ACCA P7 Advanced Audit and Assurance (International): Study Text

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Contents
Introduction
	Helping you to pass
		BPP Learning Media – ACCA Approved Content Provider
		The PER alert
		Tackling studying
		Developing exam awareness
		Testing what you can do
	Chapter features
	Studying P7
		1 What P7 is about
		2 Skills you have to demonstrate
			2.1 Knowledge and application
			2.2 Application skills
		3 How to improve your chances passing
			3.1 Study the whole syllabus
			3.2 Focus on themes, not lists
			3.3 Read around
			3.4 Lots of question practice
		4 Answering questions
			4.1 Analysing question requirements
			4.2 Understanding the question verbs
			4.3 Content of answers
		5 Gaining professional marks
		6 Brought forward knowledge
	The exam paper
		Format of the paper
		Guidance
		Analysis of past papers
	Syllabus and study guide
Part A Regulatory environment
	Chapter 1 International regulatory environments for audit and assurance services
		Introduction
		Study guide
		Exam guide
		1 International regulatory frameworks for audit and assurance services
			1.1 The need for laws, regulations, standards and other guidance
			1.2 The legal and professional framework
				1.2.1 Overview of the UK regulatory framework
				1.2.2 International standard setting
				1.2.3 Current ISAs and other examinable documents
			1.3 Public oversight
				1.3.1 Public oversight internationally
				1.3.2 Other examples of public oversight
		2 Corporate governance and audit committees
			2.1 General requirements of codes of corporate governance
				2.1.1 UK Corporate Governance Code
			2.2 UK Corporate Governance Code provisions
			2.3 FRC Guidance on Audit Committees
				2.3.1 Establishment of the audit committee
				2.3.2 Relationship with the Board
				2.3.3 Role and responsibilities
				2.3.4 Role and responsibilities in relation to external auditor
				2.3.5 Communication with shareholders
			2.4 Advantages and disadvantages of audit committees
		3 Internal control effectiveness
			3.1 Importance of internal control and risk management
			3.2 Directors' responsibilities
			3.3 Auditors' responsibilities
			3.4 Assurance services
		4 Money laundering Pilot paper, 12/07, 12/09, 6/12, 6/14, Mar/Jun 16
			4.1 What is money laundering?
				4.1.1 Background
				4.1.2 How money is laundered
			4.2 International recommendations and UK law
			4.3 Ethical guidance
				4.3.1 Need for ethical guidance
				4.3.2 Confidentiality and ethical conflict
			4.4 Accountants' obligations
				4.4.1 'Customer due diligence' information
			4.5 Risk-based approach
			4.6 The scope of criminal offences
				4.6.1 Money laundering offences
				4.6.2 Failure to report offences under the legislation
				4.6.3 Tipping off and other offences
				4.6.4 Interaction of reporting duties
		5 Laws and regulations 6/12, 12/13, 6/15
			5.1 Legal requirements relating to the company
			5.2 Responsibility of management for compliance
			5.3 Responsibility of the auditor
			5.4 The auditor's consideration of compliance
				5.4.1 Audit procedures when non-compliance is identified or suspected
			5.5 Reporting of identified or suspected non-compliance
				5.5.1 To those charged with governance
				5.5.2 To the users of the auditor's report
				5.5.3 To regulatory and enforcement authorities
			5.6 Withdrawal from the engagement
			5.7 Documentation
			5.8 Practical problems with ISA 250
				5.8.1 Distinction between types of law
				5.8.2 Procedures that should be performed
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
Part B Professional and ethical considerations
	Chapter 2 Code of ethics and conduct
		Introduction
		Study guide
		Exam guide
		1 Fundamental principles and the conceptual framework approach Pilot paper, 12/07, 6/09
			1.1 The importance of ethics
			1.2 Sources of ethical guidance
			1.3 The fundamental principles
			1.4 The conceptual framework
			1.5 Threats to compliance with the fundamental principles
			1.6 Available safeguards
			1.7 Breach of a provision of the Code of Ethics
			1.8 ACCA Disciplinary procedures
		2 Specific guidance: Independence 6/08, 12/08, 6/09, 6/10, 6/12, 12/12, 6/13, 12/13, 6/14, 12/14, 6/15
			2.1 Objective of the guidance
				2.1.1 Current issues in ethical guidance
				2.1.2 Public interest entities
			2.2 What is independence? 6/15
				2.2.1 When must the assurance provider be independent?
			2.3 Management responsibilities
