ACCA AA Syllabus 2023

ACCA Audit and Assurance (AA)

ACCA AA Syllabus 2023

Topic-wise Notes

What is Audit?

First of all the basic means of Audit is investigations.

Another way in accounts, this word being used Audit for the examination of Financial Statements prepared by entities annually.

Balance sheet
Statement of profit and loss
Income statement
Statement of changes in equity
Statement of cash flow

Likewise, ACCA AA (F8) is a theoretical paper that Probably consists of 90% theory and 10% calculations.

In theory, the examiner tests the concepts of students by giving a situation, and students need the resolve that situation in different ways in different questions, like Analytical procedures, Tests of controls, internal controls

Also, other parts of the parts consist of calculations, Calculations of this part are probably from IAS-IFRS, like if the examiner explains the situation by referring to IFRS-16 then you should be attentive there is something wrong in the calculation of IFRS 16 which examiner wants you to correct this problem,

Furthermore, like assets are recorded correctly, Disposals are calculated in the right way, Depreciation treatments accounting according to the IFRS 16,

Similar to other accounting standers.

The main motive of the ACCA AA paper

This is to develop a basic understanding and knowledge of the audit process to give an assurance engagement to a Clint by following the Professional Regulatory Framework

However, to pass AA you need to:

Concepts regarding the audit and assurance
what are the procedures of an audit, and how does an auditor perform his audit assignments
Understand and evaluation of internal controls to assess the risk factors

Study Plan

Material for topic preparation: Any approved learning provider content along with the revision notes.

Material for Question practice: Past exams (Any Revision Kit- The answers on the ACCA website do not reflect the changes in the accounting and auditing standards). Please use the latest Kit (for Sept 2017 exam session) for answers.

Key preparatory recommendations:
-Attempt each question first yourself
-then read the answers
-Read the answers constructively- annotate and underline the key points that you missed, commonly used terminology, etc.

ACCA AA Practice Questions Topic Wise

Topic	Questions
Assurance & Regulation	June 2015-Q5c Dec 12- Q2a,c June 12- Q1c
Accepting audit engagements	Sept/Dec Hybrid 2015-Q2 a,b Dec 2013-Q4a,b June 11 Q2b
Audit planning	Sept/Dec Hybrid 2015-Q2c Sept/Dec Hybrid 2015-Q4 June 2015-Q5b
Audit planning	June 2014-Q3a Dec 2013-Q1a,b,c June 2013-Q3 ( Ratios)
Audit planning	Dec 2012-Q3a,b Dec 2010-Q3 ( Ratios)
ICS-Sales	Dec 2014-Q5a Dec 2013-Q3 June 11- Q1a,c
ICS-purchases	June 2015-Q4 June 2013-Q1b,c Dec 10- Q1a,b, Q4b
ICS-payroll	Sept/Dec Hybrid 2015-Q5 a,b June 2014-Q1a,b Dec 2011- Q1a
Other IC topics	June 10- Q3b June 2015-Q2 Dec 09- Q3b June 2012- Q1a
Evidence and procedures	June 12- Q4a June 11- Q3a
Substantive-Sales and trade receivables	June 2015-Q6a and Q6biii Dec 2014-Q5b
Audit procedures-Inventory	Sept/Dec Hybrid 2015-Q6a, bi Dec 2014-Q6bii June 2014-Q3b Dec 2012-Q1a,b June 2012-Q4a
Substantive-Property, Plant & Equipment And Equity	Dec 2014-Q6bi June 2013-Q4a June 2012-Q1b,c
Substantive-purchases and trade payable s	June 2015-Q6bi
Payroll	Sept/Dec Hybrid 2015-Q5c Dec 2014-Q1 June 2014-Q1c,d
Intangible assets	Sept/Dec Hybrid 2015-Q6bii
Bank	June 2015-Q6bii June 2013-Q1d
Remuneration	June 2014-Q3c
Relying on work of others	Dec 2014-Q6a
Substantive practice	Dec 2013-Q1d Dec 2012-Q4b June 2012-Q4b
Fraud, Laws & regulations	June 2015-Q5a Dec 12- Q2b June 12- Q3a
Audit documentation	June 12- Q4c June 11- Q2a
CAATs	Dec 10- Q2c
Sampling	Dec 2012-Q1c June 12- Q2b
Going concern review	Sept/Dec Hybrid 2015-Q3 June 2014-Q5a,b,c June 2012-Q5a,b,c
Subsequent events review, overall review	Dec 2011-Q5a, bi, and bii Dec 2008-Q5 June 2013-Q1a Dec 2010-Q5a,b
Audit opinion & report	Sept/Dec Hybrid 2015-Q6c June 2015-Q3 Dec 2014-Q4 Dec 2014-Q6c June 2014-Q5d
Audit opinion & report	June 2013-Q5c Dec 2012-Q5 June 2012-Q5d Dec 2011-Q5biii June 2011-Q5c
Ethics	Sept/Dec Hybrid 2015-Q1 June 2015-Q1 June 2014-Q3d Dec 2013-Q4c June 2012-Q3b,c
Corporate governance	Dec 2014-Q3
Internal audit	June 2014-Q4 June 2013-Q4b,c,d June 2013-Q5a,b Dec 2012-Q3c June 2012-Q1d,e June 2012-Q3d
Full exam paper under exam conditions ( time managed)	March/June 2016 Sept 2016 Dec 2016 March/June 2017

