced for easy navigation Introduction Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Studying AAA As the name suggests, this subject examines advanced audit and assurance topics AAA is one of the Strategic Professional Options exams, and as such candidates must consider carefully whether they have the required competencies The examining team expects you to demonstrate a highly professional approach to all questions – not just presenting information in a professional manner, but also integrating knowledge and understanding of topics from across the syllabus The examining team is also very keen for students to demonstrate evidence of wider reading and an understanding of current issues as they affect audit and assurance At the absolute minimum you should read Student Accountant The examining team often examines topics that it has written about in Student Accountant What AAA is about The aim of the syllabus is to analyse, evaluate and conclude on the assurance engagement and other audit and assurance issues in the context of best practice and current developments The exam builds on the topics covered in AA Audit and Assurance (formerly Paper F8), but as an advanced exam it tests much more than just your knowledge of ISAs and your ability to list standard audit procedures You must be able to apply your knowledge to more complex audit and assurance scenarios, identifying and formulating the work required to meet the objectives of audit and non-audit assignments and to evaluate the findings and results of work performed Accounting knowledge examined in SBR Strategic Business Reporting (formerly Paper P2 Corporate Reporting) is also assumed Therefore, candidates studying for AAA should refer to the Accounting Standards listed under SBR The syllabus is divided into seven main sections: (a) Regulatory environment This section introduces the legal and regulatory environment including corporate governance issues It also examines the topics of money laundering and the consideration of laws and regulations (b) Professional and ethical considerations The details of the various ethical codes should be familiar to you from your earlier studies, however the importance of this topic should not be underestimated The examining team has indicated that ethical and professional issues are likely to feature in every sitting This section also covers fraud and professional liability, both of which are topical issues (c) Practice management This part of the syllabus covers quality control, tendering and professional appointments It also covers advertising, publicity, obtaining professional work and fees (d) Planning and conducting an audit of historical financial information This is the largest section of the syllabus, looking in detail at the procedures involved in an external audit, as well as relevant accounting issues The examining team has indicated that audit planning will be examined in Section A of every exam This will be a case study question that involves detailed information and a range of requirements spread across sections A – D of the syllabus (e) Completion, review and reporting Questions may require candidates to assess going concern or the impact of subsequent events, together with any identified misstatements The detail of auditor's reports should be familiar to you from your earlier studies At this level you will be expected to apply this knowledge to more complex scenarios Questions will be set at the completion stage of the audit, and may ask candidates to assess the effect of issues on the auditor’s report This section of the syllabus also includes reports to management Introduction Downloaded by Anil Kumar (ak324h7@gmail.com) vii lOMoARcPSD|4453900 (f) Other assignments This section also covers a range of audit-related and assurance services The examining team has stressed the need for candidates to be able to tackle these types of scenario (g) Current issues and developments Current issues and developments includes a wide range of topics from across the syllabus, including professional, ethical and corporate governance, information technology, going concern, transnational audits and social and environmental auditing Questions in this area are unlikely to extent to a whole question, but will be incorporated in to a Section A or B question You will therefore need to be able to discuss current issues topics in the context of a client scenario Candidates are expected to have read around the issues for themselves Skills you have to demonstrate 2.1 Knowledge and application Even with exams you've previously taken, you'll remember that passing didn't only mean reproducing knowledge You also had to apply what you knew At Strategic Professional, the balance