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Advanced A
udit and Assurance
(International) ACCA
P7
For exams up to June 20
15
ACCA approved content providerBPP Learning Media is dedicated to supporting aspiring business professionals with top-quality learning material as they study for demanding professional exams, often whilst working full time. BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials. BPP Learning Media’s study materials are written by professionally qualified specialists who know from personal experience the importance of top-quality materials for exam success.
Paper P7
Advanced Audit and Assurance (International)
This Kit provides material specifically for the practice and revision stage of your studies for Paper P7 Advanced Audit and Assurance (International) that has been comprehensively reviewed by the ACCA examining team. This unique review ensures that the questions, solutions and guidance provide the best and most effective resource for practising and revising for the exam.
One of a suite of products supporting Paper P7 Advanced Audit and Assurance (International), for use independently or as part of a package, this Kit is targeted at ACCA’s exams up to June 2015 and contains:
• Banks of questions on every syllabus area• Answers with detailed guidance on approaching questions• Three mock exams with full answers and guidance
Contact us
BPP House142-144 Uxbridge RoadLondon W12 8AAUnited KingdomT 0845 075 1100 (UK)T +44 (0)20 8740 2211 (Overseas)E Learningmedia@bpp.combpp.com/learningmedia
June 2014£18.00
Paper P7Advanced Audit and Assurance (International)Practice & Revision Kit for exams up to June 2015
ACCA ApprovedPractice & Revision Kit
ACCA APPROVED CONTENT PROVIDER
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P
ractice & R
evision Kit
ACP7(INT)RK14.indd 1-3 04/06/2014 09:27
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PR A C T I C E
&
R E V I S I O N
K I T
PAPER P7 ADVANCED AUDIT AND ASSURANCE (INTERNATIONAL)
BPP Learning Media is an ACCA Approved Learning Partner – content for the ACCA qualification. This means we work closely with the ACCA to ensure our products fully prepare you for your ACCA exams.
In this Practice and Revision Kit, which has been reviewed by the ACCA examination team, we:
Discuss the best strategies for revising and taking your ACCA exams
Ensure you are well prepared for your exam
Provide you with lots of great guidance on tackling questions
Provide you with three mock exams
Provide ACCA exam answers as well as our own for selected questions
Our Passcard and i-pass products also support this paper.
FOR EXAMS UP TO JUNE 2015
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ii
First edition 2007 Eighth edition June 2014
ISBN 9781 4727 1113 7 (previous ISBN 9781 4453 6658 6) e-ISBN 9781 4727 1177 9
British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library
Published by
BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia
Printed in the United Kingdom by
RICOH UK Limited Unit 2 Wells Place Merstham RH1 3LG
Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable, sustainable sources.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd.
We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions. The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated.
©
BPP Learning Media Ltd
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iii
Contents Page
Finding questions Question index .................................................................................................................................................................. v Topic index .................................................................................................................................................................... viii
Helping you with your revision ..................................................................................................................... ix
Revising P7 Topics to revise................................................................................................................................................................. x Question practice .............................................................................................................................................................. x Passing the P7 exam........................................................................................................................................................ xi Exam information ........................................................................................................................................................... xvi Examinable documents ................................................................................................................................................. xvii Useful websites ............................................................................................................................................................. xxi Analysis of past papers ................................................................................................................................................ xxii
Questions and answers Questions..........................................................................................................................................................................3 Answers ..........................................................................................................................................................................81
Exam practice Mock exam 1 Questions ............................................................................................................................................................345 Plan of attack .......................................................................................................................................................353 Answers...............................................................................................................................................................354
Mock exam 2 Questions ............................................................................................................................................................373 Plan of attack .......................................................................................................................................................381 Answers...............................................................................................................................................................382
Mock exam 3 (December 2013) Questions ............................................................................................................................................................405 Plan of attack .......................................................................................................................................................413 Answers...............................................................................................................................................................414
ACCA examiner's answers June 2013............................................................................................................................................................439 December 2013 ...................................................................................................................................................455
Review form ThiNga
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iv Finding questions
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Finding questions v
Question index The headings in this checklist/index indicate the main topics of questions, but questions are expected to cover several different topics.
Questions set under the old syllabus paper Audit and Assurance Services (AAS) are included because their style and content are very similar to that of the current P7 exam. The questions have been amended to reflect the current exam format.