			2.4 A dilemma: independence vs effectiveness
			2.5 Revision of threats to independence
			2.6 Self-interest threat
				2.6.1 Financial interests
				2.6.2 Loans and guarantees
				2.6.3 Business relationships
				2.6.4 Temporary staff assignments
				2.6.5 Serving as a director or officer of an audit client
				2.6.6 Compensation and evaluation policies
				2.6.7 Gifts and hospitality
				2.6.8 Overdue fees
				2.6.9 Contingent (%) fees
				2.6.10 Fees – relative size
				2.6.11 Lowballing
				2.6.12 Recruitment services
			2.7 Self-review threat
				2.7.1 General other services
				2.7.2 Preparing accounting records and financial statements
				2.7.3 Valuation services
				2.7.4 Taxation services
				2.7.5 Internal audit services
				2.7.6 Corporate finance
				2.7.7 Other services
			2.8 Advocacy threat
			2.9 Familiarity threat
				2.9.1 Long association of senior personnel with audit clients
				2.9.2 Recent service with an audit client
				2.9.3 Employment with an audit client
				2.9.4 Family and personal relationships
			2.10 Intimidation threat
				2.10.1 Actual and threatened litigation
				2.10.2 Second opinions
			2.11 Quality control: independence
				2.11.1 Familiarity threat
		3 Specific guidance: confidentiality 12/13
			3.1 Duty of confidence
			3.2 Exceptions to the rule of confidentiality
				3.2.1 Disclosure in the public interest
				3.2.2 Disclosure to protect a professional accountant's interests
				3.2.3 Disclosure authorised by statute
				3.2.4 Disclosure to non-governmental bodies
			3.3 Responding to illegal acts/non-compliance with laws and regulations
				3.3.1 IESBA (2016) Responding to Non-Compliance with Laws and Regulations
		4 Specific guidance: conflicts of interest 6/09, 6/11
		5 Conflicts in application of the fundamental principles
			5.1 The problem
			5.2 Matters to consider
				5.2.1 Unresolved conflict
			5.3 Example
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 3 Professional liability
		Introduction
		Study guide
		Exam guide
		1 Legal liability
		2 Negligence 6/10, 6/13
			2.1 Who might bring an action for negligence?
			2.2 The audit client
				2.2.1 The auditor's duty of care
			2.3 Third parties
				2.3.1 Banks and other major lenders
				2.3.2 Assurance services
			2.4 Disclaimers 6/08
			2.5 Litigation avoidance
		3 Restricting liability 6/10
			3.1 Professional indemnity insurance (PII)
			3.2 ACCA requirements
			3.3 Advantages and disadvantages
			3.4 Incorporation
			3.5 Limited liability partnerships
			3.6 Advantages and disadvantages of different structures
		4 Current issues in auditor liability
			4.1 UK Companies Act 2006
			4.2 Ongoing debate
			4.3 Network firms
		5 Fraud and error 6/09, 6/13
			5.1 What is fraud?
				5.1.1 Fraudulent financial reporting
				5.1.2 Misappropriation of assets
			5.2 Responsibilities with regard to fraud
			5.3 The auditor's approach to the possibility of fraud
				5.3.1 General
				5.3.2 Discussion with the engagement team
				5.3.3 Risk assessment procedures
				5.3.4 Responding to assessed risks
			5.4 Evaluation of audit evidence
			5.5 Documentation
			5.6 Communication to management
			5.7 Auditor unable to continue
		6 The expectations gap
			6.1 Narrowing the expectations gap
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
Part C Practice management
	Chapter 4 Quality control
		Introduction
		Study guide
		Exam guide
		1 Principles and purpose
		2 Quality control at a firm level Pilot, 6/09, 12/11, 6/14
			2.1 Purpose of ISQC 1
			2.2 Firm and leadership responsibilities for quality within the firm
			2.3 Human resources
				2.3.1 Assignment of engagement teams
			2.4 Engagement performance
			2.5 Monitoring
		3 Quality control on an individual audit 12/07, 6/08, 6/09 6/11, 12/12, 6/13, 6/14, 12/14, 6/15, Mar/Jun 16
			3.1 Leadership responsibilities
			3.2 Ethical requirements
			3.3 Acceptance/continuance of client relationships and specific audit engagements
			3.4 Assignment of engagement teams
			3.5 Engagement performance
				3.5.1 Direction
				3.5.2 Supervision
				3.5.3 Review
				3.5.4 Consultation
				3.5.5 Quality control review
			3.6 Monitoring
			3.7 Applying ISQC 1 proportionately with the nature and size of a firm
				3.7.1 Only comply with relevant requirements
				3.7.2 Structure and formality is proportionate
				3.7.3 Using external resources
				3.7.4 Documentation
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 5 Obtaining and accepting professional appointments