is tilted much more towards application You will need a sound basis of technical knowledge The exams will detect whether you have the necessary knowledge However, you won't pass if you just spend your time acquiring knowledge Developing application skills is vital 2.2 Application skills  A thorough understanding of the relevant audit, assurance and financial reporting regulations that fall within the syllabus  The ability to apply knowledge to specific client scenarios  The ability to have an independent opinion, backed by reasoned argument  An appreciation of commercial factors which influence practice management  An appreciation of fast-moving developments in audit and assurance practices The AAA examining team made very similar comments in a number of recent examining team's reports which is so important that we will quote it here These pitfalls tend not to change significantly from year to year: 'Similar factors as detailed in previous examining team's reports continue to contribute to the unsatisfactory pass rate:      Failing to answer the specific question requirements Not applying knowledge to question scenarios Not explaining or developing points in enough detail Lack of knowledge on certain syllabus areas Illegible handwriting' 'As seen in previous sittings, what makes the difference between a pass and a fail script is usually the level of application skills which have been demonstrated Candidates who answer the specific question requirement, and tailor their answers to the scenarios provided, are likely to well.' (Examiner's Report, June 2011) viii Introduction Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 How to improve your chances of passing 3.1 Study the whole syllabus Study the entire syllabus There are no optional questions for AAA, so there is nowhere to hide if a difficult topic is examined Moreover, questions may focus on several areas of the syllabus, so if you have not studied the whole syllabus then you could find yourself unable to answer a question, either in part or in full Question spotting at this level is unwise and not recommended 3.2 Focus on themes, not lists There are quite a few lists in the Text This is inevitable because technical guidance often comes in list form Lists are also sometimes the clearest way of presenting information However, the examining team has stressed that passing the exam is not a matter of learning and reproducing lists Good answers will have to focus on the details in the scenario and bring out the underlying themes that relate to the scenario The points in them will have more depth than a series of single-line bullet points 3.3 Read around Read the financial press and relevant websites for real life examples – the examining team is specifically ooking for evidence of wider reading Read Student Accountant (the ACCA's student magazine) regularly – it often contains technical articles written either by or on the recommendation of the examining team which can be invaluable for future exams, not least because they tend to focus on examinable areas of the syllabus 3.4 Lots of question practice You can develop application skills by attempting questions in the Exam Question Bank and later on in the BPP Learning Media Practice & Revision Kit Answering questions Practise as many questions as you can under timed conditions – this is the best way of developing good exam technique Make use of the Question Bank at the back of this Text BPP's Practice & Revision Kit contains numerous exam-standard questions (many of them taken from past exam sittings) as well as three mock exams for you to try Section A questions will be the case study type of question – make sure you relate your answers to the scenario rather than being generic Answers that are simply regurgitated from Texts are unlikely to score highly Present your answers in a professional manner – there are four professional marks available for setting answers out properly and for coherent, well structured arguments and recommendations You should be aiming to achieve all of these marks Consider the question requirement carefully so that you answer the actual question set Answer plans will help you to focus on the requirements of the question and enable you to manage your time effectively Answer the question that you are most comfortable with first – it will help to settle you down if you feel you have answered the first question well Introduction Downloaded by Anil Kumar (ak324h7@gmail.com) ix lOMoARcPSD|4453900 4.1 Analysing question requirements It's particularly important to consider the question requirements carefully to make sure you understand exactly what the question is asking, and whether each question part has to be answered in the