ACCA AAA June 2021

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AAA JUNE 2021- PRACTICE TO PASS
TUTOR: KASHIF KAMRAN –FCCA
DAY 1- 27-04-2021
How to prepare for June 21?
 Today – 27th April 2021

 Exam day- 7th June 2021
Plan-
 Self-appraisal / evaluation of yourself

 Job based student versus full time student
 How much time can you give each day?
 Limitations/ barriers/ weekdays/ weekends
Effective plan:
 Focus on core syllabus area

o Money laundering
o Professional skepticism
o Using the work of others
o Auditor responsibilities for
 Opening balances
 Laws and regulations
 Fraud
o Ethical and professional issues
o Quality control issues
o Practice management matters – accepting a new audit engagement / or further services from an
existing client
o Audit risk/ risk of material misstatement
o Business risk
o Audit evidence and audit procedures
o Audit report
o Communication of matters to those charged with governance
o Other assignments:
 Review of prospective financial info
 Due diligence review
 Forensic audit
 Audit of performance information
 Practice plenty of past papers
o Pen/paper or CBE practice platform
o Recent papers
 Sept/Dec 2020
 Mar 2020
 Mar /Jun 2019
 Sep/Dec 2019
 Dec 2018
 Sept 2018 (new format)
o Dec 2016 onwards up to Jun 2018 (Second priority)
 Read plenty of articles (March 2021 webinar)
 Watch the previous AAA webinars – June 21 + March 21+ Dec 2020+ March 2020
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 Read examiner reports – at least 3-4 examiner reports of recent attempt ( Constructive feedback)
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WHATSAPP+923332383442/ email: kashifkamran@gmail.com
New article- Exposure draft

- Newly introduced
- Reinforced
- Clarified
Proposal
1. Role and responsibility of professional accountant (PA) ( Reinforce the role of PA/ Clarity to PA)
2. Changes to the definition of objectivity and professional behaviour (PB)- AAA student
a. Negative to positive definition
b. Define technological bias?- new term
i. Trust the computer/ results generated from the computers (without doing any trusting
of the computers / procedures/ independent working)
ii. Auditor should develop their own working and computer working
iii. Auditor should test controls around computers
iv. Blind reliance on computer ? wrong
v. Perception – that technology is always right ????
vi. Google- technological bias
c. The definition of professional behaviour has been strengthen to include not just compliance
with the code but also to act in public interest
3. The new application material to the principle of integrity
a. determination to act appropriately when confronted with dilemmas or difficult situations
i. standing one’s ground
ii. challenging others
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DAY 2- 28-04-2021
Objective- Day 2:
 Complete the article from Day 1

 Business risk + practice platform
 Analytical procedures + using the spreadsheet
Article: Exposure draft- code (new article published by the AAA examining team)
Professional accountants to have an inquiring mind
 Professional skepticism – is confined to the external auditor only

 Use a different terminology for professional accountant (Inquiring mind)
 Professional accountant versus auditor?
o PA is wider term which includes different roles adopted by the accountant in a society
o Auditor- is confined term which means external auditor
 Meaning of inquiring mind (code)
o being open and alert for situations
o Considering whether there is a need to critically evaluate the information obtained
Emphasising
 importance of being aware of the dangers of bias when carrying out professional work
o Aware of bias and how biasness influences objectivity and professional behaviour
o Technological bias can influence can professional accountant
o Examples of bias has been in the article (Please see list of bias given on page 4 of the article)
 having a positive internal culture in firms
o internal culture of an employer, whether it is an audit firm of professional accountants or
another type of organisation, can have a significant impact on whether or not professional
accountants comply with the Code and act ethically
 (a) Leaders and those in managerial roles hold themselves and others accountable
for demonstrating the ethical values of the organisation
 (b)Appropriate education and training programs, management processes, and
performance evaluation criteria that promote that ethical culture are in place
 (c) Ethical values are adhered to in dealings with third parties
How to prepare this ARTICLE for exam purpose?

1. Go through the article published – try to understand it yourself
2. Read my summary of changes ( five key changes)- and remember them for your exams
3. Ensure all definitions covered with the exposure draft are on your finger tips
a. Objectivity
b. Integrity
c. Inquiring mind
d. Internal culture of a firm
e. Professional accountant
f. Bias ( page 4 of the article including technological bias)
4. Whenever a new exposure draft is tested the examiner test it for knowledge
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DAY 2: BUSINESS RISK
 March 2021- Day 1

