ACCA p7 KAPLAN STUDY TEXT 2021 2022 by

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Advanced Audit and Assurance (International)

This ACCA Study Text for Paper P7 Advanced

Audit and Assurance (International) has been

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Paper P7 Advanced Audit and Assurance

(International) For exams in September 2016, December

2016, March 2017 and June 2017

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Contents

Page

Introduction

Helping you to pass v

Studying P7 vii

The exam paper xv

Syllabus and study guide xvi

Part A Regulatory environment 1 International regulatory environments for audit and assurance services 3

Part B Professional and ethical considerations 2 Code of ethics and conduct 39

3 Professional liability 75

Part C Practice management 4 Quality control 105

5 Obtaining and accepting professional appointments 119

Part D Audit of historical financial information 6 Planning and risk assessment 143

7 Evidence 193

8 Evaluation and review (I) 229

9 Evaluation and review (II) – matters relating to specific accounting issues 267

10 Evaluation and review (III) – matters relating to specific accounting issues 293

11 Group audits and transnational audits 333

Part E Other assignments 12 Audit-related services and other assurance services 365

13 Prospective financial information (PFI) 397

14 Forensic audits 411

15 Social, environmental and public sector auditing 423

16 Internal audit and outsourcing 453

Part F Reporting 17 Reporting 471

Part G Current issues and developments 18 Current issues 507

List of articles by the examining team 519

Practice question bank 525

Practice answer bank 547

Index 607

Review form

Helping you to pass

BPP Learning Media – ACCA Approved Content Provider

As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use study

materials reviewed by the ACCA examination team By incorporating the examination team’s comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Study

Text provides excellent, ACCA-approved support for your studies

The PER alert

Before you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a three year practical experience requirement (PER) To help you to recognise areas of the syllabus that you

might be able to apply in the workplace to achieve different performance objectives, we have introduced the 'PER alert' feature You will find this feature throughout the Study Text to remind you that what you are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement

Your achievement of the PER should now be recorded in your online My Experience record.

Tackling studying

Studying can be a daunting prospect, particularly when you have lots of other commitments The different

features of the Study Text, the purposes of which are explained fully on the Chapter features page, will

help you while studying and improve your chances of exam success

Developing exam awareness

Our Study Texts are completely focused on helping you pass your exam

Our advice on Studying P7 outlines the content of the paper, the necessary skills you are expected to be able to demonstrate and any brought forward knowledge you are expected to have

Exam focus points are included within the chapters to highlight when and how specific topics have been

examined, or how they might be examined in the future

Using the Syllabus and Study Guide

You can find the syllabus and study guide on page xvi to xxvii of this Study Text

Testing what you can do

Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt

We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well as

Quick Quizzes at the end of each chapter to test your knowledge of the chapter content

Chapter features

Each chapter contains a number of helpful features to guide you through each topic

Topic list

Topic list Syllabus reference Tells you what you will be studying in this chapter

and the relevant section numbers, together with ACCA syllabus references

Introduction Puts the chapter content in the context of the

syllabus as a whole

Study guide Links the chapter content with ACCA guidance

Exam guide Highlights how examinable the chapter content is likely to be and the ways in which it could be

Examples Demonstrate how to apply key knowledge and

techniques

Key terms Definitions of important concepts that can often earn you easy marks in exams

Exam focus points Tell you when and how specific topics have been examined, or how they may be examined in the

future

Formula to learn Formulae that are not given in the exam but which have to be learnt

This is a new feature that gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER)

Chapter Roundup A full list of the Fast Forwards included in the chapter, providing an easy source of review Quick Quiz A quick test of your knowledge of the main topics in the chapter