		Introduction
		Study guide
		Exam guide
		1 Change in auditors 6/09
			1.1 Why do companies change their auditor?
			1.2 Audit fee
				1.2.1 Perceived to be too high
				1.2.2 Perceived not to be value for money
				1.2.3 Not competitive
				1.2.4 Interest in whether price is negotiable
			1.3 The auditor does not seek re-election
			1.4 Size of the company
			1.5 Other reasons
				1.5.1 Personality
				1.5.2 Audit rotation
				1.5.3 Companies Act 2006 requirements
			1.6 Statement of circumstances
		2 Advertising and fees 12/09, 12/10
			2.1 ACCA guidance
			2.2 Fees
				2.2.1 Advertising fees
				2.2.2 Setting and negotiating fees
				2.2.3 Commissions
			2.3 Practice descriptions and the ACCA logo
		3 Tendering 6/09, 12/11, 12/12, 12/14
			3.1 Approach
				3.1.1 Fees
				3.1.2 Negotiating the audit fee
				3.1.3 Ethical implications of low fees
				3.1.4 Practical issues
			3.2 Content of an audit proposal (tender document)
		4 Acceptance and continuance 6/08, 6/09, 6/11
			4.1 Ethical requirements
			4.2 Requirements of ISQC 1
				4.2.1 Obtain information
				4.2.2 Identify issues
			4.3 Money laundering
			4.4 Politically exposed persons (PEPs)
			4.5 Client screening
		5 Terms of the engagement
			5.1 Objective of ISA 210
			5.2 Preconditions for an audit
			5.3 Clarifying the agreement
			5.4 Engagement letter
				5.4.1 Recurring audits
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
Part D Audit of historical financial information
	Chapter 6 Planning and risk assessment
		Introduction
		Study guide
		Exam guide
		1 Revision: overview of audit planning
			1.1 ISA 200 Overall objectives of the independent auditor and the conduct
			1.2 ISA 300 Planning an audit of financial statements
			1.3 ISA 315 Identifying and assessing the risks of material misstatement
				1.3.1 What do we need to get an understanding of?
				1.3.2 How do we get this understanding?
				1.3.3 Additional information needed?
			1.4 ISA 330 The auditor's responses to assessed risks
			1.5 Documentation requirements
		2 Audit methodologies
			2.1 Risk-based audit
			2.2 'Top-down' approach 12/12
				2.2.1 Advantages of business risk approach
			2.3 Other audit strategies
				2.3.1 Systems audit
				2.3.2 Balance sheet approach
				2.3.3 Transaction cycle approach
				2.3.4 Directional testing
		3 Materiality 12/10, 12/11, 6/13, 12/13, 6/14, 12/14,6/15, 12/15, Sep/Dec 15, Mar/Jun 16
			3.1 ISA 320 Materiality in planning and performing an audit
				3.1.1 Performance materiality
			3.2 Guidelines for materiality
				3.2.1 Qualitative materiality
			3.3 Problems with materiality
				3.3.1 Revision as audit progresses
			3.4 Documentation
			3.5 Evaluating material misstatements
		4 Risk 12/07, 6/08, 6/09, 12/10, 12/11, 6/12, 12/12, 6/13, 12/13, 6/14, 12/14, 6/15, Sep/Dec 15, Mar/Jun 16
			4.1 Audit risk
				4.1.1 Inherent risk
				4.1.2 Control risk
				4.1.3 Detection risk
			4.2 Business risk Pilot paper, 6/09
				4.2.1 Relationship between business risk and audit risk
			4.3 Business risks from current trends in IT
				4.3.1 The increasing risk of cyber incidents
				4.3.2 Audit considerations
				4.3.3 E-commerce
			4.4 Risk of material misstatement
				4.4.1 Definition
				4.4.2 Link with business risk
			4.5 Professional scepticism 6/12
		5 Analytical procedures 6/09, 12/11, 6/13
			5.1 Use of analytical procedures generally
			5.2 Use of analytical procedures on an audit
			5.3 Practical techniques
				5.3.1 Trend analysis
			5.4 Investigating results
		6 Planning an initial audit engagement 6/13, 6/15
			6.1 Audit strategy and audit plan
			6.2 Understanding the entity
			6.3 Other considerations
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 7 Evidence
		Introduction
		Study guide
		Exam guide
		1 Audit evidence
			1.1 Obtaining evidence
			1.2 Sufficient and appropriate audit evidence
				1.2.1 External confirmations
			1.3 Computer-assisted audit techniques (CAATs)
				1.3.1 Audit software
				1.3.2 Test data
				1.3.3 Embedded audit facilities
			1.4 Substantive analytical procedures
				1.4.1 Considerations in using analytical procedures
				1.4.2 Examples
		2 Related parties 6/08, 6/11, 12/11
			2.1 Importance of related parties
			2.2 Assessment and identification of risks
			2.3 Responses to the risks
			2.4 Written representations
			2.5 Audit conclusions and reporting
			2.6 Transactions with directors and management
				2.6.1 Company procedures
				2.6.2 Audit procedures
		3 Written representations 12/11
			3.1 Representations
			3.2 Management from whom written representations are requested
			3.3 Written representations concerning management responsibilities
			3.4 Other written representations
				3.4.1 Doubt as to the reliability of written representations
				3.4.2 Requested written representations not provided
			3.5 Form, timing and documentation of representations by management
		4 Reliance on the work of an auditor's expert 12/08
			4.1 Experts
			4.2 Determining the need to use the work of an auditor's expert
			4.3 Competence and objectivity of the auditor's expert
			4.4 The scope of work of the auditor's expert
			4.5 Assessing the work of the auditor's expert
			4.6 Reference to an auditor's expert in the auditor's report
		5 Reliance on the work of internal audit 6/10, 12/13
			5.1 Assessing the internal audit function
			5.2 Determining the nature and extent of work that can be used
			5.3 Steps when relying on internal audit
			5.4 Direct assistance
				5.4.1 Using direct assistance
		6 Documentation
			6.1 Document what?
			6.2 Review of audit working papers
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 8 Evaluation and review (I)