o Audit risk
o RoMM
o Marking scheme
o Marking scheme – analytical procedures
o Dos and don’ts
o Examiner criticism
Business risk (June 2021)
Preparing:
1. Read the article- exam technique article – part 2 Risk (to be good at the understanding of
business risk)
2. Make your notes
3. Read examiner criticism on business risk – by downloading examiner reports (September
2017 / Dec 2018) so that you know the dos and donts of business risk
4. Read the marking scheme of business risk – Dec 2018 answers ( each business risk is worth
how many marks)
5. Start practicing past papers
a. Sep/Dec 2017 –Q1
b. Dec 2018- Q1
c. Dec 2014- Q1
What is a business risk?
 Something which adversely effects the business objectives
 Something (should be in the case study)
o Conditions
o Events
o Circumstances
o Actions (Wrong)
o Inaction ( no action taken/ or not taken timely)
o Wrong strategy for future
 Examples:
o Wrong decisions
o Political environments
o Changes in laws and regulation (legal)
o Changes in social environment
o Strikes by trade union
o PESTEL –effects the business objective
o COVID- 19
o Customer dissatisfaction
o Obsolete product
o No R&D
o Liquidity problems / issues
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 Business objectives
o Profitability
o Market share
o Share prices
o Reputation
o Sales growth
o Stakeholders satisfaction
o Competitive advantage
o Etc.
 Business risk can arise from event
o Within the business
 High staff turnover
 Strike
 Weaknesses in the internal control system
o Outside the business
 Covid- 19
 PESTEL
 Most common implication in an exam paper
o Business objectives
o Profit
o Cash flows
o Business survival
Dos and don’ts of business risk (meeting the examiner expectation)
 Identify risk from within case
o Identify the risk
o Explain why it is a risk ( implication of the risk on the business objective)
 Don’t write mitigation ( no marks)
 No need to write definition of business risk ( no marks)
 Well explained business risk is worth 2 marks (AIM)
o Identify the risk from the case
o Explain why it is a risk
o Implication on business objective
o Sync to case study
o AAA- fully developed point – 3 to 4 sentences long
o I+W+I+S= 2 marks
 Avoid speculative risk
 Risk to be prioritized – more important risk in the answer
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Marking scheme – Page 11 of the Dec 18 answers
Business risk evaluation
 Up to 2 marks for each business risk identified and explained. Marks may be awarded for other, relevant
business risks not included in the marking guide.
 In addition, allow ½ mark for relevant trends which form part of the business risk evaluation, e.g.
% increase in revenue and profit before tax.
Business risk
 2 marks
 2.5 marks
Student note:
 When you write your own business risk answer at home or any other answer for any topic at home,
reconcile your points in the answer with the points in the examiner marking guide to see how many
points you got right.
 if you got 50% or more points right you are on right track for success
 if you reconcile your answer with examiner answer you will only get stress nothing else because
examiners are tutorial guidance and examiner write a lot more to guide students about all possibilities in
exam paper and it’s not an exam standard answer to write to three hours.
 If your point reconcile with examiner point that’s good because explanation of the point will never
reconcile as everyone has a different way explaining
Case –
 Sentences in the case
o Luxury chain of hotel
o Planning to expand in next 3 years
 Flagged issues in the case
o Which is explained in full by the examiner in the case study ( priority)
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Is use of spreadsheet important in AAA paper?
 Most of your AAA or in some case the entire paper can be done on word processor
 If you want to do calculation of materiality or the trends as we did in Dec 17 paper just today,
you can use your own calculator or the calculator the on screen with whichever you are
comfortable
 Only case in AAA paper where you can make use of spread sheet is when the Q1- is on audit risk
or on Risk of material misstatement which specifically ask for utilize the analytical
procedures.
 Sept 18 Q1 on practice platform !
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DAY 3- 29-04-2021
Objective for Day 3:

1. Use of spread sheet in AAA CBE
2. Ethical and professional issues
Use of spread sheet in AAA CBE:
 AAA paper- type of paper AAA is- word processor is the most common response option a
student will be using in the exam
 Is use of spread sheet mandatory as a response option in AAA?
o No
 AAA- what sort of calculations are you doing?
o Materiality
o Ratios / trends over the last year
 Can all of this calculation be performed on a calculator?
o On screen calculator
o Use your own calculator
 In a AAA exam just like Sept 18 Q1, where the question was on audit risk, the examiner did
asked students to specifically utilize analytical procedures?
o Watch my March 2021- Day 1 webinar
o I guided student about – utilize the analytical procedures
o Marking scheme / how will you score marks?
Calculator versus spread sheet – when a question ask for - utilize analytical procedures?
Use of calculator:
 That takes a lot of time when performing analytical procedures
 Open the calculator
 Make a table in word processor
 Open the exhibit for PL/ SOFP
 Punch values in calculator
 Find answers
 You need to put them in table on briefing note
Spread sheet
 Copy paste the financial data in spread sheet
 You will work on ratios in spread sheet giving working note numbers
 You will move back to briefing note and start commentary on ratio by giving references to
working note numbers
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Main agenda- Ethical and professional issue
Ethical, professional and quality control issues
 Jun 21- ethical and professional issues
 Quality control issues- Mar 21 + Dec 20
Ethical and professional issues/ matter is a very common jargon in AAA paper?
 Evaluate/ explain ethical and professional issues/matters and recommend actions?
o Expectation of this question!
 Issues/ matters (evaluate /explain)
 Actions (recommend)
 For e.g.
o Explain / evaluate the issue / matter?
 Explain/ evaluate in AAA
 Develop your point reasonably (3-4 sentences) for 1 mark (every ethical
and professional issue is 1 mark)
 Sync to case / extracted out of the case
o You are a manager for the audit client XYZ Company. You are currently performing audit
of the financial statements. The management of XYZ Company has asked you to prepare
the financial statement for this year audit as the finance manager has left in emergency.
o Explain the ethical issue and recommend action?
 Self-review threat
(1) Preparing the financial statement alongside performing the audit of financial
statements give rise to a self-review threat (0.5). There should be two different
teams for audit of FS and for preparing FS. (0.5) = 1
(2) Preparing the financial statement alongside performing the audit of financial
statements give rise to a self-review threat because the audit team will be
reluctant to review their own work (that is the FS) later in the audit (1) If XYZ
is a non-listed company, the FS could be prepared with a use of a different
team for audit and a different team for preparing FS, alongside a second
partner review of the engagement. (1)
(3) Self review threat
Preparing the financial statement alongside performing the audit of financial
statements give rise to a self-review threat because the audit team will be
reluctant to review their own work (that is the FS) later in the audit. (1)
Management threat
Moreover, preparing FS is a management responsibility and if the auditor
prepares the FS, the auditor will assume management responsibility. (1)
If XYZ is a non-listed company, the FS could be prepared with a use of a
different team for audit and a different team for preparing FS, alongside a
second partner review of the engagement. However it is prohibited to
assume management responsibilities. (1+1)= 4 marks
Marking scheme
 1 mark per issue – well explained
 1 mark per action – recommended.
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Exam technique article – Part 1 Ethics
 Read this article
 Dos and don’ts of the examiner
 Examples of how to write a good answer on ethics
Ample practice: do all recent papers
 Sept 18
 Dec 18
 Mar/Jun 19
 Sep/Dec 19
 Mar 2020
 Sep/Dec 2020
Students comfort level:
Identifying Explaining
Ethical issues Good Weaker
Professional issues Bad / confused/ don’t know X
what they are?
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Practice – Sept 18 Q1 a
Ethical and professional issues + action?
 Ethical issues
 Actions
 Professional issues?
Professional issues (Sept 18 Q1d)
 The group has requested the audit firm to provide a non-audit service?
o Request!- ethical issues ( case)
o Request! professional issues ( book knowledge which you need to connect to the case)
 Do we have competence over integrated reporting? Can we offer or can we not ?
 Deadline- what deadline to complete work? Is it realistic? Or not?
 Reliance on integrated reported by third parties- Auditor liability?
6 marks
Student 1 Student 2 Student 3 Student 4
Ethical 5 4 3 2
Professional X 1 2 3
Action 1 1 1 1
Target 6 6 6 6
Professional issues
 Only write when they relate with case
 Broad example of professional issues
o Competence
o Deadline
o Due care
o Professional behaviour
 Explain why it is an issue
Student confusion
Ethical issues Professional issues
 Identify issue- what ever !!!

 Explain why it is an issue
 There are no marks for classification of the issue
 You are a manager not a junior
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Ethical and professional issues
 Read a case
 Identify issues while you were reading case
 Some of those issues will be ethical ( because student can pick them well where ever there is an
ethical threat)
 There might be an issue in the case which is not an ethical issue – but you are sure it is an
issue
Answer Q1d Sept 18
briefing note
to
from
subject
introduction
(a)
(b)
(c)
(d) discuss the ethical and professional implications of this request, recommending any further actions which
should be taken by our firm. 6 marks
Management threat
The request to assist in developing the integrated report will give rise to management threat, as developing the
integrated report is part of management responsbility, as if the audit firm assist in this development the audit
firm will be assuming management responsbilties (1)
Fimilarity threat
Further if the audit firm is involved in the input into the choice of key performance indicators, which is a pure
management decision, the audit firm will be stepping into the role of management and taking decision which
the management should have taken. This decision making process will make audit firm fimiliar with
management and give rise to fimiliarity threat as the audit firm will become too symphathetic toward
managment by taking decision on their behalf (1)
Self review
The key perofrmance indicators for integrated report will be extracted from financial information in the
audited financial statements, this will give rise to self review threat, as the auditor will be relucatnat to review
the KPI in the integrated report when giving assurance knowing that they have been extracted from the
financial statements audited by them (1)
Self interest
If the request, for assisting in developing the integrated report is accepted, it will generate more income/ fees
for the audit firm as the company is already there the audit client, which will give rise to self interest threat.
competence
The audit firm need to consider there competence level for offering non- audit service over integrated
reporting. If the audit fim has desired experience into this type of service then only the request can be
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accepted.
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Relaince by the third parties
The audit firm need to be careful when providing assurance on integrated reporting as the integrared report
will be relied upon by many stakeholders which increases the liability exposure for the auditor. There the
auditor if accepts the engagmeent need to excercise a greater due care.
Actions
Assuming management responsbilites is prohibited, primarily because the group is a listed entity so the audit
firm can not assist the group in developing integrated report however, the report can be developed by the
management and the audit firm can only give assurance as part of non-audit service (1)
Conclusion
Sketch of Q3b Dec 18

