The paper titled 'Audit and Assurance' focuses on the purpose, process, and outcomes of auditing.
Students may find ACCA Audit and Assurance (formerly F8) intimidating, but it isn't as difficult as you might think. Many students fail Audit and Assurance on their first attempt, but this is because they approach the paper incorrectly. Every year, there are a few questions that catch people off guard, 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 improve your chances of passing on the first try. Erin, in particular, gives us a few examples and explains how you might approach those questions on the exam, as well as her top ACCA F8 (AA) Audit and Assurance exam tips. If you want to learn how to pass the ACCA F8 (AA) Audit and Assurance exam, keep reading.
What’s ACCA F8 (AA) Audit and Assurance about?
ACCA F8 (AA) Audit and Assurance focuses on teaching students the skills they'll need to work as an external auditor. Then there's a smaller section on internal audit and another smaller section on corporate governance and audit. Corporate governance is a hot topic at the ACCA, so it appears in a lot of papers.
ACCA F8 (AA) Audit and Assurance is a exam to see if you have the skills and mindset to work as an external auditor...
In that sense, it's a very practical paper – it's about the skills you'd need as an external auditor, as well as the mentality you'd need and the tasks you'd perform.
Many students are concerned that they will need audit experience to pass the ACCA F8 (AA) Audit and Assurance, but this is a misconception. In fact, I've seen a lot of actual auditors fail F8 because they didn't study hard enough. Students with little audit experience often perform better because they concentrate solely on learning the material and exam techniques. Exams fail because of complacency!
…I've seen a lot of actual auditors fail F8 because they didn't study hard enough. Students who have no prior audit experience are more likely to pass the ACCA F8 (AA) Audit and Assurance...
What’s the ACCA F8 (AA) Audit and Assurance exam structure?
Section A is made up of multiple-choice questions (MCQs) and is worth 20 points, while Section B has four 10-mark questions and two 15-mark questions. MCQs are much faster and more factual – simple knowledge-based questions – but scenarios make up the majority of the paper. It's all about putting yourself in the shoes of the auditor and explaining what you'd do and how you'd go about doing it.
To pass the ACCA F8 (AA) Audit and Assurance, you must put yourself in the shoes of the auditor.
Although the principle remains the same, the format has changed slightly as of September 2016. To pass ACCA F8 (AA) Audit and Assurance, you must show that you can think and act like an auditor.
How do the scenario questions work?
An external auditor has gone to visit a client and has been reviewing the accounting systems that the client is using. This is a common scenario. For example, you might be asked to identify any flaws in their control systems and make recommendations to improve them.
If you're looking at the purchase cycle, for example, you might learn that the client chooses their suppliers on an ad hoc basis.
You'd point out something like that and suggest that because the process isn't rigorous, they might not be getting the best quality or price. Then you might suggest that they create a list of preferred vendors.
… A typical scenario has you reviewing a component of the client's accounting systems, identifying flaws, and making recommendations for improvements...
It's the same way. You'll be given some information, and you'll be expected to use your auditor hat to interpret the situation. At its core, your job entails looking for calculation errors, discrepancies, fraud, and other irregularities, as well as ensuring that balances are presented fairly.
The goal is to ensure that everything a company does from a financial standpoint 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 you'd take to get there. Based on your knowledge of the syllabus, you must identify, interpret, analyze, and make recommendations. There may be some simple ‘stating' of knowledge-based facts, but the main focus 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 topic that comes up frequently. As an auditor, one of the first decisions you must make is whether or not you could work for a client without jeopardizing your ethical integrity.
...Ethics is almost always discussed in ACCA F8 (AA) Audit and Assurance...
You'd have to identify and recommend what you should do if a scenario included a few ethical issues. You might be told, for example, that your client hasn't paid their previous auditors yet. You'd be expected to recognize that as an ethical threat or risk, because you might be tempted to do something unethical in order to ensure your own payment.
The concept of audit risk is 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 do after signing an Engagement Letter is called Audit Risk, and it's the first step after you and the client have agreed to work together. It all boils down to you, the auditor, keeping an eye out for potential pitfalls.
… Every year, students are asked about audit risk, and every year, many students make the same mistake and misinterpret the question. If you understand Audit Risk, you'll be more likely to pass ACCA F8 (AA) Audit and Assurance...
That is extremely significant. It detects the possibility that you, the auditor, will be unable to complete your task properly.
A typical audit risk, for example, could be that the client has requested that you complete the audit within two months of year-end. This may require you to rush to meet a deadline, which may necessitate cutting corners or working so long that your concentration suffers and you overlook important details.
... Many students make mistakes because they write the answer from the standpoint of the business, not the auditor...
Many students make the mistake of writing the answer from the viewpoint of the business. Rather than saying, "This is a problem for the auditor because...", say, "This is a business risk because..."
The paper spends a lot of time trying to figure out what problems the clients might have, but this question is the polar opposite.
Except for one, Audit Risk has appeared in every paper published in the last six years. They removed an Audit Risk question from the paper in June 2012, and the pass rate jumped to 56 percent. Getting your head around Audit Risk will help you pass the ACCA F8 (AA) Audit and Assurance exam. It's that critical.
…Internal audit is another topic that frequently appears on the ACCA F8 (AA) Audit and Assurance exam...
There's also an Internal Audit. It appears in a couple of ACCA F8 (AA) Audit and Assurance papers, most likely as a 10-point question. An internal auditor is fundamentally different from an external auditor; an external auditor does not sit internally! The job entails evaluating controls and systems as well as identifying business risks. That is an important fact for students to understand.
You'll most likely be asked to identify and discuss the differences between an internal and external auditor, as well as what an internal auditor does. You should also be able to discuss the benefits and drawbacks of using an external audit firm to hire an internal auditor.
Internal and external auditors have very different responsibilities.
Last but not least, there's corporate governance. This comes up in a few exams, so it's worth studying if you want to pass ACCA F8 (AA) Audit and Assurance. You should have a good understanding of corporate governance, with an emphasis on the audit committee. What an audit committee is, what it does, and why you should have one are all topics that should be discussed.
0 Comments