		Introduction
		Study guide
		Exam guide
		1 Revision: review procedures and evaluation of findings
			1.1 Compliance with accounting regulations
			1.2 Matters to review
			1.3 Analytical procedures
				1.3.1 Revision of key ratios: profitability
				1.3.2 Revision of key ratios: debt
				1.3.3 Revision of key ratios: shareholders' investment ratios
			1.4 Summarising misstatements Mar/Jun 16
				1.4.1 Evaluating the effect of misstatements
				1.4.2 Materiality of disclosures
			1.5 Completion checklists
			1.6 Audit clearance meeting
		2 Opening balances 6/11
			2.1 Audit procedures
				2.1.1 Specific audit procedures
				2.1.2 Consistency of accounting policies
				2.1.3 Prior period balances audited by a predecessor auditor
			2.2 Audit conclusion and reporting
		3 Revision: comparatives 12/11
			3.1 Auditor objectives
			3.2 What type of comparative information?
			3.3 Corresponding figures
				3.3.1 The auditor's responsibilities
				3.3.2 Reporting
				3.3.3 Incoming auditors: additional requirements
			3.4 Comparative financial statements
				3.4.1 The auditor's responsibilities
				3.4.2 Reporting
				3.4.3 Incoming auditors: additional requirements
		4 Revision: other information 12/10, 6/13
			4.1 What other information?
				4.1.1 Integrated reports
			4.2 Access to other information
			4.3 Reading and considering the other information
			4.4 Material misstatements
				4.4.1 Revision needed to financial statements
				4.4.2 Revision needed to other information
			4.5 Auditor's report
		5 Revision: subsequent events Pilot, 12/09, 12/10, 6/13
			5.1 Events after the reporting period
			5.2 Events occurring up to the date of the auditor's report
			5.3 Facts discovered after the date of the auditor's report but before the financial statements are issued
			5.4 Facts discovered after the financial statements have been issued
		6 Revision: going concern Pilot paper, 12/08, 6/11, 12/11, 6/13, 12/13
			6.1 The going concern basis of accounting
			6.2 Examples of events causing doubts over going concern
			6.3 Evaluating management's assessment
				6.3.1 Additional audit procedures
			6.4 Audit conclusions and reporting
				6.4.1 Use of going concern appropriate but a material uncertainty exists
				6.4.2 Use of going concern assumption inappropriate
				6.4.3 Inadequate assessment by management
			6.5 Communication with those charged with governance
			6.6 Significant delay
			6.7 Going concern statements
			6.8 Risk from economy overall
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 9 Evaluation and review (II) – matters relating to specific accounting issues
		Introduction
		Study guide
		Exam guide
		1 Fair value 12/08
			1.1 Accounting recap
			1.2 Auditing fair values
			1.3 Requirements of ISA 540
			1.4 Risk procedures: fair value
			1.5 Audit procedures: fair value
			1.6 IAASB Practice Alert Challenges in Auditing Fair Value Accounting
		2 Inventory
			2.1 Inventory 6/11, 12/11, 12/12, Sep/Dec 15
			2.2 Inventory count
			2.3 Standard costing
		3 Tangible non-current assets 6/09, 12/09, 6/11, 6/12, 6/13
			3.1 Recognition of non-current assets
			3.2 Valuation of non-current assets
			3.3 Impairment of non-current assets
			3.4 Held for sale non-current assets
			3.5 Agriculture
				3.5.1 Interactions with other accounting standards
		4 Intangible non-current assets 12/07, 6/09, 12/10,  12/11, 6/13
			4.1 Goodwill
			4.2 Development costs
			4.3 Brands
		5 Financial instruments 6/09, 12/11, 6/13
			5.1 Background
				5.1.1 Financial assets
				5.1.2 Financial liabilities
				5.1.3 Hedge accounting
				5.1.4 Impairment
				5.1.5 IFRS 7 Financial instruments: disclosure
				5.1.6 IAS 32 Financial instruments: presentation
			5.2 Business risk
			5.3 Auditing financial instruments
				5.3.1 Audit risk
				5.3.2 Audit planning