Practice Question Bank Found at the back of the Study Text with more comprehensive chapter questions Cross

referenced for easy navigation

FAST FORWARD

Studying P7

As the name suggests, this paper examines advanced audit and assurance topics Paper P7 is one of the professional level Options papers and as such candidates must consider carefully whether they have the

required competencies

The P7 examination team

The examination team expects you to demonstrate a highly professional approach to all questions – not just presenting information in a professional manner, but also integrating knowledge and understanding

of topics from across the syllabus The examination team is also very keen for students to demonstrate

evidence of wider reading and to demonstrate an understanding of current issues as they affect audit and

assurance At the absolute minimum you should read Student Accountant The examination team often

examines topics that it has written about in Student Accountant

Syllabus update

The P7 syllabus has been updated for the September 2016 sitting onwards The full syllabus and Study

Guide can be found in this Study Text on pages xvi to xxvii

1 What P7 is about

The aim of the syllabus is to analyse, evaluate and conclude on the assurance engagement and other audit and assurance issues in the context of best practice and current developments

The paper builds on the topics covered in Paper F8 Audit and Assurance but as an advanced paper it tests

much more than just your knowledge of ISAs and your ability to list standard audit procedures You must

be able to apply your knowledge to more complex audit and assurance scenarios, identifying and

formulating the work required to meet the objectives of audit and non-audit assignments and to evaluate

the findings and results of work performed Accounting knowledge examined in Paper P2 Corporate

Reporting is also assumed Therefore, candidates studying for P7 should refer to the Accounting

Standards listed under P2

The syllabus is divided into seven main sections:

(a) Regulatory environment

This section introduces the legal and regulatory environment including corporate governance

issues It also examines the topics of money laundering and the consideration of laws and

regulations

(b) Professional and ethical considerations

The details of the various ethical codes should be familiar to you from your earlier studies,

however the importance of this topic should not be underestimated The examination team has

indicated that ethical and professional issues are likely to feature in every sitting This section also covers fraud and professional liability, both of which are topical issues

(c) Practice management

This part of the syllabus covers quality control, tendering and professional appointments It also

covers advertising, publicity, obtaining professional work and fees

(d) Audit of historical financial information

This is the largest section of the syllabus looking in detail at the procedures involved in a range of audit and assurance assignments The examination team has indicated that evidence gathering is a key part of the syllabus and is likely to feature at each sitting Requirements are likely to focus on

specific assertions, balances or transactions

(e) Other assignments

This section also covers a range of audit-related and assurance services The examination team

has stressed the need for candidates to be able to tackle these types of scenario

(f) Reporting

The detail of audit reports should be familiar to you from your earlier studies At this level you will

be expected to apply this knowledge to more complex scenarios The examination team has also stressed the importance of the relationship between financial reporting and auditing This will be particularly important when forming an appropriate audit opinion This section of the syllabus also includes reports to management and other reports

(g) Current issues and developments

Current issues and developments includes a wide range of topics including the IAASB clarity project, professional, ethical and corporate governance, information technology, going concern, transnational audits and social and environmental auditing The examination team has indicated that this is likely to be examined at each sitting, and that candidates are expected to have read around the issues for themselves You will need to be able to discuss current issues topics in the

context of a client scenario

2 Skills you have to demonstrate

2.1 Knowledge and application

Even with exams you've previously taken, you'll remember that passing didn't only mean reproducing knowledge You also had to apply what you knew At Professional level, the balance is tilted much more towards application You will need a sound basis of technical knowledge The exams will detect whether you have the necessary knowledge However, you won't pass if you just spend your time acquiring knowledge Developing application skills is vital

2.2 Application skills

• A thorough understanding of the relevant audit, assurance and financial reporting regulations that fall within the syllabus

• The ability to apply knowledge to specific client scenarios

• The ability to have an independent opinion, backed by reasoned argument

• An appreciation of commercial factors which influence practice management

• An appreciation of fast-moving developments in audit and assurance practices The P7 examination team made very similar comments in a number of recent examiner's reports which is

so important that we will quote it here These pitfalls tend not to change from year to year:

'Similar factors as detailed in previous examiner's reports continue to contribute to the unsatisfactory pass rate:

• Failing to answer the specific question requirements

• Not applying knowledge to question scenarios

• Not explaining or developing points in enough detail

• Lack of knowledge on certain syllabus areas

• Illegible handwriting' 'As seen in previous sittings, what makes the difference between a pass and a fail script is usually

the level of application skills which have been demonstrated Candidates who answer the specific question requirement, and tailor their answers to the scenarios provided are likely to do well.'

