Advanced A

udit and Assurance

(International) ACCA

P7

For exams up to June 20

15

ACCA approved content providerBPP Learning Media is dedicated to supporting aspiring business professionals with top-quality learning material as they study for demanding professional exams, often whilst working full time. BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials. BPP Learning Media’s study materials are written by professionally qualified specialists who know from personal experience the importance of top-quality materials for exam success.

Paper P7

Advanced Audit and Assurance (International)

This Kit provides material specifically for the practice and revision stage of your studies for Paper P7 Advanced Audit and Assurance (International) that has been comprehensively reviewed by the ACCA examining team. This unique review ensures that the questions, solutions and guidance provide the best and most effective resource for practising and revising for the exam.

One of a suite of products supporting Paper P7 Advanced Audit and Assurance (International), for use independently or as part of a package, this Kit is targeted at ACCA’s exams up to June 2015 and contains:

• Banks of questions on every syllabus area• Answers with detailed guidance on approaching questions• Three mock exams with full answers and guidance

Contact us

BPP House142-144 Uxbridge RoadLondon W12 8AAUnited KingdomT 0845 075 1100 (UK)T +44 (0)20 8740 2211 (Overseas)E Learningmedia@bpp.combpp.com/learningmedia

June 2014£18.00

Paper P7Advanced Audit and Assurance (International)Practice & Revision Kit for exams up to June 2015

ACCA ApprovedPractice & Revision Kit

ACCA APPROVED CONTENT PROVIDER

Free access to our Exam Success site

Look inside

P

ractice & R

evision Kit

ACP7(INT)RK14.indd 1-3 04/06/2014 09:27

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PR A C T I C E

&

R E V I S I O N

K I T

PAPER P7 ADVANCED AUDIT AND ASSURANCE (INTERNATIONAL)

BPP Learning Media is an ACCA Approved Learning Partner – content for the ACCA qualification. This means we work closely with the ACCA to ensure our products fully prepare you for your ACCA exams.

In this Practice and Revision Kit, which has been reviewed by the ACCA examination team, we:

Discuss the best strategies for revising and taking your ACCA exams

Ensure you are well prepared for your exam

Provide you with lots of great guidance on tackling questions

Provide you with three mock exams

Provide ACCA exam answers as well as our own for selected questions

Our Passcard and i-pass products also support this paper.

FOR EXAMS UP TO JUNE 2015

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ii

First edition 2007 Eighth edition June 2014

ISBN 9781 4727 1113 7 (previous ISBN 9781 4453 6658 6) e-ISBN 9781 4727 1177 9

British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library

Published by

BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia

Printed in the United Kingdom by

RICOH UK Limited Unit 2 Wells Place Merstham RH1 3LG

Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable, sustainable sources.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd.

We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions. The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated.

©

BPP Learning Media Ltd

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iii

Contents Page

Finding questions Question index .................................................................................................................................................................. v Topic index .................................................................................................................................................................... viii

Helping you with your revision ..................................................................................................................... ix

Revising P7 Topics to revise................................................................................................................................................................. x Question practice .............................................................................................................................................................. x Passing the P7 exam........................................................................................................................................................ xi Exam information ........................................................................................................................................................... xvi Examinable documents ................................................................................................................................................. xvii Useful websites ............................................................................................................................................................. xxi Analysis of past papers ................................................................................................................................................ xxii

Questions and answers Questions..........................................................................................................................................................................3 Answers ..........................................................................................................................................................................81

Exam practice Mock exam 1 Questions ............................................................................................................................................................345 Plan of attack .......................................................................................................................................................353 Answers...............................................................................................................................................................354

Mock exam 2 Questions ............................................................................................................................................................373 Plan of attack .......................................................................................................................................................381 Answers...............................................................................................................................................................382

Mock exam 3 (December 2013) Questions ............................................................................................................................................................405 Plan of attack .......................................................................................................................................................413 Answers...............................................................................................................................................................414

ACCA examiner's answers June 2013............................................................................................................................................................439 December 2013 ...................................................................................................................................................455

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iv Finding questions

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Finding questions v

Question index The headings in this checklist/index indicate the main topics of questions, but questions are expected to cover several different topics.

Questions set under the old syllabus paper Audit and Assurance Services (AAS) are included because their style and content are very similar to that of the current P7 exam. The questions have been amended to reflect the current exam format.

Time Page number

Marks

allocation Mins

Question

Answer

Parts A and B: Regulatory environment and professional and ethical considerations