			5.4 Audit procedures
				5.4.1 General procedures
				5.4.2 Procedures relating to valuation
				5.4.3 Disclosures
		6 Investment properties
		7 Foreign exchange rates
			7.1 Individual company
			7.2 Groups
				7.2.1 Same functional currency as the reporting entity
				7.2.2 Different functional currency from the reporting entity
			7.3 Other issues
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 10 Evaluation and review (III) – matters relating to specific accounting issues
		Introduction
		Study guide
		Exam guide
		1 Income
			1.1 Revenue from contracts with customers 12/12, Mar/June 16
				1.1.1 Definitions
				1.1.2 Audit of revenue
			1.2 Government grants and assistance Sep/Dec 15
		2 Liabilities 12/07, 6/09, 12/11, 6/13
			2.1 Leases 12/11, 6/13, 6/15
			2.2 Deferred taxation 12/08
				2.2.1 Types of taxable temporary difference
				2.2.2 Types of deductible temporary differences
				2.2.3 Measurement of deferred tax
				2.2.4 Audit issues and procedures
			2.3 Provisions and contingencies 6/09, 12/09, 12/10, 12/11, 6/12, 6/13, 12/13, Mar/Jun 16
				2.3.1 Audit procedures
				2.3.2 Obtaining audit evidence of contingencies
		3 Expenses 6/12
			3.1 Borrowing costs 6/12
			3.2 IAS 19 Employee benefits
				3.2.1 IAS 19 recap
				3.2.2 Audit evidence
			3.3 Share-based payment 12/08, 12/11
				3.3.1 IFRS 2 Recap
				3.3.2 Audit risks and evidence
		4 Disclosure
			4.1 Segment reporting
			4.2 Earnings per share 6/09, 6/15
				4.2.1 Audit issues
			4.3 Discontinued operations
			4.4 Statements of cash flows
			4.5 Changes in accounting policy and errors 12/11, 6/14
				4.5.1 Accounting policies and estimates
				4.5.2 Prior period errors
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 11 Group audits and transnational audits
		Introduction
		Study guide
		Exam guide
		1 Group accounting recap
			1.1 Content of group accounts
			1.2 Identifying a business combination
			1.3 The acquisition method
			1.4 Acquisition-related costs
			1.5 Contingent consideration
				1.5.1 IFRS 3
				1.5.2 Post-acquisition changes in the fair value of the contingent consideration
			1.6 Goodwill and the non-controlling interest
				1.6.1 IFRS 3 methods – an introduction
				1.6.2 IFRS 3 goodwill calculation
				1.6.3 BPP proforma goodwill calculation
				1.6.4 Valuing non-controlling interest at acquisition
			1.7 Investment in subsidiaries
			1.8 Consolidation process
		2 Associates and joint ventures recap 6/15
			2.1 Investments in associates
			2.2 Accounting for investments in joint arrangements
			2.3 Other investments
		3 Audit of groups 6/12, 6/13, 12/13, 6/14, Sep/Dec 15
			3.1 Definitions
			3.2 Responsibilities
				3.2.1 Audit opinion
				3.2.2 Parent company financial statements
			3.3 Objectives
			3.4 Acceptance and continuance
				3.4.1 Obtaining an understanding of the group, its components and their environments
			3.5 Planning and risk assessment
				3.5.1 Significant components
				3.5.2 Understanding the component auditor
				3.5.3 Materiality
				3.5.4 Involvement in the work of a component auditor
			3.6 Access to information about components
			3.7 Evaluating the work of the component auditor
			3.8 Communication with the component auditor
			3.9 Communicating with group management and those charged with governance
			3.10 Communication with those charged with governance of the group
			3.11 Other aspects of the audit requiring consideration in a group context 6/12
				3.11.1 Co-terminous year ends
				3.11.2 Changes in group structure
				3.11.3 Support (comfort) letters
				3.11.4 Overseas subsidiaries in developing countries
				3.11.5 Control environment and systems
		4 The consolidation: problems and procedures Pilot paper, 6/08, 6/11
			4.1 Audit procedures
		5 Joint audits 6/08 ,12/12
			5.1 Reasons for joint audits