ACCA Audit and Assurance Topic-wise questions for practice, To help out students we are providing you this list, so when students learn one topic they can practice its relevant question to get a full grip on that topic

How to Pass ACCA AA

AA Video Lectures

Books & Revision Kits

AA Pass Rate

Dec 2017	Jun 2018	Dec 2018	Jun 2018	Dec 2019
40%	40%	38%	39%	38%

Find Us on Facebook

Previously Known as F8

Audit and Assurance Video Lectures

Audit and Assurance Video Lectures

Previously known as F8

Here are AA Audit and Assurance Video lectures, held by ACCA. for exam preparation within a few days these short lectures,

The best preparation for tomorrow is doing your best today.

This is a one-week revision class, at the end of day 6, hopefully, you will be able to pass your exam of Audit & Assurance,

However, practice makes perfect, try to practice past exam questions as much as you can.

There is no shortcut to success, so don’t be trying to guess the exam questions, every single topic is important and you should prepare every topic its necessary

Day 1

Day 2

Day 3

Day 4

Day 5

Day 6

it’s all, now best of luck with your ACCA exam of Audit and Assurance.

The exam rule is:

Don’t be panic at all
Do your best
Don’t leave any questions unanswered

As well also prepare straightforward knowledge too. because in the audit exam there are many areas that the examiner test straightforwardly and purely knowledge-based. so those can be rote learning. you can check our Audit and Assurance exam tips

Substantive procedures are a major area of the Audit and Assurance course, so you need to learn substantive procedures very defectively.

Let us sacrifice our today so that our children can have a better tomorrow

Threats to Auditor Independence

International Code of Ethics for Professional Accountants ACCA AA & AAA

Conceptual Framework

What is Auditor Independence?

Auditors are expected to provide an unbiased opinion on the work that they have performed. An auditor who has a lack of independence or has threats to auditor independence, his audit report useless to those who rely on it.

For example, consider yourself a potential shareholder in XYZ Company. If you know that the auditor for XYZ Company keeps a personal relationship with the CEO of the company, would you trust that the audited work is a fair representation of the company’s financial standing? How can you be certain that the auditor and CEO did not influence issues a favorable audit report? so must ensure that Auditor no have Threats to Auditor Independence

Once you have identified a threat from the question scenario, you will need to name the threat, explain WHY it is a threat to the auditor and tell the safeguard for that threat.

Here are a few techniques that can be avoided Threats to Auditor Independence,

Threats to Auditor Independence?

In Audit, there are five threats that hurt the independence of the auditor. Before the start of an audit engagement, it is crucial that each member of the audit team independence. If an auditor is exposed to a certain threat, He/she should either develop safeguards to reduce the threat to an acceptable level or resign from audit engagement. here we are going to discuss threats to auditor independence and possible remedies

QCR: Quality Control Review ( independent partner review)- Having a professional accountant who was not involved with the non-assurance service review the non-assurance work performed

Chinese walls: The use of separate engagement teams, with different engagement partners and team members

Public interest entities are:

(a) All listed entities; and
(b) Any entity:
- Defined by regulation or law-making as a public interest entity
- OR
- For which the audit is required by law and regulation to be conducted in compliance with the same independence requirements that apply to the audit of listed entities. Such regulation may be circulated by any relevant regulator, including an audit regulator

1. Self interest threat and safeguards

The threat that a financial or other interest will inappropriately influence the auditor’s judgment or behavior.

