ACCAF8AAAuditandAssurance(AA)筆記(二)

1、ACCA F8 AA Audit and Assurance (AA) 筆記今天整理 Threats and safeguard toindependence 的題目，同樣是需要分兩欄，分別寫出threats和safeguard這部分我們練四道題：2013 Dec Q4 (cl (I) Werrtrfy ind nplain FIVE ethical ri Us which ari» 什 the 蠹皿。adtiom a* &att & Pepper ft Co；(10 mtarks)(ilj For each athic*! risk explain th* 情世p$

2、 which Sa 11 & Pepper & Co lihauld adapl to Edum the mk當(dāng) arismg.Nq® The total marks wiill be 5Pllt equally between wh 3rL題目讓我們找五個(gè) ethical risks和對(duì)應(yīng)的safeguards ,與昨天介紹 的 recommendations 要對(duì)應(yīng) weakness 樣， safeguards 也要做至U 具體且有針對(duì)性。4 SaK & Pepper & Co (Slt & Pepper) is firiTi of Cha

3、rtered Certrfied Accounkanb whih h筌 sijn g revenue dechrw- steadily over the pa si few The firm Is looking g increase its rcvcniLie and diant ba - and 駕has dev e-loped a new adveriFSiiig sErateg/ where it haw uaraniecd ihal it$ audi性 will mini mi駛 diSTuptvon to companies as they 喇 II nol last ：xirpi

4、 (tian 岫。州*幅 In Edition. Salt & Peppef has otfefed 洲 fwr audit clients h(iee 前為1升心 口誑修舊力。門 serioe for the hrsf year of the 即限牌merit,翱 it 邙 believed that time spent on the aMI will be reduct il thie firm has preduced the financial $1 日tmrhec后.The firm is seskinE ta neduce audil catsmdmermfere dec

5、ided not to jpdtP 已門即弋所臺(tái) 1年仃”5 of existingclients, on the 3加 that these letters da not tend ia change much on a yearly basis. One of Salt & Fteppcir's existrng clients has proposed that this 產(chǎn)aydil f醍 should be based on aM iheir flrk»l pre-lax prod The parfnerSiare exciled about mis opt

6、ion as they believe n will increase the o«fai1 audit fee.S Pepper hds recently Qbtind a new audit Cinnamon Brothers Co【CingEQnk whose end is 31 Decembier Cinnaman f&quiires their audit (o br compleleci by Ihe end of February； howEver,此弓 七 i 我,busy lir 1qf Satt & *p% and so it is titende

7、d to use mere junior slafl d等 ：hey d% awildblQ. Additionally, in ondr to lime 司d cot. SaM & Pepper have i tontaclEd Cmnanxin previcius audirors.考試時(shí)記得要分兩欄寫，這里為了方面大家看就用藍(lán)色Ethical risk黑色寫 Steps to reduce the risks1. Salt & Pepper has guaranteed that their audit will not last longerthan two weeks

8、 and will minimize disruption to companies, which will bringaudits difficulties to gather sufficient andappropriate audit evidence （記得加上分析部分！ 把后果 /會(huì)出現(xiàn)的 risk類型寫上）Salt & Pepper should cease thisadvertising campaign immediately asit is not in compliance with ACCA' s Code ofEthics and Conduct. T

9、hefirm should inform the clients that the audit durationwill be based on the level of audit risk present2. Salt & Pepper has offered all new audit clients a free accountspreparation service for the first year of the engagement, which willincrease the risk of self-reviewSalt & Pepper must ens

10、ure that thiswork is undertaken by a team separate to the audit team.3. The firm is not updating engagement letters for existing clients, sothe engagement letters will not be reviewed to ensure that they are stillrelevant and up to date.Salt & Pepper should comply fully withISA 210 and annually

11、review the need for revising the engagement letters.4. An existing client of Salt & Pepper has proposed an audit feebased on a percentage of the client final pre -tax profit. This is acontingent fee arrangement and is prohibited as it creates a selfinterestthreat.Salt & Pepper should politel

12、y declinethe proposed contingent fee arrangement and inform the client that the feeswill be based on the level of work required to obtain sufficient andappropriate audit evidence.of giving an5. Salt & Pepper intends to use junior staff for the audit of their newclient as the timing of the audit

13、is when the firm is very busy.Junior staffmay not be competent enough and the risk incorrect audit opinionis increased.Salt & Pepper should try to increasethe amount of experienced team members. If this is not possible, they shoulddiscuss with thedirectors of Cinnamon to see whether the timing o

14、f the auditcould be changed.6. Salt & Pepper has not contacted Cinnamon ' previous auditors. Inthis way Salt & Pepper cannot know the reasons why Cinnamon changed their auditors.They may have been acting unethically and their previous auditors thereforerefused to continue.Salt & Pepp