			5.2 Accepting a joint audit
			5.3 Problems with joint audits
		6 Transnational audits 6/09
			6.1 The Transnational Auditors Committee
			6.2 Features of transnational audits
			6.3 Role of the international audit firm networks
				6.3.1 Forum of Firms
			6.4 International education standards
			6.5 Current debate: dominance of the global accounting firms
				6.5.1 Competition and choice
				6.5.2 Barriers to entry
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
Part E Other assignments
	Chapter 12 Audit-related services and other assurance services
		Introduction
		Study guide
		Exam guide
		1 Audit-related services 12/07, 6/08, 6/11, Mar/Jun 16
			1.1 Review of financial statements
				1.1.1 Quality control
				1.1.2 Acceptance/continuation
				1.1.3 Agreeing terms
				1.1.4 Communication
				1.1.5 Performing the engagement
				1.1.6 Written representations
				1.1.7 Reporting
			1.2 Review of interim financial information performed by the independent auditor of the entity 12/12
				1.2.1 General principles
				1.2.2 Procedures
				1.2.3 Reporting
			1.3 Due diligence 12/13, Sep/Dec 15
			1.4 Agreed-upon procedures
				1.4.1 Accepting appointment
				1.4.2 Carrying out procedures and reporting
		2 Assurance engagements 12/07, 12/10
			2.1 Elements of an assurance engagement
			2.2 Engagement type
			2.3 Assurance provided
			2.4 Accepting and continuing appointment
				2.4.1 Preconditions for an assurance engagement
				2.4.2 Agreeing terms
				2.4.3 Report prescribed by law or regulation
			2.5 Quality control
			2.6 Professional scepticism, judgment, skills and techniques
			2.7 Planning and performing the engagement
			2.8 Understanding the underlying subject matter
			2.9 Using the work of an expert
				2.9.1 Using the work of internal audit
			2.10 Written representations
			2.11 Subsequent events
			2.12 Other information
			2.13 Concluding and reporting
				2.13.1 Drawing a conclusion
				2.13.2 Unmodified conclusions
				2.13.3 Modified conclusions
			2.14 Documentation
			2.15 References for a client
			2.16 Assurance reports on compiled pro forma information
			2.17 Assurance reports on service organisations
			2.18 Compilation engagements
		3 Risk assessments
			3.1 Need for assurance
			3.2 Possible assurance criteria
			3.3 Responsibility for risk assessment
			3.4 Assessing risk
			3.5 Responses to risk
			3.6 Assurance
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 13 Prospective financial information (PFI)
		Introduction
		Study guide
		Exam guide
		1 Reporting on prospective financial information (PFI)
			1.1 Principles of PFI
			1.2 Types of prospective financial information
		2 Accepting an engagement 6/12, 6/14
			2.1 General considerations
		3 Procedures 12/09, 6/11, 6/12, 6/14
			3.1 General matters
				3.1.1 The nature and background of the company's business
				3.1.2 The accounting policies normally followed by the company
				3.1.3 The procedures followed by the company in preparing the forecast
			3.2 Specific matters
		4 Expressing an opinion 12/09
			4.1 Level of assurance
			4.2 Reports under ISAE 3400
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 14 Forensic audits
		Introduction
		Study guide
		Exam guide
		1 Definitions Pilot paper, 12/07, 12/08, 12/11
			1.1 More general definitions
		2 Applications of forensic auditing
			2.1 Fraud
			2.2 Negligence
			2.3 Insurance claims
			2.4 Other disputes
			2.5 Terrorist financing
			2.6 The forensic accountant as an expert witness
				2.6.1 Duties of experts
				2.6.2 Expert witness reports
		3 Ethical principles 12/08
		4 Planning, procedures and evidence 12/08, 12/11, 12/12, 6/13, 6/15
			4.1 Planning
			4.2 Audit procedures
			4.3 Differences in approach
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 15 Social, environmental and public sector auditing
