Review board meeting minutes to check the facts and

• Review board meeting minutes to check the facts and the expected outcome of the legal
case.
(b) Examples of acceptable other account balance:
Account
balance
Explanation
Inventory Batches of paint still in stock may also be faulty and may be required to be written off.
Learning outcomes
Unit Learning outcome
5 2. Explain and apply the use of assertions in assessing the risk of material misstatement at the
financial statement level and at the assertion level.
1. Apply audit sampling during substantive testing in order to provide a reasonable basis for the
auditor to draw conclusions.
2. Design, perform and evaluate the results of substantive testing
11 2. Determine whether sufficient appropriate audit evidence has been obtained on which to base
conclusions and auditor’s reports
12 1. Demonstrate an understanding of the auditor’s use of external confirmation procedure to
obtain relevant and reliable audit evidence
19 1. Apply the ethical requirements and the audit process to a financial statement audit engagement

Chartered Accountants Program Audit & Assurance
Main exam suggested solutions and examiner’s feedback Page 9
Question 3 (20 marks)
General comments
Question 3 assessed candidates’ knowledge on the finalisation and reporting stage of
an audit of general purpose financial statements. Specifically, the question required
candidates to demonstrate their understanding of obligations of the auditor to assess and
evaluate misstatements and communicate to those charged with governance regarding the
misstatements.
Candidates generally did reasonably well in this question, though as detailed below there are
some key learning points.
Parts (a) and (b)
Part (a) required the candidates to determine and justify the amounts recorded in the summary
of uncorrected audit misstatements. Most candidates were able to determine the amounts
recorded, with the exception of prior year error, which was ignored by a significant number
of candidates. Part (b) of the question required candidates to apply NJN’s audit methodology
in evaluating the misstatements individually and in the aggregate. Where errors, either
individually or in aggregate, fell within the ‘evaluation based on professional judgement’
category, many candidates simply indicated that the error was either material or immaterial,
without justifying why.
Part (c)
This part was designed to assess candidates on their ability to identify qualitative factors that
should be taken into consideration when evaluating misstatements, particularly those that
require evaluation based on professional judgement. Most candidates were awarded some
marks in this part. The most common error was giving generic answers rather than answers that
related specifically to the misstatements that had to be assessed.