Time Page number
Marks
allocation Mins
Question
Answer
Parts A and B: Regulatory environment and professional and ethical considerations
1 Lark (6/12) 15 27 3 81
2 Plant (12/12) 16 29 3 84
3 Becker (12/08) 20 36 4 87
4 Peaches (12/09) 16 29 5 91
5 Retriever (6/13) 25 45 5 93
6 Smith & Co (6/08) 17 31 6 99
7 Carter (6/10) 20 36 7 102
8 Dedza (Pilot paper) 20 36 7 105
9 Clifden (6/09) 17 31 8 108
Part C: Practice management
10 Hawk Associates (AAS 6/04) 15 27 9 111
11 Grape (12/09) 36 65 9 114
12 Ingot & Co (Pilot paper) 20 36 10 121
13 Nate & Co (12/07) 20 36 11 123
14 Wexford (6/11) 18 32 12 126
15 Spaniel & Bulldog (6/13) 20 36 12 129
16 Raven (6/12) 15 27 13 132
17 Dragon Group (6/09) 34 61 13 135
Part D and E: Audit of historical financial information and other assignments
18 Pulp (6/08) 17 31 16 140
19 Aspersion (AAS 12/01) 20 36 16 143
20 Mac (6/10) (amended) 26 47 17 147
21 Distant 15 27 18 151
22 Juliet (6/10) 20 36 19 153
23 Apricot (12/09) 16 29 19 156
24 Poppy (12/08) 20 36 21 158
25 Magpie (6/12) 37 67 21 161
26 Beech (12/11) 18 32 23 167
27 Setter (6/13) 20 36 24 170
28 Lamont (AAS 6/07) 20 36 25 174
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vi Finding questions
Time Page number
Marks
allocation Mins Question Answer
29 Papaya (12/09) 36 65 25 176
30 Bill (6/11) (amended) 39 70 26 181
31 Mulligan (12/07) 20 36 28 187
32 Parker (6/13) 35 63 29 190
33 Lapwing (6/12) 33 59 31 196 34 Azure Airline (AAS 12/04) 35 63 33 201 35 Island (12/07) (amended) 32 58 34 206
36 Meadow (AAS 12/02) (amended) 29 52 36 211
37 Butler (6/11) (amended) 32 58 38 215
38 Grohl (12/12) 40 72 40 220
39 Champers (6/09) (amended) 36 65 42 226
40 Grissom (6/10) (amended) 38 68 44 231
41 Jacob (6/11) 18 32 45 236
42 Cusiter (AAS 6/07) 29 52 46 239
43 Oak (12/11) (amended) 41 74 48 242
44 Geno Vesa Farm (AAS 6/05) 26 47 50 248
45 Cedar (12/11) 18 32 51 252
46 Willow (12/11) (amended) 27 49 52 254
47 Jovi (12/12) 28 50 53 258
48 Kobain (12/12) 16 29 56 262
49 Cuckoo Group 34 61 57 264
50 Bluebell (12/08) (amended) 36 65 58 267
51 Robster (6/09) (amended) 17 31 60 273
52 Efex Engineering (Pilot paper) (amended) 34 61 60 276
53 Bateleur Zoo Gardens 34 61 62 279
54 Sci-Tech (12/07) (amended) 34 61 63 284
55 Rosie (6/08) (amended) 36 65 65 289
56 Medix (6/08) (amended) 36 65 67 294
Part F: Reporting
57 Yew (12/11) 18 32 69 300
58 Snipe (6/12) 15 27 70 302
59 Nassau Group (6/11) 18 32 70 304
60 Cinnabar Group (AAS 6/02) 15 27 71 307
61 Poodle (6/13) 20 36 72 310
62 Dexter (12/08) 20 36 73 313
63 Johnston and Tiltman (AAS 6/06) (amended) 15 27 73 317
64 Lychee (12/09) 16 29 74 319
65 Grimes (6/10) 20 36 74 322
66 Pluto (6/09) 17 31 75 325
67 Cleeves (AAS 12/06) 15 27 75 328
68 Blod (6/08) 17 31 76 330
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Finding questions vii
Time Page number
Marks
allocation Mins Question Answer
69 Axis & Co (Pilot paper) 15 27 77 333
70 Dylan (12/12) 16 29 77 334
71 Bertie & Co (12/07) 20 36 78 337
Mock exam 1
Mock exam 2
Mock exam 3 (December 2013 paper)
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viii Finding questions
Topic index Listed below are the key Paper P7 syllabus topics and the numbers of the questions in this Kit covering those topics. If you need to concentrate your practice and revision on certain topics or if you want to attempt all available questions that refer to a particular subject, you may find this index useful.
