The 'Audit and Assurance' paper delves into the purpose, process, and outcomes of auditing.
ACCA Audit and Assurance (formerly F8) may be intimidating to students, but it isn't as difficult as you might think. Many students fail Audit and Assurance on their first attempt, but this is due to an incorrect approach to the paper. Every year, there are a few surprises, as well as some key exam techniques that students must master in order to pass.
We sat down with expert tutor Erin Morton to learn everything there is to know about ACCA F8 (AA) Audit and Assurance, so you can pass on your first attempt. Erin, in particular, provides some examples and explains how you might approach those exam questions, as well as her top ACCA F8 (AA) Audit and Assurance exam tips. Continue reading to learn how to pass the ACCA F8 (AA) Audit and Assurance exam.
What’s ACCA F8 (AA) Audit and Assurance about?
ACCA F8 (AA) Audit and Assurance teaches students the skills necessary to work as an external auditor. Then there's a smaller section on internal audit, followed by another on corporate governance and audit. Because corporate governance is a hot topic at the ACCA, it appears in numerous papers.
The ACCA F8 (AA) Audit and Assurance exam determines whether you have the necessary skills and mindset to work as an external auditor...
In that sense, it's a very practical paper; it discusses the skills you'd need as an external auditor, as well as the mentality and tasks you'd perform.
Many students believe that they will need audit experience to pass the ACCA F8 (AA) Audit and Assurance exam, but this is untrue. In fact, I've seen many real-world auditors fail F8 because they didn't study hard enough. Students with little audit experience frequently outperform because they focus solely on learning the material and exam techniques. Exams fail due to complacency!
… Many actual auditors have failed F8 because they did not study hard enough. Students with no prior audit experience have a better chance of passing the ACCA F8 (AA) Audit and Assurance...
What’s the ACCA F8 (AA) Audit and Assurance exam structure?
Section A consists of multiple-choice questions (MCQs) and is worth 20 points, whereas Section B consists of four 10-mark questions and two 15-mark questions. Although MCQs are much faster and more factual – simple knowledge-based questions – scenarios comprise the majority of the paper. It all comes down to putting yourself in the shoes of the auditor and explaining what you'd do and how you'd do it.
You must put yourself in the shoes of the auditor to pass the ACCA F8 (AA) Audit and Assurance.
Although the basic concept remains unchanged, the format has changed slightly as of September 2016. To pass the ACCA F8 (AA) Audit and Assurance exam, you must demonstrate your ability to think and act like an auditor.
How do the scenario questions work?
An external auditor visited a client and reviewed the accounting systems that the client is using. This is a common occurrence. You might be asked to identify flaws in their control systems and make recommendations to improve them, for example.
If you examine the purchase cycle, you may discover that the client selects their suppliers on an ad hoc basis.
You'd point that out and suggest that because the process isn't rigorous, they may not be getting the best quality or price. You could then suggest that they compile a list of preferred vendors.
... In a typical scenario, you would review a component of the client's accounting systems, identify flaws, and make recommendations for improvement...
It's the same thing. You'll be given some information and will be expected to interpret it using your auditor hat. Your primary responsibility is to look for calculation errors, discrepancies, fraud, and other irregularities, as well as to ensure that balances are presented fairly.
The goal is to ensure that everything a company does in terms of finance is "free of material misstatements," as the official language puts it.
To pass the ACCA F8 (AA) Audit and Assurance, you must understand the steps involved. You must identify, interpret, analyze, and make recommendations based on your knowledge of the syllabus. There may be some straightforward'stating' of knowledge-based facts, but the main emphasis is on how you apply your knowledge.
What are the most common questions or topics on the ACCA F8 (AA) Audit and Assurance exam?
Ethics is a frequently discussed topic. One of the first decisions you must make as an auditor is whether you can work for a client without jeopardizing your ethical integrity.
...In ACCA F8 (AA) Audit and Assurance, ethics is almost always discussed...
If a scenario included a few ethical issues, you'd have to identify and recommend what you should do. For example, you may be informed that your client has not yet paid their previous auditors. You'd be expected to recognize that as an ethical threat or risk, as you might be tempted to do something unethical to ensure your own payment.
Audit risk is used to identify potential pitfalls for you as an auditor.
Every ACCA F8 (AA) Audit and Assurance exam includes an audit risk question, and it's one that a lot of students struggle with. The audit plan you'd implement after signing an Engagement Letter is known as Audit Risk, and it's the first step after you and the client have agreed to collaborate. It all comes down to you, the auditor, keeping an eye out for potential stumbling blocks.
… Every year, students are asked about audit risk, and many of them make the same mistake and misinterpret the question. You'll be more likely to pass ACCA F8 (AA) Audit and Assurance if you understand Audit Risk...
That is extremely important. It predicts that you, the auditor, will be unable to complete your task properly.
A typical audit risk might be that the client has requested that you complete the audit within two months of the end of the fiscal year. This may necessitate cutting corners or working so long that your concentration suffers and you overlook important details in order to meet a deadline.
... Many students make errors because they write the answer from the perspective of the business, rather than the auditor...
Many students make the error of writing their answers from the perspective of the business. Instead of saying, "This is an audit problem because...", say, "This is a business risk because..."
The paper spends a lot of time attempting to determine what problems the clients might be experiencing, but this question is the polar opposite.
Audit Risk has appeared in every paper published in the last six years, with the exception of one. In June 2012, they removed an Audit Risk question from the paper, and the pass rate increased to 56%. Understanding Audit Risk will help you pass the ACCA F8 (AA) Audit and Assurance exam. It's that important.
… Another topic that frequently appears on the ACCA F8 (AA) Audit and Assurance exam is internal audit...
Internal auditing is also available. It appears as a 10-point question in a couple of ACCA F8 (AA) Audit and Assurance papers. An internal auditor is not the same as an external auditor because the latter does not sit internally! The position entails assessing controls and systems as well as identifying business risks. This is an important concept for students to grasp.
You will almost certainly be asked to identify and discuss the distinctions between internal and external auditors, as well as what an internal auditor does. You should also be able to discuss the advantages and disadvantages of hiring an internal auditor through an external audit firm.
Internal and external auditors perform very different functions.
Corporate governance is the last but not least. This is covered in a few exams, so it's worthwhile to study if you want to pass ACCA F8 (AA) Audit and Assurance. You should be well-versed in corporate governance, with a focus on the audit committee. All of these topics should be discussed, including what an audit committee is, what it does, and why you should have one.
 - STUDY TEXT and REVISION KIT){kind=link}
0 Comments