15、er should contact theprevious auditors to identify if there are any ethical issues which wouldprevent them from acting as auditors of Cinnamon.2014 Specimen Q1 (a)(aJ Using the mtoriuatien aM%；傅 Explain the ethical threats which rruiy affect the independence of Remy & Co in respect et the audit

16、erf Hazard 8； and(3 marks)(11) Fm each ttireal eiptairn hew A mijht be reduced io am acc&ptablt level.(3 mrks)沒有說明找?guī)c(diǎn)的，一般是一分一點(diǎn)。 The audit engageroeM partner lor Hgfard Co 4 Hara rd), a listed company has been in ；p4e for approodmatefy six years and her san has just accepted：日 |oh after Itditi Ha

17、zard as a safes rnanaT. This note wotlld entitle him to shared in Hazard as part of hrs remuneration package.Hazard's directots areestablisJhiing an mternal audit department, and (he 力heiue dtrrelor han asked theudr| firmF ftemy & Co about the d/陋between irnrrical audil and 白工帕mal Audit.II U

18、>e internal audit 加陷 Urr*eE Is eslabiished! and Remy & Co is appnied as inleanai as well as externa I audit&rs. then Hazard has suggested thal the external audit (ee shou'd be runegMe3d wilh 3口際I 20% d th fee being based on the profit afler 爾 of Ih-e company as the feel tins will alig

19、n Une mtcresls o-f Remy & Co and Hazard.藍(lán)色為 Ethical risk 黑色為 Steps to reduce the risks1. Remy spartner has been involved in the audit of Hazard Co for sixyears and hence may not maintain her professional skepticism and objectivity,and familiarity threat arises.ACCA sCode of Ethics and Conductrec

20、ommends that engagement partnersrotate offan auditafter five years forlistedandpublicinterestentities.Therefore consideration shouldbegiventoappointing an alternative audit partner2. The engagement partner ' son has accepted a job as a sales manager atHazard Co. This could represent a self-inter

21、est/familiarity threatWhether a sales manager can affect thefinancial statement should be considered. If it was believed that additionalsafeguards were required then consideration should be given to appointing an alternativeaudit partner.3. The partner ' son, an immediate family member of the pa

22、rtner, willreceive shares as part of his remuneration. A self-interest threat can arisewhen an audit firm has a financial interest in the company.The engagement partner will need to be removedfrom the audit.4. A self-review threat can arise when an audit firm provides an internalaudit service to an

23、audit client.Remy & Co should ensure that the auditteam is not involved in the internal audit service andalso ensure client staff remain responsiblefor the internal audit activities.5. Hence Hazard ' request that 20% of the external audit fee is based onprofit after tax would represent a con

24、tingent fee, which is prohibited byACCA ' s Code of Ethics and Conduct.The external audit fee needs to be based onthe time spent and level of work performed2015 June Q11 You are an儀 Bwch i Co and hawe bew al located to the audit of Willow Wands Co (Wiltow), a lastedcompany which h薛 been mn sudit

25、 client lor yea 母 and speG就氐抬 in manuhclurin mcJSical irislrumgntsBethan Oak 的釜 ihe 口udH 百尊削川印【pamner for wHiow and 巒 had compiled seven 輯ag as the 郵即 engagementfeo&ritry 性照力的 the audilThe curreni audrt pariiw, Sandeep Pine,IMA 如幽氏E th* Iri Ardor to rhalnlairi A cltec rcljlionsliip with Wlllowr

26、Btfthan &h<iuld LibdMlfc* the tote iiidiptniJent fcm iw pn巾-rIn addition Wilkie hds roqucUuiJ Iha! Belfijn as.-.ist ihrm by dth-nd：ng Ihc iauctii r：omrnrHeH meetinRSm a$ » non歌eartl” director h然 recently left the company.Wiricw also askjgd Sindeep 劉。tM odhet pjftners 凱 & Co to Mlp th

27、em m rgQ 心町&。旭, director.The total fees received by Beech & Co for last year equated in 1sz of the fimn's Total fee income. The current year's audit not yel been rxHifiirnfid, but along wi由 Uxatiori and other possiblo non-audit fees the lolal Enrome from WiHv Ihis 臟卻 could! be 即e時(shí)百 由

28、自力 品t 枝. Last yGdi's audit 也已 如心 baling paid monthly by billow but no paymenEs have been made for Ehc 地品 three mcnllhs.The audit rnan.sger for Willovv has just announced that he is lewing Beech & Co to join Willow 酩 the finunc詡 controller.Usiing the ilntormabon(1) Identify and explain FIVE e

29、thical ttireau which may affect the indepfoden= of Beech & CaRs audrr at Willow Worlds 3;且 nd(ii|i For BMh ttireat explain how h mighrt ti« reduced to an acceptable lewLNotch The toOI m.nk* will 如 split oqully between each p/rt，(10 marks) 藍(lán)色為 Ethical risk 黑色為 Steps to reduce the risks1. It