Syllabus topic Question numbers
A REGULATORY ENVIRONMENT
1 International regulatory frameworks for audit and assurance services 20(d) 2 Money laundering 1(a), 8, 11(c), 13(a) 3 Laws and regulations 39, 56(b), 67(a)
B PROFESSIONAL AND ETHICAL CONSIDERATIONS
1 Code of Ethics for Professional Accountants 1(b), 3-9, 13, 14(a), 15(a), 16, 22(b), 25(b), 56(a), 68(b), 70(a)
2 Fraud and error 15(b)–(c), 20(d), 66(a) 3 Professional liability 15(d), 42(d), 66(b), 68(c)
C PRACTICE MANAGEMENT
1 Quality control 2, 11, 12, 18(c), 35(c), 43(b), 66(c) 2 Advertising, publicity, obtaining professional work and fees 4, 10 3 Tendering 9(b), 17(b) 4 Professional appointments 7, 14(a), 17(a), 21(b), 33(a), 56(a),
70(a)
D AUDIT OF HISTORICAL FINANCIAL INFORMATION
1(i) Planning, materiality and assessing the risk of material misstatement 14(b), 22(b), 25(a), 29-30, 32(a)–(b), 35–40, 43(a), 44, 47-51, 52(c)–(d), 53(a), 54, 56(b)–(d)
1(ii) Evidence 18(a), 24, 47(c) 1(iii) Evaluation and review 11(a), 18(b), 19, 26-28, 33(b), 36(b),
37(b), 38(b)–(c), 39(c), 40(c), 44(b), 46, 47(d), 52(c)–(d), 54(b)–(c), 55(b), 58(a), 61(a), 62(a), 63(a), 64(a)
2 Group audits 25(a), 40, 49-50, 55(c), 59(b), 67(b)
E OTHER ASSIGNMENTS
1 Audit-related services 41, 55(a) 2 Assurance services 31(a)-(b), 34, 71(b)–(c) 3 Prospective financial information 21, 23, 33(a), 37(a), 42(a)–(c) 4 Forensic audits 20(c), 31(c), 45(a)–(b), 52(a)–(b) 5 Internal audit 20(a)–(b) 6 Outsourcing 20(a)–(b), 54(a)
F REPORTING
1 Auditor's reports 37(b), 57, 58(b), 59–60, 61(b), 62(b)–(c), 63(b), 64(b), 65(a), 66(b), 67(b), 68(c), 69, 70(b), 71(a)
2 Reports to those charged with governance and management 68(a) 3 Other reports 68(a)
G CURRENT ISSUES AND DEVELOPMENTS
1 Professional and ethical 22(a), 45(c) 2 IFAC developments 4 3 Transnational audits 17(c) 4 Social and environmental auditing 32(c), 33(b), 50(c) 5 Other current issues 22(a), 24(a)
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Helping you with your revision ix
Helping you with your revision
BPP Learning Media – Approved Learning Partner – content
As ACCA’s Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use exam team reviewed revision materials. By incorporating the examiner’s comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA-approved support for your revision.
Tackling revision and the exam
Using feedback obtained from the ACCA exam team review:
We look at the dos and don’ts of revising for, and taking, ACCA exams
We focus on Paper P7; we discuss revising the syllabus, what to do (and what not to do) in the exam, how to approach different types of question and ways of obtaining easy marks
Selecting questions
We provide signposts to help you plan your revision.
A full question index
A topic index listing all the questions that cover key topics, so that you can locate the questions that provide practice on these topics, and see the different ways in which they might be examined
Making the most of question practice
At BPP we realise that you need more than just questions and model answers to get the most from your question practice.
Our Top tips provide essential advice on tackling questions, presenting answers and the key points that answers need to include.
We show you how you can pick up Easy marks on some questions, as we know that picking up all readily available marks often can make the difference between passing and failing.
We include marking guides to show you what the examiner rewards.
We include examiner’s comments to show you where students struggled or performed well in the actual exam.
We refer to the 2014 BPP Study Text (for exams up to June 2015) for detailed coverage of the topics covered in questions.
In a bank at the end of this Kit we include the official ACCA answers to the June and December 2013 papers. Used in conjunction with our answers they provide an indication of all possible points that could be made, issues that could be covered and approaches to adopt. Note that the official ACCA answers for the 2013 exams have not been updated for technical changes coming into effect for exams up to June 2015. However, the BPP model answers for these questions have been updated.
Attempting mock exams
There are three mock exams that provide practice at coping with the pressures of the exam day. We strongly recommend that you attempt them under exam conditions. Mock exams 1 and 2 reflect the question styles and syllabus coverage of the exam; Mock exam 3 is the December 2013 paper.
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