context of the scenario or is more general You also need to be sure that you understand all the tasks that the question is asking you to perform Remember that every word will be important If for example you are asked to 'Explain the importance of identifying all audit risks arising at the planning stage of the audit of Company X', then you would not identify all the audit risks at Company X This would be a waste of your time and would gain no marks You must focus your answer on the requirement that is set 4.2 Understanding the question verbs Verbs that are likely to be frequently used in this exam are listed below, together with their intellectual levels and guidance on their meaning Bold text denotes verbs used most frequently in AAA Intellectual level Evaluate/critically evaluate Determine the value of in the light of the arguments for and against (critically evaluate means weighting the answer towards criticisms / arguments against) Design To devise in order to execute a plan Assess Determine the strengths/weaknesses/importance/ significance/ability to contribute Examine Critically review in detail Discuss Examine by using arguments for and against Explore Examine or discuss in a wide-ranging manner Criticise Present the weaknesses of / problems with the actions taken or viewpoint expressed, supported by evidence Construct the case Present the arguments in favour or against, supported by evidence Recommend Advise the appropriate actions to pursue in terms the recipient will understand Distinguish Define two different terms, viewpoints or concepts on the basis of the differences between them Compare and contrast Explain the similarities and differences between two different terms, viewpoints or concepts Contrast Explain the differences between two different terms, viewpoints or concepts Analyse Give reasons for the current situation or what has happened Define Give the meaning of Explain Make clear Identify Recognise or select Describe Give the key features A lower level verb such as define will require a more descriptive answer A higher level verb such as evaluate will require a more applied, critical answer The examining team has stressed that higher-level requirements and verbs will be most significant in this exam, for example critically evaluating a statement and arguing for or against a given idea or position The examining team is looking to set questions that provide evidence of student understanding x Introduction Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 US Law Sarbanes-Oxley Act 2002 [Online] Available at: https://www.sec.gov/about/laws/soa2002.pdf [Accessed 11/2016] Corporate governance code FRC (2016) FRC UK Corporate Governance Code [Online] Available at: https://www.frc.org.uk/OurWork/Corporate-Governance-Reporting/Corporate-governance/UK-Corporate-Governance-Code.aspx [Accessed 09/2016] FRC Audit and Assurance Standards and Guidance FRC (2016) Standards and guidance [Online] Available from: https://www.frc.org.uk/OurWork/Audit/Audit-and-assurance/Standards-and-guidance.aspx [Accessed 09/2016] International Financial Reporting Standards IFRS Foundation (2016) IFRS [Online] Available at: http://eifrs.ifrs.org [Accessed 09/2016] International Audit and Assurance Standards Board guidance IAASB (2016) Publications [Online] Available from: https://www.iaasb.org/publications-resources [Accessed 10/2016] International Ethics Standards Board for Accountants guidance IESBA (2016) Publications [Online] Available from: https://www.ethicsboard.org/publications-resources [Accessed 10/2016] 610 Bibliography Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Index 611 Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 612 Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Note Key Terms and their page references are given in bold ACCA Technical Factsheet 145 Anti-money laundering for the accounting sector, 23 Accounting estimate, 234 Accounting Framework, 254 Accounting policies, 183 Actuarial assumptions, 280 Adverse opinion, 393 Advertising and fees, 120 Advocacy, 44 Advocacy threat, 61 Agreed-upon procedures assignment, 429 Agriculture, 242 Analytical procedures, 177, 335 Anomaly, 193 Appropriateness, 193 Assertions, 191 Associate, 301, 307 Assurance engagement, 431 Attestation engagement, 431 Audit agreement, 132 Audit committees, 12 Audit firms, 324 Audit interrogation software, 197 Audit risk, 164 Audit sampling, 193 Auditor rotation, 15 Auditor's expert, 211 Audit-related services, 417 Comparative financial statements, 348 Comparative information, 347 Compliance risk, 167 Component, 309 Component auditor, 254, 310 Component materiality, 310 Computer assisted audit techniques, 197, 198 Confidentiality, 43, 68 Conflicts of