		Introduction
		Study guide
		Exam guide
		1 Importance for the company
			1.1 Stakeholders
			1.2 Implications for management: risk management
			1.3 Management controls
		2 Measuring social and environmental performance 12/08, 12/10, 6/12, 12/14
			2.1 The problem of measurement – what? and for whom?
				2.1.1 Identifying and engaging stakeholders
				2.1.2 Generating performance measures
			2.2 Targets and indicators
			2.3 Social audits
			2.4 Environmental audits
		3 Implications for the statutory audit
			3.1 Why important?
			3.2 Planning the audit
			3.3 Substantive procedures
				3.3.1 Substantive procedures: asset valuation
				3.3.2 Substantive procedures: provisions
				3.3.3 Substantive procedures: contingent liabilities
			3.4 Going concern
			3.5 Auditor responsibility in the event of non-compliance with laws and regulations
		4 Implications for assurance services
			4.1 Types of service
			4.2 Contents of an assurance report on environmental issues
		5 Audit of performance information in the public sector Sep/Dec 15
			5.1 Problems with measurement
				5.1.1 Generating relevant quantitative measures
				5.1.2 Incentives and manipulation
				5.1.3 Existence of information
			5.2 Planning and conducting the audit of performance information
			5.3 Concluding and reporting
		6 Integrated reporting
			6.1 Growth of integrated reporting
			6.2 Key elements
			6.3 Capital types
			6.4 Interaction of capitals
			6.5 Short term vs long term
			6.6 Monetary values
			6.7 Materiality
			6.8 Implications of introducing integrated reporting
			6.9 IAASB Discussion Paper on integrated reporting
			6.10 Auditing integrated reports
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
	Chapter 16 Internal audit and outsourcing
		Introduction
		Study guide
		Exam guide
		1 Revision: internal audit
			1.1 Revision
			1.2 Internal auditors and risk management
		2 Outsourcing 12/07
			2.1 Why outsource?
				2.1.1 Financial efficiency
				2.1.2 Change management
				2.1.3 Strategy
			2.2 Outsource what?
			2.3 Advantages and disadvantages of outsourcing
		3 Outsourcing specific functions 6/11
			3.1 Internal audit
				3.1.1 Advantages
				3.1.2 Disadvantages
			3.2 Outsourcing finance and accounting functions
		4 Impact of outsourcing on an audit
			4.1 Use of service organisations
			4.2 Obtaining an understanding
			4.3 Responding to assessed risks
			4.4 Reporting
			4.5 Impact on internal audit
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
Part F Reporting
	Chapter 17 Reporting
		Introduction
		Study guide
		Exam guide
		1 The form and content of the standard unmodified auditor's report
			1.1 The act of communication
			1.2 Understandability
				1.2.1 Comparability vs relevance in standard reports
			1.3 Responsibility
			1.4 Availability
		2 Key audit matters (KAMs)
			2.1 Background and purpose
			2.2 Audit objectives
			2.3 Determining KAMs
				2.3.1 Choosing not to include a KAM
			2.4 Communicating KAMs
				2.4.1 KAMs should not give original information
				2.4.2 No KAMs?
			2.5 Relationship with the auditor's opinion
			2.6 Relationship with Emphasis of Matter and Other Matter paragraphs
			2.7 Communication with those charged with governance, and documentation
			2.8 IAASB More informative auditor's reports - what audit committees
		3 Forming and critiquing an audit opinion Pilot paper, 12/07, 6/09, 12/09, 6/10, 12/10, 6/11, 6/12, 12/12, 6/13, 12/13, 6/14, 12/14, 6/15, Sep/Dec 15, Mar/Jun 16