30、has been proposed that Bethan Oak, the auditengagement partner of Willow Wands Co (Willow) for the last seven years, shouldnow become the independent review partner. This represents a familiaritythreat as the partner will have been associated with Willow for a long periodof time and so may not retai

31、n professional skepticism and objectivity.As Willow is a listed company, then BethanOak should not serve as the independent review partner for a period of two years.An alternative review partner should be appointed instead.2. Willow has requested the previous engagement partner,Bethan Oak, attend au

32、dit committee meetings as a non-executive director. Thisrepresents a self-interest threat as the audit firm may be perceived asperforming the role of management by attending these meetings and thisthreatens objectivity.The firm should politely decline thisrequest from Willow, as it represents too gr

33、eat a threat to independence3. A non-executive director of Willow has recently leftand the management of Willow have asked whether the partners of Beech & Cocan assist them in recruiting to fill this vacancy. This represents aself-interest as non-executive directors have a key responsibility ina

34、ppointing the audit firm.Beech & Co is able to assist Willow inthat they can undertake roles such as reviewing a shortlist of candidates.However, they cannot undertake management decisions on who is appointed.4. The total fees received from Willow for last year tookup to 16% of the firm ' ts

35、tal income, and this year could be greater than 16%. Thereis a potential self-interest threat as the total fees could represent a significant proportion of Beech & Co，sincome. If the recurring fees are likely to exceed15% of annual practice income this year, additional consideration should begiv

36、en as to whether the taxation and non-audit assignments should be undertakenby the firm.5. Last year ' shree months' payments are outstanding. Aself- interest threat can arise if the fees remain outstanding, as Beech &Co may feel pressure to agree to certain accounting adjustments in ord

37、er tohave the previous year and this year' s audit fee paid.Beech & Co should discuss with thosecharged with governance the reasons why the last three months ' paym ents havenot been made. They should agree a revised payment schedule which will resultin the fees being settled before much

38、 more work is performed.6. The audit manager of Willow is leaving Beech & Coto become the financial controller at Willow. This represents aself-interest and familiarity threat as the audit manager is familiar with the auditplan which is to be adopted at Willow.A new audit manager should be appoi

39、nted toWillow and any work already undertaken by the previous manager should be independentlyreviewed.2015 S&D (S) Q1Vcu are an audit Rianafier of Pink Partnefs A Co (Pink)/而 are planning the audit cM Golden Finance Co i.Goiden), a banking inistituticn which provides a range M financial services

40、 includinf loans, 'four firm has audited Golden tar four yoars and the company's year end is 30 September 2015.Afihe end of August. Golden* Iinan ci 刮 coniioller 附ft and the new repliacemcnt i$ nal due to start until approx imatiy two m&nThs afler Hie ye5r end The 力 nanc拈 risrector. whD

41、15 th sister- m-hw cl Ihe aiXir 歸門后同涉rn白E partner. ti懿 asked if m member of rhe audit team 匚 13rl be seconded to Gulden for thfEe rronlhs to act as lti& lEwpona* financial cooboller.¥ov are aware that a number of the MJdd team members cunenny Mnk wim Golden ana (wo teann members have signji

42、icani toans owing to the 8rmpany. Pink's taMtion ctepartment also prwiife& services to Gold酊l T hey hae been approached b/ Golden to represenl them in iiBgolititions* Co白山鋁 sonic aj國ending ssucs with Itic kdtiariul卜口川o for which the Ices quoted are 軸 ManMMThe finance director has iinlwmed Ih

43、e audit engagement partner that when Ilie audit is compleftg- she would like Ihe whole learn to attend an evening watching fitie national fDatbail leam ply a matdi followed by a lukiiry meal Requ ined；V&ing ttie infgirrnatian atnsve；(i) Identify and explain FIVE finical UireaU which may affect t

44、he independence orf Pink Partners & Coes audit d Golden Finance Cd; and(ii)1 Ftw each ttireat, explain Iww it rnlgjht be reduced to an atce.ptablie lev喇LNote： The total marks will be split equialty between each part.O'2rg林E色為 Ethical risk 黑色為 Steps to reduce the risks1. The finance director

45、is the sister-in-law of the auditengagement partner and hence there is a familiarity and self-interest threatit would be advisable for the auditengagement partner to be removed and an alternative partner appointed.2. Golden Finance Co' s(Golden) finance director hasasked if a member of the audit

46、 team can be seconded to fill the role of financialcontroller, which will cause self-review risk.Pink Partners & Co (Pink) shouldclarify exactly which areas the seconded team member would assist Golden on.3. Two members of the audit team have significant loansowing to the company. If either of t

47、he loans has any preferential terms,such as rates or repayment periods, then this would represent a self-interest threat.The terms of the loans should be reviewedto ascertain whether they are in any way preferential. If not, no furtheraction is required. However, if the terms are preferential then either theterms should be amended or these two members should be removed from the auditteam.4. Golden has requested that Pink ' staxation department representsthem in negotiations to resolve some outstanding issues with the taxationauthorit