(b)(ii)
Comment on the ethical and professional issues arising from your review of the audit working papers and
recommend any actions which should now be taken by Thomasson & Co. 15 marks
 established that Thomasson & Co performed the taxation computation for Clean Co ( self review / self
interest)
 All of the taxation services have been invoiced to Clean Co as part of the total fee for the audit (wrong
practice)
 Mr Blackers’ personal tax return includes a significant number of transactions involving the purchase
and sale of properties in various international location ( money laundering/ client integrity/ reporting
the matter to MLRO)
 number of off-shore bank accounts in Mr Blackers’ name ( SUSPICIOUS - Money laundering - layering)
 asked Thomasson & Co to provide assistance with the design and implementation of the website and
online sales system. (management threat/ self review threat/ self interest)
 audit team was invited to and subsequently attended Clean Co’s annual office party. The client provided
each member of the audit team with a free voucher worth $30 which could be redeemed at the venue
during the part(Gift and hospitality -self interst)
 audit team has always been encouraged to attend the party in order to develop good client relations (
familiarty threat)
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Day 3: key learning
 encourage you all to use the AA CBE practice platform
 doing analytical procedures – using calculator or using spread sheet
 will you carry your own calculator to exam hall
 rough papers –
o CBE at centre (Available)
o CBE (RI) – will not available
 Copy paste of info from exhibit to word processor later save time when writing answer
 Marking scheme for E&P issues
 How to evaluate an ethical issue?
 Professional issues – examples ?
 No classification of issues
 Only explain the issue and why it is an issue to score 1 mark
 1 mark for writing an action
 Code of conduct – Read to the chapter from the book
 Changes in code of conduct (Exposure draft- Day 1 & Day 2 ) – Five changes
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DAY 4- 30-04-2021
Objective: Audit procedures & audit evidence

1. Question on audit procedure
a. Recommend the audit procedure on __________________ ?
2. Questions on audit evidence
a. Comment on the matters, AND explain the audit evidence YOU should expect to find
during the review of the working papers?
b. Comment on the sufficiency and appropriateness of the audit evidence obtained by the
audit team?
Audit procedure: Examiner expectation
 Read- exam technique article- Part 4: Audit procedure
 Make your notes – key learning you got from the article
 Watch the previous webinar by the tutor for audit procedure including June 2021
 Practice the past paper
Summary
 What is a good procedure in AAA paper?/ what the examiner expect from you?
o Q1- 50 marks ( includes audit procedure in one of the part)
o 5 to 10 marks on audit procedures
o Audit procedures- accounting matters
o Each procedure is worth 1 mark (recommend the audit procedures?)
o How to gain 1 mark? And What is a good procedure? Or How to write a good procedure?
o Good procedure:
 Case specific (for e.g. the examiner ask you to write audit procedure on government
grant for 5 marks)
 While reading the case, where ever you get a para on government grant, stop and read it
carefully.
 You will get some important info about government grant (FACTS)
 Covert the facts to audit procedure
 Good procedure- (Attributes)
 Action
 Source
 Purpose
 1 mark = 1 procedure = good procedure = A+S+P
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For example:
 Action- procedure should start with action (to do something) for example:
o Review the board minutes
o Recalculate the amortization expense
o Discuss with those charged with government
o Analyse the receivable days
 Source- a procedure must have a source( subject matter) for example:
o Review the board minutes
o Recalculate the amortization expense
o Discuss with those charged with government
o Analyse the receivable days
 What are you reviewing?
 What are you recalculating?
 With whom you are discussing?
 What are you analysing?
 Purpose – the objective of performing the procedures
o Review the board minutes to confirm the approval and the business
rationale of acquiring the new subsidiary
o Recalculate the amortization expense to confirm the accuracy of
expense recorded
o Discuss with those charged with government to confirm reasons why
the product has been discontinued / or the basis of the provision
recognized
o Analyse the receivable days to confirm whether the customer are
struggling to pay over time
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DRILL- on audit procedure (Sept/Dec 19- Q1)
Procedure
 Investment in Peppers (4)

 Government grant (4)
-Read the case- identify the para where information is given for investment in Peppers and government grant
- The government provides grants to organisations which commit to investing in properties to reduce carbon
emissions and energy consumption. Grants are also available to organisations to promote the benefits of
recycling to their customers.
In January 20X5, Ryder Co received a grant of $20 million. The only condition attached to the grant is that half of
the amount must be used to upgrade existing assets to make them more environmentally friendly. None of the
amount received has yet been spent, but it is planned that it will be used to finance capital expenditure across
the Group’s property portfolio. The other half of the grant will be used to fund an advertising campaign.
According to the Group finance director, the full $20 million is included within operating profit in the projected
Group statement of profit or loss for the year
-identify facts from case- highlighted in green above