interest, 72 Contingent consideration, 301 Contingent fee, 55 Contract, 255 Control, 254, 301, 304 Control risk, 164, 165 Corporate finance, 60 Corresponding figures, 348 Customer, 255 D Borrowing costs, 278 Brands, 245 BS 7750 Environmental Management System, 481 Bulletin 2006/5 The Combined Code on Corporate Governance: Requirements of Auditors Under the Listing Rules of the Financial Services Authority, 20 Business relationships, 54 Business risk, 167 ata analytics, 505 Deferred taxation, 270 Deficiencies, 407 Deficiency in internal control, 407 Defined benefit liability, 281 Derivative, 246 Detection risk, 164, 166 Development costs, 244 Difficulty, 254 Direct assistance, 219 Direct Effect, 30 Direct engagement, 431 Disciplinary procedures, 46 Disclaimer of opinion, 393 Disclaimers, 86 Disclosures, 160 Discontinued operations, 287 Dividend cover, 337 Domestic PEPs, 130 Due diligence, 426 Duty of care, 81, 82 Duty of confidence, 68 Capital, 336 Earnings per share, 285 Capping liability, 91 Cash-generating unit, 239 Civil Procedure Rules, 464 Client screening, 130 Close family, 64 Cold review, 113 Committee of European Auditing Oversight Bodies (CEAOB), 11 Eco-audit, 481 Eco-labelling, 481 Embedded audit facilities, 198 Emphasis of Matter, 391 Emphasis of Matter (EoM) paragraph, 391 End of the Reporting Period, 254 Engagement letter, 132 Environmental audits, 481 Environmental Impact Assessments (EIAs), 481 Big data, 505 Index Downloaded by Anil Kumar (ak324h7@gmail.com) 613 lOMoARcPSD|4453900 Environmental management system (EMS), 477 Environmental Quality Management (EQM), 481 Environmental SWOT analysis, 481 Equity method, 308 EU audit regulation, 11, 14, 15 Exercise Control, 254 Expectations gap, 103 Expert, 210 Expert witness reports, 465 Fair value, 233, 246, 301 Familiarity, 44, 61 Family and personal relationships, 55 Fees – relative size, 56 Fidelity guarantee insurance, 89 Financial asset, 236, 242, 247 Financial instrument, 246 Financial interest, 51 Financial liability, 247, 248 Financial Reporting Council (FRC), Financial risks, 167 Financial statement assertions, 191 First year audit, 182 Forecast, 449 Foreign PEPs, 130 Forensic accounting, 462 Forensic auditing, 462 Forensic investigation, 462 Fraud, 93 FRC Guidance on risk management, internal control and related financial and business reporting ('Risk Guidance'), 216 Gain or Loss, 254 Gifts and hospitality, 55 Going concern, 254, 357 as a key audit matter (KAM), 388 in the auditor's report, 397 Going concern statements, 367 Goodwill, 244 Government grants and assistance, 263 Group, 310 Group audit, 310 Group-wide controls, 318 H edge accounting, 248 High Inflation., 254 Hot review, 113 IAASB A Framework for Audit Quality, 512 IAASB Determining and Communicating Key Audit Matters (June 2016), 385 614 IAASB ED of ISA 540 Auditing Accounting Estimates and Related Disclosures, 509 IAASB Exploring the Growing Use of Technology in the Audit, with a Focus on Data Analytics, 505 IAASB More Informative Auditor's Reports - What Audit Committees and Finance Executives Need to Know (2016), 388, 389 IAASB Practice Alert Audit Considerations in Respect of Going Concern in the Current Economic Environment (Jan 2009), 510 IAASB Practice Alert Challenges in Auditing Fair Value Accounting Estimates in the Current Market Environment (Oct 2008), 511 IAASB Preface to International Standards on Quality Control, Auditing, Assurance and Related Services, IAASB Q&A paper Auditor Considerations Regarding Significant, Unusual or Highly Complex Transactions, 511 IAASB Q&A Paper Professional Scepticism in an Audit of Financial Statements, 511 IAASB Q&A paper XBRL: The Emerging Landscape, 511 IAASB The New Auditor’s Report: Questions and Answers, 388 IAPN 1000 Special Considerations in Auditing Financial Instruments, 246 IAS Presentation of Financial Statements, 424 IAS Statements of Cash Flows, 288 IAS Accounting Policies, Changes in Accounting Estimates and Errors, 292 IAS 10 Events After the Reporting Period, 356 IAS 12 Income Taxes, 270 IAS 19 Employee Benefits, 279 IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, 263 IAS 23 Borrowing Costs, 278 IAS 31 Interests in Joint Ventures, 308 IAS 33 Earnings Per Share, 285, 401 IAS 37 Provisions, Contingent Liabilities and Contingent Assets, 274 IAS 38 Intangible Assets, 243, 244 IAS 40 Investment Property, 252 IAS 41 Agriculture, 242 IESBA Changes to the Code Addressing Certain Non-assurance Services Provisions for Audit and Assurance Clients, 514 IESBA Code of Ethics for Professional Accountants, 42 IESBA ED Improving the Structure of the Code of Ethics for Professional Accountants—Phase and Phase 2, 508 IESBA ED Limited Re-exposure of Proposed Changes to