(Examiner's Report, June 2011)

3 How to pass

3.1 Study the whole syllabus

Study the entire syllabus Although Section B of the paper contains an optional element, the two questions

in Section A are compulsory and could cover a range of topics from across the syllabus Moreover,

Section B questions may focus on several areas of the syllabus, so if you have not studied the whole

syllabus then you could find yourself unable to answer any Section B question in full Question spotting at this level is unwise and not recommended

3.2 Focus on themes, not lists

There are quite a number of lists in the Texts This is inevitable because technical guidance often comes in list form Lists are also sometimes the clearest way of presenting information However, the examination team has stressed that passing the exam is not a matter of learning and reproducing lists Good answers will have to focus on the details in the scenario and bring out the underlying themes that relate to the

scenario The points in them will have more depth than a series of single-line bullet points

3.3 Read around

Read the financial press and relevant websites for real life examples – the examination team is specifically looking for evidence of wider reading

Read Student Accountant (the ACCA's student magazine) regularly – it often contains technical articles

written either by or on the recommendation of the examination team which can be invaluable for future

exams, not least because they tend to focus on examinable areas of the syllabus

3.4 Lots of question practice

You can develop application skills by attempting questions in the Exam Question Bank and later on in the BPP Learning Media Practice & Revision Kit

4 Answering questions

Practise as many questions as you can under timed conditions – this is the best way of developing good

exam technique Make use of the Question Bank at the back of this Text BPP's Practice & Revision Kit contains numerous exam-standard questions (many of them taken from past exam papers) as well as

three mock exams for you to try

Section A questions will be the case study type of question – make sure you relate your answers to the

scenario rather than being generic Answers that are simply regurgitated from Texts are unlikely to score highly

Present your answers in a professional manner – there are between four and six professional marks

available for setting answers out properly and for coherent, well structured arguments and

recommendations You should be aiming to achieve all of these marks

Consider the question requirement carefully so that you answer the actual question set

Answer plans will help you to focus on the requirements of the question and enable you to manage your

time effectively

Answer the question that you are most comfortable with first – it will help to settle you down if you feel

you have answered the first question well

4.1 Analysing question requirements

It's particularly important to consider the question requirements carefully to make sure you understand exactly what the question is asking, and whether each question part has to be answered in the context of

the scenario or is more general You also need to be sure that you understand all the tasks that the

question is asking you to perform

Remember that every word will be important If for example you are asked to 'Explain the importance of identifying all audit risks arising at the planning stage of the audit of Company X', then you would not identify all the audit risks at Company X This would be a waste of your time and would gain no marks You must focus your answer on the requirement that is set

4.2 Understanding the question verbs

Verbs that are likely to be frequently used in this exam are listed below, together with their intellectual levels and guidance on their meaning

Intellectual level

2 Distinguish Define two different terms, viewpoints or concepts on the

basis of the differences between them

3 Explore Examine or discuss in a wide-ranging manner

3 Criticise Present the weaknesses of / problems with the actions

taken or viewpoint expressed, supported by evidence

evaluate

Determine the value of in the light of the arguments for and against (critically evaluate means weighting the answer towards criticisms / arguments against)

3 Construct the case Present the arguments in favour or against, supported by

evidence

3 Recommend Advise the appropriate actions to pursue in terms the

recipient will understand

A lower level verb such as define will require a more descriptive answer A higher level verb such as evaluate will require a more applied, critical answer The examination team has stressed that higher-

level requirements and verbs will be most significant in this paper, for example critically evaluating a

statement and arguing for or against a given idea or position The examination team is looking to set questions that provide evidence of student understanding

Certain verbs have given students particular problems

(a) Identify and explain

Although these verbs are both Level 1, the examination team sees them as requiring different things You have to go into more depth if you are asked to explain than if you are asked to identify

