• 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.
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- Financial audit, Chartered Accountants Program