			3.1 Forming an audit opinion
			3.2 Emphasis of Matter and Other Matter paragraphs
				3.2.1 Emphasis of Matter
				3.2.2 Other Matter
			3.3 Modified opinions
			3.4 Going concern
			3.5 Critically appraising an audit opinion
				3.5.1 When will it be necessary to critically appraise an audit opinion?
				3.5.2 How should an auditor critically appraise an audit opinion?
			3.6 Form and content of modified reports
				3.6.1 Opinion paragraph
				3.6.2 Basis for (Modified) Opinion paragraph
		4 Communicating with those charged with governance 6/08, 12/10
			4.1 Report to those charged with governance
				4.1.1 Requirements
				4.1.2 Matters to be communicated
				4.1.3 Communication process
				4.1.4 Timing
				4.1.5 Adequacy of the communication process
				4.1.6 Documentation
			4.2 Reporting deficiencies in internal control
				4.2.1 Key qualities of a report
				4.2.2 Form of report
				4.2.3 Specific recommendations
		5 Actions when an auditor's report is modified 12/10
			5.1 Communicate with those charged with governance
			5.2 External consultation
			5.3 Management integrity?
			5.4 Withdrawal from engagement
		Chapter Roundup
		Quick Quiz
		Answers to Quick Quiz
Part G Current issues and developments
	Chapter 18 Current issues
		Introduction
		Study guide
		Exam guide
		1 Update
			1.1 Guidance on smaller audits
			1.2 Big data and data analytics
				1.2.1 Revolutionising audit?
			1.3 IESBA Exposure draft Limited re-exposure of proposed changes to
			1.4 IESBA Exposure draft Improving the structure of the code of ethics
			1.5 IESBA Exposure draft Proposed revisions pertaining to safeguards in
			1.6 IAASB Practice Alert Audit considerations in respect of going
			1.7 IAASB Practice Alert Challenges in auditing fair value accounting
			1.8 IAASB Q&A paper Auditor considerations regarding significant,
			1.9 IAASB Q&A paper XBRL: The emerging landscape
			1.10 IAASB Q&A Paper Professional scepticism in an audit of financial
			1.11 IAASB A framework for audit quality
			1.12 IAASB Project on Addressing disclosures in the audit of financial
			1.13 IESBA Changes to the code addressing certain non-assurance
		2 General issues
			2.1 FRC and FSA: Enhancing the auditor's contribution to prudential regulation
			2.2 Audit referred to Competition Commission in UK
			2.3 EU audit reform
List of articles by the examining team
Practice question and answer bank
	Questions
		1 Audit 14 mins
		2 Fundamental principles 29 mins
		3 Aventura International 29 mins
		4 Professional responsibilities 29 mins
		5 Mobile Sales 39 mins
		6 Osbourne plc 29 mins
		7 PLD Associates 39 mins
		8 Marsden Manufacturing Co 49 mins
		9 Herzog 68 mins
		10 Lambley Properties 39 mins
		11 Bestwood Electronics 39 mins
		12 Bingham Engineering 49 mins
		13 Locksley 49 mins
		14 Bainbridge 39 mins
		15 Recognition 29 mins
		16 Henshelwood 39 mins
		17 Keffler 39 mins
		18 Griffin 39 mins
		19 Merger of audit firms 29 mins
		20 Annabella 49 mins
		21 Trendy Group 29 mins
		22 Business assurance 39 mins
		23 Scenarios 29 mins
		24 Verity 39 mins
		25 Painswick Ltd 29 mins
		26 Harness 29 mins
		27 Eastfield Distributors 39 mins
		28 Maple 29 mins
		29 Petrie 33 mins
	Answers
		1 Audit
		2 Fundamental principles
		3 Aventura International
		4 Professional responsibilities
		5 Mobile Sales
		6 Osbourne plc
		7 PLD Associates
		8 Marsden Manufacturing Co
		9 Herzog
		10 Lambley Properties
		11 Bestwood Electronics
		12 Bingham Engineering
		13 Locksley
		14 Bainbridge
		15 Recognition
		16 Henshelwood
		17 Keffler
		18 Griffin
		19 Merger of audit firms
		20 Annabella
		21 Trendy Group
		22 Business assurance
		23 Scenarios
		24 Verity
		25 Painswick Ltd
		26 Harness
		27 Eastfield Distributors
		28 Maple
		29 Petrie
Bibliography
Index
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