An explanation means giving more detail about the problem or factor identified, normally meaning that you have to indicate why it's significant If you were asked to:

(i) Identify the main problem with the same person acting as chief executive and chairman

– you would briefly say excessive power is exercised by one person

(ii) Explain the main problem with the same person acting as chief executive and chairman

– you would say excessive power is exercised by one person and then go on to say it would mean that the same person was running the board and the company As the board is meant

to monitor the chief executive, it can't do this effectively if the chief executive is running the board Also, you may be asked to explain or describe something complex, abstract or philosophical in nature

(b) Evaluate

Evaluate is a verb that the examination team uses frequently Its meaning may be different from the way that you have seen it used in other exams The examination team expects to see arguments for

and against, or pros and cons for what you are asked to evaluate

Thus for example if a question asked you to:

'Evaluate the contribution made by non-executive directors to good corporate governance in companies'

You would not only have to write about the factors that help non-executive directors make a worthwhile contribution (independent viewpoint, experience of other industries) You would also have to discuss the factors that limit or undermine the contribution non-executive directors make (lack of time, putting pressure on board unity)

If the examination team asks you to critically evaluate, you will have to consider both viewpoints However you will concentrate on the view that you are asked to critically evaluate, as the mark scheme will be weighted towards that view

4.3 Content of answers

Well-judged, clear recommendations grounded in the scenario will always score well, as markers for this

paper have a wide remit to reward good answers You need to be selective As we've said, lists of points memorised from Texts and reproduced without any thought won't score well

The examination team identified lack of application skills as a serious weakness in many student answers What constitutes good application will vary question by question but is likely to include:

• Only including technical knowledge that is relevant to the scenario For example, although some mnemonics can be a useful memory aids, you shouldn't quote them in full just because the question requirements seem to point to them Only discuss the parts of it that are relevant

• Only including scenario details that support the points you are making, for example using words or

phrases taken from the scenario to explain why you're making a particular recommendation – there are no marks available for repeating material from the scenario

• Tackling the problems highlighted in the scenario and the question requirements

• Explaining why the factors you're discussing are significant

• Taking a top-down strategic approach – excessive detail about the minutiae of auditing is not

important

Important!

5 Gaining professional marks

As P7 is a Professional level paper, four professional level marks will be awarded in a Section A question These are marks allocated not for the content of an answer, but for the degree of professionalism with which certain parts of the answer are presented

The examination team has stated that some marks may be available for presenting your answer in the form of a letter, presentation, memo, report, briefing notes, management reporting, narrative or press statement You may also be able to obtain marks for the layout, logical flow and presentation of your answer You should also make sure that you provide the points required by the question

Whatever the form of communication requested, you will not gain professional marks if you fail to follow the basics of good communication Keep an eye on your spelling and grammar Also think carefully, am I saying things that are appropriate in a business communication?

6 Brought forward knowledge

The P7 syllabus assumes knowledge brought forward from F8 Audit and Assurance It also assumes knowledge from Paper F7 Financial Reporting and Paper P2 Corporate Reporting It is very important to be

comfortable with your financial reporting studies because these are likely to be drawn upon by the scenario-based questions in Sections A and B of this paper

The P7 examination team has written a number of articles relevant to the P7 exam and it is highly recommended that you read them A list of these articles can be found after Chapter 18 of this Study Text Important!

Analysis of past papers

The table below provides details of when each element of the syllabus has been examined and the question number and

section in which each element appeared Further details can be found in the Exam Focus Points in the relevant chapters

With the introduction of the four exam sessions, ACCA will continue to publish the same number of exams, two per year, and

at the same times, after the December and June exam sessions These exams will be compiled from questions selected from

the two preceding sessions The first of this kind was published in December 2015, compiled from September 2015 and

December 2015 exams, and this has been included in the analysis below

2(a)

1(a), 3(b)

1(b), 3(b), 4

2(b) 3(a) 2(a),

4(b) 3(b), 4 4(b)

1, 2(a), 3(b), 5(a)- (b)

1(a)–(c),

2, 3(a), 5(b)