the Code Addressing the Long Association of Personnel with an Audit Client (Feb 2016), 507 Index Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 IESBA ED Proposed Application Material Relating to Professional Skepticism and Professional Judgment, 510 IESBA ED Proposed Revisions Pertaining to Safeguards in the Code—Phase (Jan 2017), 508 IESBA Ethical Considerations Relating to Audit Fee Setting in the Context of Downward Fee Pressure, 124 IFAC Towards Enhanced Professional Skepticism, 509 IFRS Share-based Payment, 282 IFRS Business Combinations, 243 IFRS Non-current Assets Held for Sale and Discontinued Operations, 287 IFRS Operating Segments, 284 IFRS 15 Revenue from Contracts with Customers, 255 IFRS 16 Leases, 264 Immediate family, 64 Impairment review, 240 Income, 255 Incorporation, 90 Independence, 46 Independence in appearance, 48 Independence of mind, 48 Inherent risk, 164 Initial audit engagements, 182 Insider dealing, 81 Insolvency, 81 Insurance claims, 463 Integrated Test Facility (ITF), 198 Integrity, 43 Internal audit, 124, 217 Internal auditors, 18 Internal control effectiveness, 19 International Auditing and Assurance Standards Board (IAASB), International Education Standards (IESs), 326 Intimidation, 44, 64 Investment, 301 Investment property, 252 ISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing, 141, 163 ISA 210 Terms of Audit Engagements, 130 ISA 220 Quality Control for an Audit of Financial Statements, 335, 338 ISA 230 Audit Documentation, 225 ISA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, 94 ISA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, 258 ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements, 29, 485 ISA 260 Communication with Those Charged with Governance, 403 ISA 300 Planning an Audit of Financial Statements, 141 ISA 315 Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment, 95 ISA 330 The Auditor's Responses to Assessed Risks, 146 ISA 402 Audit Considerations Relating to Entities Using Service Organisations, 222 ISA 450 Evaluation of Misstatements Identified During the Audit, 162 ISA 501 Audit Evidence – Additional Considerations for Specific Items, 276 ISA 510 Initial Engagements – Opening Balances, 208 ISA 520 Analytical Procedures, 177, 335 ISA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures, 234 ISA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures, 246 ISA 550 Related Parties, 199 ISA 560 Subsequent Events, 356 ISA 570 Going Concern, 361 ISA 580 Written Representations, 344 ISA 600 Special Considerations – Audit of Group Financial Statements (Including the Work of Component Auditors), 318 ISA 610 Using the Work of Internal Auditors, 217 ISA 620 Using the Work of an Expert, 211 ISA 701 Communicating Key Audit Matters in the Independent Auditor’s Report, 383 ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report, 391 ISAE 3400 The Examination of Prospective Financial Information, 448 ISQC Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements, 67, 127 ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, 422 ISRS 4400 Engagements to Perform Agreed Upon Procedures Regarding Financial Information, 429 ISRS 4410 Compilation Engagements, 441 Joint arrangement, 301, 308 Joint audit, 323 Joint control, 301, 308 Joint venture, 301, 308 Index Downloaded by Anil Kumar (ak324h7@gmail.com) 615 lOMoARcPSD|4453900 Key audit matters, 383 Key audit partner, 63 Know your client, 130 Knowledge, 27 Leases, 264 Legal action, 131 Legal liability, 80 Liabilities, 263 Limited assurance, 452 Limited assurance engagement, 432 Limited liability partnerships, 90 Litigation avoidance, 87 Loans and guarantees, 53 Lowballing, 56, 124 Management responsibilities, 49 Management's expert, 211, 251 Management's point estimate, 234 Material Effect, 30 Material misstatement, 394 Materiality, 158 Misstatement of the other information, 352 Modified opinions, 393 Money laundering, 21, 246 N egligence, 81, 463 New audit, 182 Non-compliance, 29 Non-Compliance with Laws And Regulations (NOCLAR), 71 Non-sampling risk, 193 Objectivity, 43 Opening balances, 208 Operational risks, 167 Other information, 352 Other Matter (OM) paragraph, 391 Overdue fees, 55 P ayment of Profits, 254 Pension costs, 279 Performance information, 486 Performance materiality, 158, 159 Performance obligation, 255 Pervasiveness, 394 Politically exposed persons, 130 Population, 193 Post-issuance review, 113 Preconditions for an audit, 131 Pre-issuance review review, 113 Price/Earnings (P/E) ratio, 337 616 Professional behaviour, 43 Professional competence and due care, 43 Professional indemnity insurance (PII), 89 Professional scepticism, 48, 141 Projection, 449 Proportionate liability, 91 Prospective financial information (PFI), 448 Provisions and contingencies, 274 Public interest entities, 48 Q ualified opinion, 393 Quality control review, 113 Reasonable assurance engagement, 432 Recognised Supervisory Bodies, Recoverable amount, 239 Recruitment services, 57 Related party, 200 Restated, 254 Restrictions, 254 Revenue, 255 Review engagements, 417 Risk assessment, 442 Risk of material misstatement, 171 Risk-based auditing, 149 ROCE, 336 Royal Bank of Scotland v Bannerman Johnstone Maclay and Others, 86 Sampling, 158 Sampling risk, 193 Sampling units, 193 Sarbanes-Oxley Act, 57 Segment reporting, 284 Self-interest, 44 Self-interest threat, 51 Self-review, 44, 57 Service auditor, 222 Service organisation, 222 Share-based payment, 282 Significant component, 312 Significant deficiency in internal control, 407 Significant influence, 301, 307 Significant risk, 144 Social audits, 480 Statements of cash flows, 288 Statistical sampling, 193 Stratification, 193 Subject matter information, 435 Subsequent events, 356 Subsidiaries, 307 Subsidiary, 301 Sufficiency, 193 Supplier audits, 482 Index Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Suspicion, 27 Systems Control and Review File (SCARF), 198 Type report, 222 UK Corporate Governance Code, 13 Tendering, 15, 123 Terrorist financing, 464 Test data, 198 The Forum of Firms, 326 Those charged with governance, 403 Tolerable misstatement, 193 Tolerable rate of deviation, 193 Top-down approach, 149 Transaction price, 255 Transnational audit, 324 Transnational Auditors Committee (TAC), 324 Trend analysis, 181 Type report, 222 Uncorrected misstatements, 342 Underlying subject matter, 435 User auditor, 222 User entity, 222 V aluation, 59 Valuation of non-current assets, 238 Value in use, 239 Working papers, 226 Written representations, 344 Index Downloaded by Anil Kumar (ak324h7@gmail.com) 617 lOMoARcPSD|4453900 618 Index Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Notes Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Notes Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Notes Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Notes Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 Review Form – Advanced Audit and Assurance (AAA) (International) (01/18) Please help us to ensure that the ACCA learning materials we produce remain as accurate and user-friendly as possible We cannot promise to answer every submission we receive, but we promise that it will be read and taken into account when we update this Study Text Name: Address: During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) How have you used this Study Text? (Tick one box only) Home study (book only) On a course: college Our advertisement in ACCA 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 Study Text? (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 BPP Study Texts in the past Recommendation by friend/colleague Recommendation by a lecturer at college Prices and publication dates of new editions Saw information on BPP website Information on Study Text content Saw advertising Facility to order books off-the-page Other None of the above Which BPP products have you used? Study Text Passcards Kit i-Pass Other Your ratings, comments and suggestions would be appreciated on the following areas Very useful Useful Not useful Good Adequate Poor Yes No Introductory section Chapter introductions Key terms Quality of explanations Case studies and other examples Exam focus points Questions and answers in each chapter Fast forwards and chapter roundups Quick quizzes Question Bank Answer Bank Index Overall opinion of this Study Text Excellent Do you intend to continue using BPP products? On the reverse of this page is space for you to write your comments about our Study Text We welcome your feedback The author of this edition can be emailed at: accaqueries@bpp.com Downloaded by Anil Kumar (ak324h7@gmail.com) lOMoARcPSD|4453900 TELL US WHAT YOU THINK Please note any further comments and suggestions/errors below For example, was the text accurate, readable, concise, user-friendly and comprehensive? Downloaded by Anil Kumar (ak324h7@gmail.com) ... lOMoARcPSD|4453900 1.2.2 International standard setting International Standards on Auditing (ISAs) are produced by the International Auditing and Assurance Standards Board (IAASB), a technical standing committee... 2) IFAC (International Federation of Accountants) IAASB (International Auditing and Assurance Standards Board)  ISAs (International Standards on Auditing)  ISQCs (International Standards on... evaluate and conclude on the assurance engagement and other audit and assurance issues in the context of best practice and current developments The exam builds on the topics covered in AA Audit and Assurance