2009 summer - SUMMER SESSION 2008/2009 Examination for the...

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SUMMER SESSION 2008/2009 Examination for the BUSINESS SCHOOL WIDE OPTION LEVEL 6 5B3030 AUDIT AND ASSURANCE Unit Leaders: Neil Rodda and Barry Mounsey Tuesday 12 th May 2009 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
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1 SECTION A Answer TWO questions ONLY from this section 1. The audit threshold has risen substantially over recent years and there are now fewer business entities that require a statutory audit in the UK. However, this reduction in the number of audits conducted has been accompanied by a rise in the demand for other forms of assurance engagements to be undertaken by firms of professional accountants for client businesses. Required a) Critically discuss the meaning of the term ‘assurance’ and describe the elements of an assurance engagement . (7 marks) b) Describe the typical contents of an assurance report . (7 marks) c) Critically discuss the different possible levels of assurance , the circumstances in which each level is appropriate and the benefits derived. (11 marks) Total 25 marks
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2. It is widely reported that the current economic downturn and volatility in the world financial markets is resulting in an increase in the number of business failures. The uncertainty of the economic climate means that extra vigilance is required by both directors (when preparing and presenting financial statements) and auditors (when undertaking the audit and reporting) to ensure that going concern issues are properly considered and dealt with. Required a) Explain what is meant by the going concern status of a business and describe its significance in terms of the way in which the items in the financial statements are presented. (5 marks) b) Categorise and describe typical going concern indicators. (7 marks) c) Critically discuss the respective responsibilities of the directors and auditors of a business with regard to its going concern position. Your answer should include comment on the responsibilities relating to risk assessment, other procedures to be undertaken and audit reporting implications. (13 marks)
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2009 summer - SUMMER SESSION 2008/2009 Examination for the...

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