1, 3, 4 1, 3, 5 1(a), 3,

4(b), 5(b), (c)

1, 2, 3(a)-(b), 5(a)

1(a), 2(b), 3(a)-(b), 5(a)

1(a), 2(a)-(b), 3(a)-(c), 5(a)-(b)

1, 2, 3(b)

1(a), 2(c), 3(a)-(c)

1, 3(b), 5(a)

1, 2(a)-(b),

5

13 Prospective

financial information

2(a) 2(a) 2(a) 3

environmental auditing

2(b)

15 Public sector audit

of performance information

developments

1,2,3 Professional,

ethical and corporate governance

The exam paper

Format of the paper

Number of marks

Section A: Two compulsory questions:

100 Time allowed: 3 hours and 15 minutes

Guidance

Section A will consist of two compulsory 'case study' style questions These will include detailed

information including, for example, extracts from financial statements and audit working papers The

questions will include a range of requirements covering different syllabus areas

Section B questions will tend to be more focused towards specific topic areas, such as ethical issues and

auditor's reports Short scenarios will be provided as a basis for these questions

Syllabus and Study Guide

Regulatory environment

P A R T A

Topic list Syllabus reference

1 International regulatory frameworks for audit and

assurance services

A1

2 Corporate governance and audit committees A1

3 Internal control effectiveness A1

International regulatory

environments for audit

and assurance services

Introduction

This chapter covers a wide range of regulations that affect the work of audit

and assurance professionals You need to be aware of the international nature

of the audit and assurance market and the main issues driving the development

of regulatory frameworks

The detailed requirements relating to money laundering are then discussed

You should be prepared to explain the responsibilities of professional

accountants in this area and to outline the procedures that audit firms should

implement

The final section looks at the auditor's responsibilities in respect of laws and

regulations that apply to an audit client This is a topic that could be built in to a

practical case study question

Study guide

Intellectual level

A Regulatory environment A1 International regulatory frameworks for audit and assurance services

(a) Explain the need for laws, regulations, standards and other guidance relating

(b) Outline and explain the legal and professional framework including:

(i) Public oversight to an audit and assurance practice (ii) The role of audit committees and impact on audit and assurance practice

2

A2 Money laundering

(b) Explain how international efforts seek to combat money laundering 2 (c) Explain the scope of criminal offences of money laundering and how

professional accountants may be protected from criminal and civil liability 2

(e) Describe how accountants meet their obligations to help prevent and detect

money laundering including record keeping and reporting of suspicion to the appropriate regulatory body

2

(g) Recognise potentially suspicious transactions and assess their impact on

(h) Describe, with reasons, the basic elements of an anti money laundering

A3 Laws and regulations

(a) Compare and contrast the respective responsibilities of management and

auditors concerning compliance with laws and regulations in an audit of financial statements

2

(b) Describe the auditor's considerations of compliance with laws and

regulations and plan audit procedures when possible non-compliance is discovered

2

Exam guide

The technical content of this part of the syllabus is mainly drawn from your earlier studies Questions in this paper are unlikely to ask for simple repetition of this knowledge, but are more likely to require explanation or discussion of the reasons behind the regulations

1 International regulatory frameworks for audit and assurance services

Major developments in international regulation of audit and assurance have recently concluded, with reaching effects on ISAs

far-1.1 The need for laws, regulations, standards and other guidance

Corporate scandals, such as Enron and Worldcom in the US, Olympus in Japan and Autonomy in the UK, have brought the audit profession under close scrutiny from investors, businesses, regulators and others There is a trend towards businesses becoming more complex and global, and firms of accountants have expanded their range of services well beyond traditional assurance and tax advice This has led to a great deal of re-examination of regulatory and standard-setting structures both nationally and internationally in recent years

Laws are in many respects a last resort in the task of ensuring that audits are conducted properly and are

of a high quality As a generalisation, laws tend to be prescriptive and dissuasive They are external to the auditor, requiring them to act within the letter (although not necessarily the spirit) of the law in order to avoid punishment Law is a relatively blunt instrument for regulation

