2008 resit - AUTUMN SESSION 2007/2008 Examination for the...

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AUTUMN SESSION 2007/2008 Examination for the BA (HONOURS) ACCOUNTING AND FINANCE PATHWAYS FINAL YEAR 5B3030 AUDIT AND ASSURANCE Joint Unit Leaders/Authors: Neil Rodda and Barry Mounsey 26 th August 2008 1.30 pm 4.30 pm Instructions to Candidates Answer two questions from Section A Answer two questions from Section B All questions carry equal marks Materials Provided Answer booklet.
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1 SECTION A - Answer TWO questions ONLY from this section 1. There is some debate amongst users and preparers of audit reports as to the extent to which the content of the external audit report provides valuable information to the various user groups that examine it. Some commentators consider that the terminology used within the external audit report is complicated and therefore detracts from user understanding. Required a) Discuss the level of importance attached to external audit reports by users of financial statements and reach a conclusion. (12 marks) b) Explain the following terms that appear in an external audit report: (i) International Standards on Auditing (UK and Ireland). (ii) Reasonable assurance. (iii) Fraud or error. (9 marks) c) Explain what is meant by a disclaimer of opinion and give an example of a situation where this would be appropriate. (4 marks) ( Total 25 marks)
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2 2. It is often argued that a credible accountancy and audit profession is an important contributor to a properly functioning developed economy. However, the accountancy profession has often been criticised for a lack of independence when undertaking audits and other assurance engagements. There has also been a need for the accountancy profession to demonstrate that ethical issues that arise in the course of accepting and performing professional services are appropriately managed. As part of the response to these challenges the accountancy profession has developed a ‘framework’ or ‘principle based’ approach in the design of ethical codes of conduct to be observed by professional accountants. A common feature of these codes is the establishment of ‘fundamental principles’ and the application of a ‘threats and safeguards’ approach . An example of this is The Code of Ethics and Conduct issued by The International Federation of Accountants (IFAC). Also, the Auditing Practices Board (APB) has issued Ethical Standards that must be observed by UK auditors. Required
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2008 resit - AUTUMN SESSION 2007/2008 Examination for the...

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