F8考官总结2010年6月

　　General Comments

　　The examination consisted of five compulsory questions. Section A contained question 1 for 30 marks and question 2 for 10 marks. Section B comprised three further questions of 20 marks each.

　　It was pleasing to see that the vast majority of candidates attempted all five questions，with the exception of question 2a. Many candidates chose to start with question 4 or 5 first，and then moved onto questions 1，2 and 3. A significant proportion of candidates answered question 1 last and their answers were often incomplete. As question 1 is the case study and represents 30 of the available marks，leaving this question until last can be a risky strategy， as many answers presented were incomplete or appeared rushed.

　　Candidates performed particularly well on questions 3bi，3bii，4 and 5b，questions 2b and 5a were also answered to a satisfactory level. The questions candidates found most challenging were questions 1a，1d，2a， 3biii，3c and 5d. This is mainly due to candidates not understanding core syllabus areas well enough and also partly due to a failure to read question requirements carefully.

　　A number of common issues arose in some candidate’s answers：

　　·Failing to read the question requirement clearly and therefore providing irrelevant answers which scored few if any marks.

　　·Wasting time by providing definitions which were unnecessary.

　　·Presenting answers inadequately，questions 3b and 4b in particular lent themselves well to a columnar format as opposed to lengthy paragraphs of text.

　　·Failing to answer each question on a new page of the answer booklet.

　　·Illegible handwriting.

　　Specific Comments

　　Question One

　　This 30-mark question was based on a paint manufacturer，Smoothbrush Paints Co，and tested candidates’ ability to cope with a number of areas including audit risks，planning and inventory.

　　Part （a）for 10 marks required candidates to identify and explain the audit risks identified at the planning stage of the audit.

　　Many candidates performed inadequately on this part of the question. Audit risk is a key element of the Audit & Assurance syllabus and candidates must understand audit risk.

　　A number of candidates wasted valuable time by describing the audit risk model along with definitions of audit risk，inherent risk，control and detection risk；this generated no marks as it was not part of the requirement. Candidates are reminded that they must answer the question asked as opposed to the one they wish had been asked.

　　The main area where candidates lost marks is that they did not actually understand what audit risk relates to. Hence they provided answers which considered the risks the business would face or ‘business risks，’ which are outside the scope of the syllabus. Audit risks must be related to the risk arising in the audit of the financial statements. If candidates did not do this then they could not have passed this part of the question as there were no marks available for business risk explanations. Candidates were able to pick up a few marks by identifying risk factors from the scenario，but if they then went onto provide a business risk explanation；they would have scored at most . marks for this point，as opposed to a possible 1. marks for each valid point.

　　An example of this is most candidates identified from the scenario a valid risk factor of goods being in transit for two months. The explanation of the audit risk should have been to ascertain that the cut-off of inventory was appropriate at the year end. However many candidates went onto explain that Smoothbrush Paints Co may encounter problems with stock-outs of goods，this is focused more on operational business risk rather than on the risks to the financial statements. Future candidates must take note；audit risk is an important element of the syllabus and must be understood.

　　Additionally，some of the candidates who were able to provide valid audit risks tended to focus too much on inventory risks as opposed to any number of the additional audit risks presented in the scenario. Credit was awarded for valid inventory risks in 1a；however where candidates focused overly on inventory they tended to lose marks in question 1c，which asked for inventory controls，as candidates did not then consider the inventory issues in question 1c as they had raised them in 1a.

　　The majority of answers were presented in detailed paragraphs as opposed to a columnar approach；either approach was suitable for this question. In addition a number of candidates provided far too many points for this question，which resulted in their answers to later questions either being incomplete or rushed.

　　Part （b）for 4 marks required a discussion of the importance of assessing risk at the planning stage of an audit. This was well answered by the majority of candidates with many identifying that assessing risk would lead to an effective audit with the focus of testing being on high risk areas only.

　　Part （c）for 10 marks required an identification and explanation of controls over the continuous/perpetual inventory counting system in order to ensure completeness and accuracy of the inventory records. This question proved to be challenging for a number of candidates and there were some unsatisfactory answers. Many identified controls，such as “the inventory team should be independent of the warehouse staff” but failed to then explain these controls，this would have restricted their marks to . mark per control as opposed to the 1. marks available for an identification and explanation.

　　As noted above for question 1a，many candidates identified inventory risks in 1a，but then did not consider the controls required to address these risks for question 1c，and hence missed out on available marks.

　　In addition despite the question asking for controls a significant minority of candidates provided substantive procedures the auditor would perform at an inventory count. Candidates must read the question carefully. Also many candidates failed to appreciate that the controls required were in relation to the perpetual inventory system only and not for the whole inventory cycle，hence controls in relation to goods received notes and purchase invoices were not relevant.

　　Part （d）for 6 marks required three substantive procedures each to confirm the valuation of inventory and the completeness of provisions or contingent liabilities.

　　Performance was mixed for this question；candidates were generally able to provide adequate substantive procedures for provisions or contingent liabilities. However candidates are reminded that procedures such as；

　　·obtain management representations，

　　·discuss with management，or

　　·read board minutes

　　are only likely to score . mark unless there is an explanation of what the management representation should contain， what the management discussions should cover，or what the minutes are being reviewed for. Substantive procedures must be sufficiently detailed otherwise at best only . marks rather than 1 mark can be obtained.

　　The requirement to consider valuation of inventory，which is a topic which is regularly examined，was on the whole inadequately answered. Candidates seemed to ignore the requirement to consider valuation and often structured their answers with headings such as existence or rights and obligations. Clearly many failed to read the question properly. In addition despite substantive procedures being required，many started with a definition of net realisable value，this scored no marks.

　　Question Two

　　This 10-mark question covered the areas of assurance and materiality.

　　Part （a）for 5 marks required an explanation of the elements of an assurance engagement. A large number of candidates did not attempt this question，and where it was attempted it was inadequately answered. Most candidates who provided an answer clearly did not know what the elements of an assurance engagement were and therefore proceeded to write down anything they knew about assurance. The usual answers focused on positive and negative assurance or on the different types of assurance engagements. Only a small minority of candidates actually understood the requirement and provided valid answers.

　　It was fairly apparent from the answers provided that many candidates had simply not studied the area of assurance and hence were unable to score any marks at all.

　　Part （b）for 5 marks required candidates to define materiality and determine how the level is assessed. Generally candidates performed well on defining materiality and were able to provide a couple of points in relation to the assessment of materiality. Most candidates correctly identified benchmarks that can be used to calculate materiality and many also commented on the need for professional judgement.

　　Unfortunately，some candidates failed to identify a sufficient number of points，as a definition of materiality along with an assessment of benchmarks such as 1% of revenue would only have scored two marks in total. In order to pass this part of the question further points were required. In addition only a small minority of candidates commented on performance materiality which is a new topic from the revised ISA 320 Materiality in Planning and Performing an Audit.