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ACCA F8 Audit And Assurance Study Guide

ACCA F8 Audit And Assurance Study Guide

ACCA F8 Audit And Assurance Study Guide : This is the main document that students, learning and content providers should use as the basis of their studies, instruction and materials. Examinations will be based on the detail of the study guide which comprehensively identifies what could be assessed in any examination session. The study guide is a precise reflection and breakdown of the syllabus. It is divided into sections based on the main capabilities identified in the syllabus. These sections are divided into subject areas which relate to the sub-capabilities included in the detailed syllabus. Subject areas are broken down into sub-headings which describe the detailed outcomes that could be assessed in examinations. These outcomes are described using verbs indicating what exams may require students to demonstrate, and the broad intellectual level at which these may need to be demonstrated (*see intellectual levels below).

ACCA F8 Audit And Assurance Study Guide

ACCA F8 Audit And Assurance Study Guide : A AUDIT FRAMEWORK AND REGULATION

1. The concept of audit and other assurance engagements

a) Identify and describe the objective and general principles of external audit engagements.

b) Explain the nature and development of audit and other assurance engagements.

c) Discuss the concepts of accountability, stewardship and agency.

d) Define and provide the objectives of an assurance engagement.

e) Explain the five elements of an assurance engagement.

f) Describe the types of assurance engagement

g) Explain the level of assurance provided by an external audit and other review engagements and the concept of true and fair presentation.

ACCA F8 Audit And Assurance Study Guide

2. External audits

a) Describe the regulatory environment within which external audits take place.

b) Discuss the reasons and mechanisms for the regulation of auditors.

c) Explain the statutory regulations governing the appointment, rights, removal and resignation of auditors.

d) Explain the regulations governing the rights and duties of auditors

e) Describe the limitations of external audits.

f) Explain the development and status of International Standards on Auditing (ISAs).

g) Explain the relationship between International Standards on Auditing and national standards.

3. Corporate governance

a) Discuss the objectives, relevance and importance of corporate governance.

b) Discuss the provisions of international codes of corporate governance (such as OECD) that are most relevant to auditors. c) Describe good corporate governance requirements relating to directors’ responsibilities (e.g. for risk management and internal control) and the reporting responsibilities of auditors.

d) Evaluate corporate governance deficiencies and provide recommendations to allow compliance with international codes of corporate governance.

e) Analyse the structure and roles of audit committees and discuss their benefits and limitations.

f) Explain the importance of internal control and risk management.

g) Discuss the need for auditors to communicate with those charged with governance.

4. Professional ethics and ACCA’s Code of Ethics and Conduct

a. Define and apply the fundamental principles of professional ethics of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

b) Define and apply the conceptual framework, including the threats to the fundamental principles of self-interest, self-review, advocacy, familiarity, and intimidation.

c) Discuss the safeguards to offset the threats to the fundamental principles.

d) Describe the auditor’s responsibility with regard to auditor independence, conflicts of interest and confidentiality.

 5. Internal audit and governance, and the differences between external audit and internal audit

a) Discuss the factors to be taken into account when assessing the need for internal audit.

b) Discuss the elements of best practice in the structure and operations of internal audit with reference to appropriate international codes of corporate governance.

c) Compare and contrast the role of external and internal audit.

6. The scope of the internal audit function, outsourcing and internal audit assignments

a) Discuss the scope of internal audit and the limitations of the internal audit function.

b) Explain outsourcing and the associated advantages and disadvantages of outsourcing the internal audit function.

c) Discuss the nature and purpose of internal audit assignments including value for money, IT, financial, regulatory compliance, fraud investigations and customer experience.

d) Discuss the nature and purpose of operational internal audit assignments

e) Describe the format and content of audit review reports and make appropriate recommendations to management and those charged with governance

ACCA F8 Audit And Assurance Study Guide

B PLANNING AND RISK ASSESSMENT

1. Obtaining, accepting and continuing audit engagements

a) Discuss the requirements of professional ethics and ISAs in relation to the acceptance / continuance of audit engagements b) Explain the preconditions for an audit

c) Explain the process by which an auditor obtains an audit engagement

 d) Discuss the importance of engagement letters and their contents

e) Explain the quality control procedures that should be in place over engagement performance, monitoring quality and compliance with ethical requirements

2. Objective and general principles

a) Identify the overall objectives of the auditor and the need to conduct an audit in accordance with ISAs.

b) Explain the need to plan and perform audits with an attitude of professional scepticism, and to exercise professional judgment.

3. Assessing audit risks

a) Explain the components of audit risk.

b) Describe the audit risks in the financial statements and explain the auditor’s response to each risk.

c) Define and explain the concepts of materiality and performance materiality.

d) Explain and calculate materiality levels from financial information.

4. Understanding the entity and its environment

a) Explain how auditors obtain an initial understanding of the entity and its environment.

b) Describe and explain the nature, and purpose of, analytical procedures in planning.

c) Compute and interpret key ratios used in analytical procedures.

5. Fraud, laws and regulations

a) Discuss the effect of fraud and misstatements on the audit strategy and extent of audit work.

b) Discuss the responsibilities of internal and external auditors for the prevention and detection of fraud and error.

c) Explain the auditor’s responsibility to consider laws and regulations.

 6. Audit planning and documentation

a) Identify and explain the need for and importance of planning an audit

 b) Identify and describe the contents of the overall audit strategy and audit plan.

c) Explain and describe the relationship between the overall audit strategy and the audit plan.

d) Explain the difference between an interim and final audit.

e) Describe the purpose of an interim audit, and the procedures likely to be adopted at this stage in the audit.

f) Describe the impact of the work performed during the interim audit on the final audit.

h) Explain the need for, and the importance of, audit documentation.

 i) Describe the form and contents of working papers and supporting documentation.

j) Explain the procedures to ensure safe custody and retention of working papers.

C INTERNAL CONTROL

1. Internal control systems

a) Explain why an auditor needs to obtain an understanding of internal control relevant to the audit.

b) Describe and explain the five components of internal control

i) the control environment

ii) the entity’s risk assessment process,

iii) the information system, including the related business processes, relevant to financial reporting and communication

iv) control activities relevant to the audit

v) monitoring of controls

ACCA F8 Audit And Assurance Study Guide

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