At the other extreme would be a moral code that is purely internal to the auditor's self, which the individual would adhere to irrespective of external consequences The audit profession does not attempt to set out such a code, this being the more proper area for broader social, moral or religious authority

Audit regulations do take the presence of external laws and internal morality as their starting points, but sit somewhere in between these two extremes International standards are principles-based, representing a common set of principles and practices which are more flexible than statutory laws, allowing for an element of ambiguity and judgement on the part of the auditor At the same time, however, auditing standards are not simply general statements of morality: they contain specific suggestions for the auditor

to consider in specific circumstances, which are not legally binding but which provide a starting point for the auditor in a given situation

1.2 The legal and professional framework

One of the competencies you require to fulfil Performance Objective 18 of the PER is the ability to apply up

to date auditing standards and applicable frameworks You can apply the knowledge you obtain from this section of the Study Text to help you demonstrate this competency

You have studied the regulatory framework in earlier papers The following summaries will provide a quick reminder Note that the UK regulatory framework is given in this International-stream Study Text as an example only

1.2.1 Overview of the UK regulatory framework

The EU Eighth Directive on company law requires that persons carrying out statutory audits must be approved by the authorities of EU member states The authority to give this approval in the UK is delegated

to Recognised Supervisory Bodies (RSBs) An auditor must be a member of an RSB and be eligible under its own rules The ACCA is an RSB

The RSBs are required by the Companies Act to have rules to ensure that persons eligible for appointment

as a company auditor are either:

 Individuals holding an appropriate qualification

 Firms controlled by qualified persons

FAST FORWARD

The Financial Reporting Council

The Financial Reporting Council (FRC) is the UK's independent regulator for corporate reporting and governance It has the following core structure and responsibilities under the overarching FRC Board

 Codes and Standards Committee – responsible for actuarial policy, audit and assurance, corporate governance, and accounting and reporting policy

 Conduct Committee – responsible for audit quality review, corporate reporting review, professional discipline, professional oversight, and supervisory inquiries

 Executive Committee – providing day to day oversight of the work of the FRC The main changes that concern P7 students are:

 Auditing standards (ISAs) are the direct responsibility of the FRC Board – but the Board is advised

by the new 'Codes and Standards Committee', which is in turn advised by the new 'Audit and Assurance Council' Auditing standards were formerly the responsibility of the APB

 Accounting standards are the responsibility of the FRC Board, which is advised by the 'Codes and Standards Committee' and the 'Accounting Council' in turn Accounting standards were formerly the responsibility of the ASB

The revised role of the FRC Board is:

 To set high standards of corporate governance through the UK Corporate Governance Code

 To set standards for corporate reporting and actuarial practice

 To monitor and enforce accounting and auditing standards

 To oversee regulatory activities of the actuarial profession and professional accountancy bodies

 To operate independent disciplinary arrangements for public interest cases The revised structure is shown by the following diagram

FRC Board

Conduct Committee

Conduct Committee

Actuarial Council

Accounting Council

Audit & Assurance Council

Financial Reporting Review Panel

Case Mangement Committee

Monitoring Committee

1.2.2 International standard setting

International Standards on Auditing (ISAs) are produced by the International Auditing and Assurance

Standards Board (IAASB), a technical standing committee of the International Federation of Accountants (IFAC) You should also be familiar with the International Ethics Standards Board for Accountants (IESBA),

another body of IFAC and the producer of the Code of Ethics (see Chapter 2)

The IAASB's Preface to International Standards on Quality Control, Auditing, Assurance and Related

Services Pronouncements states that all the IAASB's 'engagement standards' above are 'authoritative

material', which means that they must be followed in an audit that is conducted in accordance with ISAs The IAASB also publishes four kinds of 'non-authoritative material'

 International Auditing Practice Notes (IAPNs) These do not impose additional requirements on

auditors, but provide them with practical assistance

 Practice Notes Relating to Other International Standards, eg in relation to ISREs, ISAEs or ISRSs

 Staff Publications, which are used to help raise awareness of new or emerging issues, and to direct attention to the relevant parts of IAASB pronouncements