-covert the facts to procedures ( 4 mark= 4 procedures= A+S+P)
Procedures
1. Review the grant agreement to confirm: ( 2 marks)
a. The amount of grant received and the date received
b. The conditions associated with the grant
2. Review the bank statement to confirm the receipt of the grant of $ 20 million (1)
3. Discuss with Ryder’s management their plan and timeline to confirm by when the grant amount will be
utilized on upgrading assets and funding the advertising campaign. (1)
4. Discuss with Ryder’s finance director, the reason why the full amount has been recognized as income to
confirm or understand the finance director rationale (1)
Good procedure –
 Read the case
 Identify the fact
 Covert facts to procedure
 Procedure = A+S+P
Home work: Investment in Pepper – (Read / identify fact/ into procedure)
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Audit evidence-
There are 2 types of question which comes on this topic in past paper?
 Comment on the matters, AND explain the audit evidence YOU should expect to find during the
review of the working papers?
 Comment on the sufficiency and appropriateness of the audit evidence obtained by the audit
team?
Analyse the first question:
Comment on the matters, AND explain the audit evidence YOU should expect to find during the
review of the working papers file)
 YOU- is the manager in case study
 Manager- review the working paper file
o Comment on the matter ( Accounting matter)
 Materiality (1 mark)
 Accounting treatment ( 1 mark)
 Risk of material misstatement ( understatement / overstatement)- ( 1 mark)
o Explain the audit evidence
 Imagine you have a WP file in front of you – and you are reviewing the WP
file. What will you find in the file?
 Working papers of the audit team
 So many working papers put in file by the team.
Suppose:
Comment on the matters, AND explain the audit evidence YOU should expect to find during the review
of the working papers?
The government provides grants to organisations which commit to investing in properties to reduce carbon
emissions and energy consumption. Grants are also available to organisations to promote the benefits of
recycling to their customers.
In January 20X5, Ryder Co received a grant of $20 million. The only condition attached to the grant is that half of
the amount must be used to upgrade existing assets to make them more environmentally friendly. None of the
amount received has yet been spent, but it is planned that it will be used to finance capital expenditure across
the Group’s property portfolio. The other half of the grant will be used to fund an advertising campaign.
According to the Group finance director, the full $20 million is included within operating profit in the projected
Group statement of profit or loss for the year- 7 marks
Comment – matter
The amount of grant i.e. $20 million is _______ % of the total assets, which is material to the financial statements.(1)
The government grant received should be recorded as deferred income until it is utilized by the management,
when it can be recognized as income. (1). Because the grant is recognized in full as other income, even though
it’s not utilized, thus currently, the other income is overstated and deferred income(liability) is understated. (1)
Explain- audit evidence (What evidence will you find in the working paper file of government grant?)
 Copy of the grant agreement to confirm the date, amount and the conditions associated with grant
 Copy of bank statement to confirm the receipt of $ 20 million
 Notes of discussion with Ryder management to confirm plan of utilizing the grant
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 Notes of discussion with finance director to confirm the rationale of the full amount of other income
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Working papers: (Form)
1. Copy – (of management document)
2. Notes – (of discussion)
3. Results – (of recalculation)
4. Representation letter
Evidence = WP+ SOURCE+ PURPOSE
Procedure = ACTION+SOURCE+PURPOSE
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Second type of question on evidence
Comment on the sufficiency and appropriateness of the audit evidence obtained by the audit
team?
 Evidence obtained by the team ( will be given in the case study)
 Comment on the S & A of the evidence obtained
 Comment – on the issues/ shortcoming in the evidence obtained
o Why the evidence obtain is insufficient ? – 1 mark
o Why the evidence obtain is inappropriate? -1 mark
 Read case- you will find somewhere in the case- that evidence gathered by team is not
adequate , annotate it.
 Later explain why you believe evidence is not adequate.
Knowledge:
 Sufficiency- sample size (quantity)

 Appropriate- reliable/ right source/ credible (quality)
Drilling- March 2020 Q2
In respect of the development costs and trade receivables:
(ii) Comment on the sufficiency and appropriateness of the audit evidence obtained, and
(iii) Recommend the actions to be taken by the auditor, including the further evidence which should be
obtained. (11 marks)
Development cost (Webinar)
- Comment on the sufficiency/appropriateness of evidence- 1 mark per comment

- Actions and further evidence – 1 mark per action + 1 mark per evidence
Trade receivables (Home assignment)

- Comment on the sufficiency/appropriateness of evidence
- Actions and further evidence
Common jargon: ACTIONS