Threat		Safeguard
Direct financial interest	A member of the assurance team or the firm having a direct financial interest in the assurance client.	Remove the individual from the audit team the self-interest threat created would be so significant that no safeguards could reduce the threat to an acceptable level.
Gifts and hospitality		Nature, value and intent of offer to be considered Not allowed unless insignificant ( politely decline)
Fee dependence	A firm having fee dependence on total fees from a client.	Listed clients: If gross recurring fee from one client greater than 15% of the firm’s revenue for two consecutive years,– Tell client’s BOD– Independent QCR or external QCR before OR After issuing 2nd year’s opinion Other clients:– Reducing the dependency on the client;– External quality control reviews OR Consulting a third party, such as a professional regulatory body (E.g ACCA, ICAEW) or a professional accountant on key audit judgments.
Recent Service with an Audit Client	If a member of the audit team has recently served an employee of the audit client	Remove from the team if worked at the client in the year being audited at a position to exact significant influence over the subject matter.
Close business relationship	A member of the assurance team (or the firm) having a significant-close business relationship – Commercial relationship, Common financial interest Examples: a joint venture with the client or a controlling owner/ director, formal marketing of each other’s product, combine the services of the firm with those being offered by the client and market the package.	If material, not allowed (The threat created would be so significant that no safeguards could reduce the threat to an acceptable level.
Contingency fee	Firm going to enter into a contingency fee arrangement relating to an assurance engagement	Politely decline the proposed contingent fee arrangement, Inform the client that the fees will be based on the level of work required to obtain sufficient and appropriate audit evidence.
Overdue fee	Might be regarded as being equivalent to a loan to the client if fees due from a client(Audit Client) remain unpaid for a long time, especially if a significant part is not paid before the issue of the audit report for the following financial year	Discuss with TCWG the reasons why the payments have not been made. Should agree with a revised payment method which will result in the fees being settled before much more work is performed for the current year audit
Loans and guarantee		If not under normal lending conditions, No safeguard acceptable under normal lending conditions- review by network firm.
Serving as a Director or Officer of an Audit Client		Not allowed. (Particular reference made by the code to the role of the Company Secretary. If allowed under local laws or professional rules, the duties and activities shall be limited to those of a routine and nature of administrative, such as preparing minutes and maintaining statutory returns)
Recruitment services (especially hiring of senior management)		Listed clients: Not allowed for directors or senior positions related to Financial Statements preparation. Otherwise, The final decision should be by the client and DO NOT negotiate on the client’s behalf firm can undertake roles such as reviewing a shortlist of other candidates. However, they must ensure that they are not interfering to undertake management decisions and so must not make the final decision on who is appointed
Employment negotiations with the audit client.	A member of the audit team entering into employment negotiations with the audit client.	Remove the individual from the audit team– A review of any significant judgments made by that individual while on the team
Compensation and Evaluation Policies	when a member of the audit team is evaluated on or compensated for selling non-assurance services to that client	Audit partner should not be evaluated on or compensated based on that partner’s success in selling non-assurance engagement to the partner’s audit client

2. Self Review threat and safeguards

The threat that an auditor will not appropriately evaluate the results of a previous judgment made or service performed by himself.

Threat		Safeguards
Self-Review	The threat that the auditor will not appropriately evaluate the results of a previous judgment made/or service performed by him	Provision of other services to an audit client (Note: other threats due to this are self-interest because of the fee element and advocacy Safeguard for Listed Clients: Most non-assurance services related to financial reporting are not allowed. Other clients: Segregation of duties, Chinese walls, QCR
Temporary staff assignments	The lending of staff by a firm to an audit client	Should ideally not be made a part of the audit team. Generally acceptable if no management responsibility is taken up and the audit client shall be responsible for directing and supervising the activities of the loaned staff
Recent Service with an Audit Client	a member of the audit team has recently served as an employee of the audit client- The threat is that the member of the audit team has to evaluate elements of the financial statements for which he had prepared the accounting records while with the client	Remove from the team if worked at the client in the year being audited at a position to exert significant influence over the subject matter

3. Familiarity Threat and safeguards

The threat that due to a long or close relationship with a client or employer,

Threat		Safeguard
Long Association	Long Association of Senior Personnel with an Audit Client	Listed clients: 7 years plus 1 year of flexibility than a gap of two years for audit partner– In these 2 years gap period, cannot participate in the audit Or provide quality control for the engagement, Or consult with the engagement team or the client regarding technical or industry-specific issues Other clients: Rotate members, & QCR
Family and Personal Relationships		Remove from the team if the relationship is with a senior person at the client with influence over the financial statements.
Employment with an Audit Client	The director or a senior member of the audit client has been a member of the audit team or partner of the firm in the past	Listed client: for partners, ok if twelve months have passed since the individual was Partner. Other safeguards- Modifying the audit plan;-any work already undertaken by that individual should be independent reviewed.-Assigning individuals to the audit team who have enough experience in relation to the individual who has joined the client

4. Advocacy Threat and safeguards

The threat that an auditor will promote a client’s or employer’s position to the point that the auditor objectivity is compromised.