 Consultation Papers, which seek to generate discussion with stakeholders

Within each country, local regulations govern, to a greater or lesser degree, the practices followed in the auditing of financial or other information Such regulations may be either of a statutory nature, or in the form of statements issued by the regulatory or professional bodies in the countries concerned

National standards on auditing and related services published in many countries differ in form and

content The IAASB takes account of such documents and differences and, in the light of such knowledge, issues ISAs which are intended for international acceptance

The European Union, for example, has since 2014 required ISAs (as issued by the IAASB) to be adopted at

EU level Member states may impose additional requirements on auditors (such as the FRC, whose ISAs (UK and Ireland) are in some places more stringent than the IAASB's ISAs) but these must not contradict

EU ISAs

IFAC

(International Federation of Accountants)

IAASB

(International Auditing and

Assurance Standards Board)

 Code of Ethics for Professional Accountants

The IAASB issued A Framework for Audit Quality in this area, which is covered in Chapter 18

1.2.3 Current ISAs and other examinable documents

International Standards on Auditing (ISAs)

Preface to the International Standards on Quality Control, Auditing, Review, Other Assurance and Related Services

ISA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit

in Accordance with ISAs

ISA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of Financial

ISA 265 Communicating Deficiencies in Internal Control to Those Charged with

Governance and Management

ISA 315 Identifying and Assessing the Risks of Material Misstatement through

Understanding the Entity and Its Environment

ISA 402 Audit Considerations Relating to an Entity Using a Service Organisation  

ISA 540 Auditing Accounting Estimates, Including Fair Value Accounting Estimates

and Related Disclosures

International Standards on Auditing (ISAs)

Point to note

Title F8 P7

ISA 600 Special Considerations - Audits of Group Financial Statements (Including

the Work of Component Auditors)



ISA 701 Communicating Key Audit Matters in the Independent Auditor's Report   ISA 705 Modifications to the Opinion in the Independent Auditor's Report   ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the

Independent Auditor's Report

ISA 710 Comparative Information – Corresponding Figures and Comparative

Financial Statements

ISA 720 The Auditor's Responsibilities Relating to Other Information in

Documents Containing Audited Financial Statements

Amendments Addressing Disclosures in the Audit of Financial Statements – Revised

ISAs and Related Conforming Amendments

ISAE 3420 Assurance Engagements to Report on the Compilation of Pro Forma

Financial Information Included in a Prospectus

 International Auditing Practice Notes (IAPNs)

International Standards on Quality Control (ISQCs) ISQC 1 Quality Controls for Firms that Perform Audits and Reviews of Financial

Statements, and Other Assurance and Related Services Engagements

International Standards on Review Engagements (ISREs)

ISRE 2410 Review of Interim Financial Information Performed by the Independent

Auditor of the Entity



Other Documents

IESBA Code of Ethics for Professional Accountants (Revised May 2015)  ACCA Technical Factsheet 145 – Anti Money-Laundering Guidance for the

IAASB Auditor Considerations Regarding Significant Unusual or Highly Complex Transactions (September 2010)



IAASB Questions and Answers Professional Scepticism in an Audit of Financial Statements (February 2012)

 IESBA Staff Questions and Answers on Implementing the Code of Ethics  IAASB Staff Questions & Answers - Applying ISQC1 Proportionately with

the Nature and Size of a Firm (October 2012)



IAASB A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality (February 2014)



Note Topics of exposure drafts are examinable to the extent that relevant articles about them are

published in Student Accountant

International standards are quoted throughout this Text and you must understand how they are applied in practice Make sure you refer to auditing standards when answering questions

1.3 Public oversight

Public oversight of the audit profession and of standard setting has been a trend in recent regulatory developments internationally

1.3.1 Public oversight internationally

The Public Interest Oversight Board (PIOB) exists to exercise oversight for all of IFAC's 'public interest activities' including its standard-setting bodies such as the IAASB Its work involves:

 Monitoring the standard-setting boards

Exam focus

point

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