- In which ever question you come across the term ACTION, action means, steps taken by the
auditor to resolve an issue in the case study
- Action – verb ( Discuss, review)
- Procedures is developed to gather evidence
- Action is develop to resolve an issue (Most of the time the most appropriate action is
Discuss/Inquire) 20
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Development cost (Webinar)
In August 20X4, the Group commenced development of a new security system, and incurred expenditure of
$600,000 up to the financial year end, which has been capitalised as an intangible non-current asset. The only
audit evidence obtained in relation to this balance is as follows:
– Agreement of a sample of the costs included in the $600,000 capitalised to supporting documentation such as
supplier invoices.
– Cash flow projection for the project, which indicates that a positive cash flow will be generated by 20X8. The
projection has been arithmetically checked.
– A written representation from management stating that ‘management considers that the development of this
new product will be successful’.
You are aware that when the Group finance director was asked about the cash flow projection which he had
prepared, he was reluctant to answer questions, simply saying that ‘the assumptions underlying the
projection have been agreed to assumptions contained in the Group’s business plan’. He provided a
spreadsheet showing the projection but the underlying information could not be accessed as the file was
password protected and the Group finance director would not provide the password to the audit team
Comment on the sufficiency/appropriateness of evidence- 1 mark per comment
The agreement to supplier invoices only confirm that expense was indeed occurred, but fail to provide any
evidence on the bifurcation of research cost and development cost with in the $600,000, thus there is no evidence
gathered by the team on research cost. (1).
Alone arithmetical accuracy of cash flow forecast is not adequate evidence, because this will not confirm, the
underlying basis and there adequacy used in preparing the cash flow forecast. Thus the audit team has gathered
no evidence on the basis nor have challenged the basis used in preparing the cash flow forecast (1)
Representation is a last resort of evidence, and its seems that the audit team has obtained representation as a
source of evidence, too early or when too less work was performed by the audit team. The representation is not
a substitute of the evidence obtained directly by the auditor. (1)
Actions and further evidence – 1 mark per action + 1 mark per evidence
- Breakup of development cost of $600,000 to confirm whether there is any component of cost
which should be classified as research cost (1)
- Notes of discussion with finance director confirming the underlying basis used in preparing the
cash flow forecast and the realisticness of the assumptions used.(1)
- The audit manager should inform the group finance director the auditor power to access all
information and explanation and the responsibility of the management to provide all
explanation to auditor (1)
- The audit manager should discuss with group FD the pre-conditions of audit mentioned in the
audit engagement letter, reinforcing the fact that auditor has access to all informing and
management could not limit the scope of auditor
- The audit manager need to inform of the implication on audit report if the limitation on audit
work in not remove. (1)
Importance of reading questions carefully
How important is it to read the question carefully?

Remember there can be a comma in the question, there can be the word “AND”
How many things is the examiner asking you to do?
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Question 1 – on evidence?
Comment on the matters, AND explain the audit evidence YOU should expect to find during the
review of the working papers file)
Comment on the matter (accounting treatment)
- Materiality
- Accounting treatment
- Risk – under or overstatement
Government grant (webinar) – 3 mark (1+1+1)
What if in the exam the accounting matter consist of discrete figures and the accounting treatment consist of
multiple issues?
For e.g. Loan has a value + finance cost given in the case
- Can you find materiality for the loan ( total assets) – SOFP item – 1 mark
- Can you find materiality for finance cost (PBT)- SOCI item – 1 mark
For e.g. the accounting matter given in case – relates with impairment loss recognized by management.
- Comment on the materiality of the impairment loss- (1)
- Comment on the accounting treatment of impairment loss-
o Comment on the presence of the indicator (1)
o Comment on the determination of right recoverable amount – which is higher of VIU or fair
value less cost to sell (1)
o Comment on the impairment loss – when the carrying amount exceed the RA (1)
What if you get a situation in comment on matters- when materiality is not possible?
- Materiality – ( No marks)
- Comment on treatment
- Risk
For example- Sale and leaseback transaction (Sep /Dec 19-Q2)
- No materiality
- Accounting treatment ( gain so much on it- IFRS 15 / IFRS 16)
o Transfer of control – accounting treatment (IFRS-15)- lifeson company is right
o Right of use of asset- ? / liability ? gain or loss in the profit and loss ?
- Risk- if ROUA is not recorded
- Evidence in working paper
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DAY 5- 01-05-2021
Objective:
1. Audit report
2. Tips and techniques – AAA June 2021
Audit report
 Recommended article- (Knowledge)

o Exam technique article- Part 5- audit report ( general misconceptions in this article and has
provided mitigation to these general misconception+ exam technique- how to write a good
answer on audit report)
o Audit report to TCWG- (Knowledge- what sort of matters are communicated to TCWG at the
completion stage of audit by the auditor, what is the timing of communication, how are these
matters communicated)
 Section B- One of the question will be from syllabus area (E), which includes:
o Completion and reporting stage
o Question can consist of the following:
 Ethical, professional and quality control issues identified by the audit manager
 Going concern
 Audit evidence (Day 4)
 Communication to TCWG
 Audit report
 Critical appraisal of audit report
 Matters and the impact on the audit opinion/ report etc.
 Recommended to watch 3 previous webinar + June 21 = 12 hours ( perfect on syllabus area E)
Focus – June 21
 Going concern (Dec 18 Q2)

 Critical appraisal of audit report (Mar/Jun 19- Q2a)
 Communication of matters to TCWG (Mar/Jun 19- Q2b)
Audit report
 New audit report (Sept 16 exams)