Threat		Safeguard
Legal services	Legal services To audit client ( For example contract support, litigation, mergers, and acquisition legal advice, and support to clients’ internal legal departments)	If they relate to resolving a dispute or litigation when the amounts involved are material to the Financial Statements: Not allowed
Promote client/shares	The auditor asked to promote client/shares in a client or asked to accompany the client to a meeting with the bank	Not allowed (Politely decline)

5. Intimidation Threat and safeguards

The threat that an auditor will be deterred from acting objectively because of actual or perceived pressures, including attempts to exercise undue influence over the auditor.

Threat		Safeguard
Threat of dismissal	Threat of dismissal or replacement of auditor/or his close family member over a disagreement about the application of an accounting principle.	Tell client’s TCWG– ensure that all audit engagements are conducted in accordance with International Standards on Auditing– Ensure you gather sufficient appropriate evidence A dominant personality at the client attempting to influence the decision-making process, for example, the application of an accounting principle. A firm being pressured to reduce inappropriately the extent of work performed in order to reduce fees. *An auditor feeling pressured to agree with the judgment of a client employee because the employee has more expertise on the matter in question.
Actual or Threatened Litigation	(For example regarding a previous audit report)- When the firm and the client’s management are placed in adversarial positions by actual or threatened legally, affecting management’s willingness to make complete disclosures	QCR– If a team member involved, remove from the – Withdraw from the cement if very significant
Fee dependence	Fee dependence, close personal relationships, business relationships also cause intimidation threats.	The safeguards for each will be the same as discussed earlier.

6. Conflict of Interest Threat and safeguards

Threat		Safeguard
Firm competes with client or firm has a joint venture with a competitor of a client or the firm has competitors as clients		Members should place their clients’ interests before their own and should not accept or continue engagements which threaten to give rise to conflicts of interest between the firm and the client. Any advice given should be in the best interests of the company.
		A conflict of interest arises where an auditor acts for both a client company and for a competitor company of the client. Where the acceptance of an audit engagement would, despite safeguards, materially prejudice the interests of any clients, the appointment should not be accepted, or one of the appointments should be discontinued.
		Where the acceptance of engagement would, despite safeguards, materially prejudice the interests of any clients, the appointment should not be accepted, or one of the appointments should be discontinued.
		Managing conflicts of interest 1. Full disclosure is important – both companies should be fully aware that the firm is acting for the other party. 2. Regular review of the situation by an independent senior partner 3. Use of different partners and teams of staff for different engagements 4. Internal procedures within the firm -Procedures to stop access to information, for example, strict physical separation of both teams, private and secure data filing. -Clear guidelines for members of each assurance engagement team on issues of security and confidentiality. These guidelines must be included within the audit engagement letters. -Potentially the use of confidentiality agreements signed by employees and partners of the firm 5- Advising at least one or all clients to seek additional advice

ACCA Past Papers Attempt These past papers questions to check your understanding:

Sept/Dec Hybrid 2015-Q1
June 2015-Q1
June 2014-Q3d
Dec 2013-Q4c
June 2012-Q3b,c

This is the detailed explanation on Threats to Threats to Auditor Independence, and how its work, don’t forget to give us feedback by commenting below

True and Fair presentation

True and Fair presentation Definition

Financial statements are produced by the Board of directors which give a true and fair view of the entity’s results. The auditor in reviewing these financial statements gives an opinion on the truth and fairness of them. Although there is no definition in the International Standards on Auditing of true and fair it is generally considered the meaning of

True and Fair presentation as following

True – Information is based on facts and conforms with reality in that there are no factual errors. In addition, it is assumed that to be true it must comply with accounting standards and any relevant legislation. True includes data that is correctly transferred from accounting records to the financial statements.

Fair – Information is impartial, clear and unbiased, and representing the commercial substance of the transactions of the entity.

Board of directors = The person who is responsible for overviewing the strategic direction of the entity and obligations related to the accountability of the entity. This includes overviewing the financial reporting process.

Management – The persons with executive responsibility for the conduct of the companies operations. In some cases, all of those charged with governance are involved in managing the company, Example, a small business (sole trader) where a single owner manages the entity and no one else has a governance role

Engagement partner – The partner in the firm who is responsible for the audit engagement and its performance (who is authorized to sign the audit report), and for the auditor’s report that is issued on behalf of the firm and who has the authority from a professional, legal or regulatory body.

Professional judgment – The application of audit training, experience and knowledge, within the context provided by the client, accounting and principles of ethical standards, in making decisions on the base of information about the courses of action that are appropriate in the circumstances of the audit engagement.

Professional skepticism – An attitude that includes a questioning mind, being alert to conditions which can indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence. Professional skepticism includes being alert to, for example:

• Audit evidence that conflicts with other audit evidence obtained by the auditor.

• The questionable information brings the reliability of documents and responses to inquiries to be used as audit evidence.

• Conditions that may indicate possible fraud.

• Circumstances that suggest the need for audit procedures required by the ISAs.