 Format of the report/ order of paragraphs in the report
 Language of the report
 Source? – Audit report given by examiner in the exam technique article part 5 ( in the para exam focus)
 So if you know the language, order, format of the audit report you can easily solve a question on critical
appraisal
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Mar/June 2019- Q2a
Critically appraise the extract from the draft auditor’s report for the year ended 31 March 20X9.
Note: You are NOT required to re-draft the extracts from the auditor’s report. (10 marks)
10 mark- critical appraisal?
 The requirement to ‘critically appraise’ means you need to consider each piece of information and assess
whether it is correct or incorrect, describing why and how to amend it as necessary. As is clearly stated
you are to re-draft the extract.
 If you pick up something in the NOT required audit report, which is incorrect so you will tell:
o Why it is incorrect
o How to amend it as necessary
- One of the first things to note is that the requirement refers to ‘the extract’. As it is not a complete report,
comments on missing elements do not answer the question set and would therefore earn no marks
Marking scheme: 10 marks- each critical appraisal is worth 1 mark = 10 critical appraisal ( 10
weaknesses)
Suggestion: (Mar/ June 19- Q2a) – Critical appraisal
- The title of the audit report is wrong as it is currently addressed to both the shareholders and the
directors. The audit report is only addressed to the shareholders as shareholders are the principal for the
auditor and are the one who has appointed the auditor. (1)
- The audit report of Kilmister Company shows the basis of opinion para first followed by the opinion
paragraph which is incorrect, as per the relevant reporting standards. The opinion paragraph should be
the first para of the audit report followed by the basis of opinion paragraph (1)
- The ethical requirement is a vague and incorrect statement as it does not justify which of the ethical
requirement has been followed, that is, the framework of ethical requirement is missing. The audit report
should mention IESBA code of conduct as a proper jargon(1)
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Communication of matters to those charged with governance (Completion stage)
o Once in recent paper – Mar/June- Q2b
Required:
From the information provided above, recommend the matters which should be included in Eddie & Co’s report to those
charged with governance, and explain the reason for their inclusion. (15 marks)
o Read the case

o Identify the matter- which you believe should be communicated to TCWG
o Explain why they should be included.
o 1 mark per matter – identify + explain why to be included
Which matters are included in the report to TCWG?
o the overall approach and scope of the audit, including any limitations on the scope of the audit
o the accounting policies, and any changes to them, that could materially affect the financial statements
o adjustments arising as a result of audit procedures which could materially impact the financial
statements
o material events or uncertainties which could jeopardise the going concern status, and which require
disclosure within the financial statements
o disagreements with management over accounting treatments or disclosures
o any expected modifications to the audit report
o material weaknesses discovered in the internal systems and controls.
Note: All of the above are referred to as ‘findings from the audit’ (also often called ‘management
letter points’).
Examiner expectation – March/Jun Q2b
Generally, candidates identified the “matters to be included” and used an approach of calculating the materiality
of the issue, discussing the relevant accounting standard and how the matter had been dealt with incorrectly.
However, candidates were vague on why matters should be included within a report to those charged with
governance and continued to answer the question as if it were asking about the impact on the audit opinion. This
demonstrates a lack of understanding of the question requirement by a number of candidates.
CASE- Identifying a wrong accounting matter (which you need to communicate to TCWG)
o calculating the materiality of the issue- 1 M
o discussing the relevant accounting standard- 1M
o how the matter had been dealt with incorrectly (PROPOSE ADJUSTMENT)- 1M
DRILLING
Matters to be communicated to TCWG
- The audit team faced difficulties during the audit in getting information on time from the management
despite request being made at planning stage for access to the external valuer report. This is an important
matter because, this cause delay in audit field work, and has disturbed the audit time table and the
document requested was important to perform timely substantive procedure to ensure that the
revaluation of the property portfolio is correct. (1)
- The four properties which were still held at cost is 2.07% of the total assets and thus material to the
financial statement (1). When properties are revalued, the entire class of asset, which is all the properties
should be revalued for the sake of consistency of accounting practices. (1). Thus currently properties
could be understated (1) This is an important matter as this requires adjustment to the financial
statement, and is the reason why it should be communicated to those charged with governance.
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Going concern
Dec 2018 Q2
Requirement
Required:
(a) Using analytical review where appropriate, evaluate the matters which may cast doubt on Daley Co’s ability to continue
as a going concern. (10 marks )
- Read the case

- Identify matter – which you believe may cast doubt on the going concern status of the company
- Explain why- this matter may cast doubt
- Matter-
o Narrative (A major new competitor has moved in to Daley Co’s market in October 20X8.)
o Through the analytical procedure (Calculate current ratio + comment on it as a matter which may
cast doubt)
Marking scheme
Going concern indicators
Up to 2 marks for each well-explained going concern indicator discussed. Up to 3 marks for calculation of
relevant ratios and trends
Examiner criticism
Requirement (a) for ten marks asked candidates to evaluate matters which cast doubt on a client’s
ability to continue as a going concern (GC). Candidates were directed to analytical review of a cash flow
forecast to aid in their evaluation and those who used the quantitative and discursive parts of the
scenario to describe the GC risk indicators with an explanation of how that impacted on the company’s
future tended to score high marks on this question. Candidates who merely calculated ratios and
stated the direction of movement or simply stated that an increase in the receivables collection period
showed going concern issues attained very few marks. It is important candidates demonstrate
their knowledge of how each matter gives rise to an issue for trading as a going concern. For
example a fuller explanation would be that the increase in the receivables collection period may mean that
there are irrecoverable debts which should be written off, increasing losses further, or that slow collection
would decrease liquidity and therefore put pressure on the ability of the company to make payments as
they fell due. A technique candidates could employ here would be to ask themselves why as they get to
the end of a sentence, allowing them to add a second sentence demonstrating their understanding. A
minority of candidates appeared to lack focus on the question requirement and answered this as a
RoMM discussion, covering risks of material misstatements in the forecast rather than relating the
scenario to the GC issues required.
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Dec 2018 –Q2b
Matters which may cast doubt on going concern status

Major new competitor
A major competitor has moved into Daley market in Oct 20x8, which may impact on the future sales and market
share of Daley for the foreseeable future and the upcoming year end in August 20x9. The major competitor will
encroach the market share from Daley, and will give tough time to the company which may bring doubt on Daley
going concern. (2). This may further worsen the situation of loss this year, and the losses might increase in
foreseeable if due to competition Daley has to reduce its margin and selling prices to fight the competition. (1)
Current issue
The current ratio is 20x7 was 2.37 whereas it was 1.58 in 20x8 (1). The current ratio has declined drastically
over the last year and even though its still above 1, but the drastic fall, challenge the ability of the company to
meet it obligation in the foreseeable future which may cast doubt on going concern status (2). Already the
company is facing worsening liquidity position due to the fact that the in 20x7 the company had a cash balance
of 0.6 million which is 20x8 is a nil balance and has been replaced with an overdraft of $1.8 million(1)
Student note: up to for 3 marks for AP (exhausted)
- Heading 3 – 2 mark max ( 9 so far)
- Heading 4- 2 marks ( 11 marks)
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TIPS AND TECHNIQUES- JUNE 2021
1. Preparation
2. Meeting examiner expectation
3. Practice
4. Excel
1st May 2021- 7th June 2021 (36 days)
Preparation
 Control over the core syllabus areas

o Audit risk/ RoMM
o Business risk
o Audit procedures
o Audit evidence
o Ethical and professional issues
o Quality control issue
o Practice management
o Audit report
o Going concern
o Communication of matters to those charged with governance
o Other assignments
 Due diligence
 Audit of performance info
 Review of prospective financial info
 Forensic audit
o Money laundering
o Opening balance
o Using the work of – internal auditor / expert/ component auditor
o Auditor responsibility for:
 Fraud
 Laws and regulations
o New article: Exposure draft – on code
Student note:
 Watch my previous webinars, June 2021, March 2021, Dec 2020, March 2020, December 2019 as
minimum, to be good all above core areas.
 Read articles- recommend in previous webinar + ones available on ACCA websites
 Read- recent exposure draft article
Meeting examiner expectations
 Exam technique article- part 1 to 5

 Examiner reports of recent papers- at least the recent 5s
 Recent marking scheme guides – for last 3 to 4 attempts
 Dos and donts
 What to avoid?
 What to do?
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Practice
 First ( 6 are enough)

o Sep/Dec 2020
o Mar 2020
o Sep/Dec 2019
o March/June 2019
o Dec 2018
o Sept 2018
 Second (another 4)
o June 2018
o Sep/Dec 2017
o June 2017
o Dec 2016
 Practice platform / blank workspace
 Pen and paper exams
Excel
 Follow and implement the tutor support / learnings from the webinar/s
 Don’t get distracted
 Make a plan/ stick to it
“ REDUCE THE EXPECTATION

GAP WITH YOUR AAA
EXAMINER”
29
Page

ACCA AAA June 2021

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How to prepare for June 21?

 Today – 27th April 2021

 Self-appraisal / evaluation of yourself

 Focus on core syllabus area

New article- Exposure draft

 Complete the article from Day 1

 Professional skepticism – is confined to the external auditor only

How to prepare this ARTICLE for exam purpose?

DAY 2: BUSINESS RISK

 March 2021- Day 1

Objective for Day 3:

Ethical and professional issues + action?

Ethical issues Professional issues

 Identify issue- what ever !!!

Sketch of Q3b Dec 18

Objective: Audit procedures & audit evidence

 Investment in Peppers (4)

-identify facts from case- highlighted in green above

Home work: Investment in Pepper – (Read / identify fact/ into procedure)

Analyse the first question:

 Sufficiency- sample size (quantity)

Development cost (Webinar)

- Comment on the sufficiency/appropriateness of evidence- 1 mark per comment

Trade receivables (Home assignment)

Common jargon: ACTIONS

Comment on the sufficiency/appropriateness of evidence- 1 mark per comment

Importance of reading questions carefully

How important is it to read the question carefully?

 Recommended article- (Knowledge)

 Going concern (Dec 18 Q2)

 New audit report (Sept 16 exams)

Suggestion: (Mar/ June 19- Q2a) – Critical appraisal

Communication of matters to those charged with governance (Completion stage)

o Once in recent paper – Mar/June- Q2b

o Read the case

Which matters are included in the report to TCWG?

Examiner expectation – March/Jun Q2b

- Read the case

Matters which may cast doubt on going concern status

 Control over the core syllabus areas

 Exam technique article- part 1 to 5

 First ( 6 are enough)

“ REDUCE THE EXPECTATION

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