1 Lark (6/12) 15 27 3 81

2 Plant (12/12) 16 29 3 84

3 Becker (12/08) 20 36 4 87

4 Peaches (12/09) 16 29 5 91

5 Retriever (6/13) 25 45 5 93

6 Smith & Co (6/08) 17 31 6 99

7 Carter (6/10) 20 36 7 102

8 Dedza (Pilot paper) 20 36 7 105

9 Clifden (6/09) 17 31 8 108

Part C: Practice management

10 Hawk Associates (AAS 6/04) 15 27 9 111

11 Grape (12/09) 36 65 9 114

12 Ingot & Co (Pilot paper) 20 36 10 121

13 Nate & Co (12/07) 20 36 11 123

14 Wexford (6/11) 18 32 12 126

15 Spaniel & Bulldog (6/13) 20 36 12 129

16 Raven (6/12) 15 27 13 132

17 Dragon Group (6/09) 34 61 13 135

Part D and E: Audit of historical financial information and other assignments

18 Pulp (6/08) 17 31 16 140

19 Aspersion (AAS 12/01) 20 36 16 143

20 Mac (6/10) (amended) 26 47 17 147

21 Distant 15 27 18 151

22 Juliet (6/10) 20 36 19 153

23 Apricot (12/09) 16 29 19 156

24 Poppy (12/08) 20 36 21 158

25 Magpie (6/12) 37 67 21 161

26 Beech (12/11) 18 32 23 167

27 Setter (6/13) 20 36 24 170

28 Lamont (AAS 6/07) 20 36 25 174

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vi Finding questions

Time Page number

Marks

allocation Mins Question Answer

29 Papaya (12/09) 36 65 25 176

30 Bill (6/11) (amended) 39 70 26 181

31 Mulligan (12/07) 20 36 28 187

32 Parker (6/13) 35 63 29 190

33 Lapwing (6/12) 33 59 31 196 34 Azure Airline (AAS 12/04) 35 63 33 201 35 Island (12/07) (amended) 32 58 34 206

36 Meadow (AAS 12/02) (amended) 29 52 36 211

37 Butler (6/11) (amended) 32 58 38 215

38 Grohl (12/12) 40 72 40 220

39 Champers (6/09) (amended) 36 65 42 226

40 Grissom (6/10) (amended) 38 68 44 231

41 Jacob (6/11) 18 32 45 236

42 Cusiter (AAS 6/07) 29 52 46 239

43 Oak (12/11) (amended) 41 74 48 242

44 Geno Vesa Farm (AAS 6/05) 26 47 50 248

45 Cedar (12/11) 18 32 51 252

46 Willow (12/11) (amended) 27 49 52 254

47 Jovi (12/12) 28 50 53 258

48 Kobain (12/12) 16 29 56 262

49 Cuckoo Group 34 61 57 264

50 Bluebell (12/08) (amended) 36 65 58 267

51 Robster (6/09) (amended) 17 31 60 273

52 Efex Engineering (Pilot paper) (amended) 34 61 60 276

53 Bateleur Zoo Gardens 34 61 62 279

54 Sci-Tech (12/07) (amended) 34 61 63 284

55 Rosie (6/08) (amended) 36 65 65 289

56 Medix (6/08) (amended) 36 65 67 294

Part F: Reporting

57 Yew (12/11) 18 32 69 300

58 Snipe (6/12) 15 27 70 302

59 Nassau Group (6/11) 18 32 70 304

60 Cinnabar Group (AAS 6/02) 15 27 71 307

61 Poodle (6/13) 20 36 72 310

62 Dexter (12/08) 20 36 73 313

63 Johnston and Tiltman (AAS 6/06) (amended) 15 27 73 317

64 Lychee (12/09) 16 29 74 319

65 Grimes (6/10) 20 36 74 322

66 Pluto (6/09) 17 31 75 325

67 Cleeves (AAS 12/06) 15 27 75 328

68 Blod (6/08) 17 31 76 330

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Finding questions vii

Time Page number

Marks

allocation Mins Question Answer

69 Axis & Co (Pilot paper) 15 27 77 333

70 Dylan (12/12) 16 29 77 334

71 Bertie & Co (12/07) 20 36 78 337

Mock exam 1

Mock exam 2

Mock exam 3 (December 2013 paper)

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viii Finding questions

Topic index Listed below are the key Paper P7 syllabus topics and the numbers of the questions in this Kit covering those topics. If you need to concentrate your practice and revision on certain topics or if you want to attempt all available questions that refer to a particular subject, you may find this index useful.

Syllabus topic Question numbers

A REGULATORY ENVIRONMENT

1 International regulatory frameworks for audit and assurance services 20(d) 2 Money laundering 1(a), 8, 11(c), 13(a) 3 Laws and regulations 39, 56(b), 67(a)

B PROFESSIONAL AND ETHICAL CONSIDERATIONS

1 Code of Ethics for Professional Accountants 1(b), 3-9, 13, 14(a), 15(a), 16, 22(b), 25(b), 56(a), 68(b), 70(a)

2 Fraud and error 15(b)–(c), 20(d), 66(a) 3 Professional liability 15(d), 42(d), 66(b), 68(c)

C PRACTICE MANAGEMENT

1 Quality control 2, 11, 12, 18(c), 35(c), 43(b), 66(c) 2 Advertising, publicity, obtaining professional work and fees 4, 10 3 Tendering 9(b), 17(b) 4 Professional appointments 7, 14(a), 17(a), 21(b), 33(a), 56(a),

70(a)

D AUDIT OF HISTORICAL FINANCIAL INFORMATION

1(i) Planning, materiality and assessing the risk of material misstatement 14(b), 22(b), 25(a), 29-30, 32(a)–(b), 35–40, 43(a), 44, 47-51, 52(c)–(d), 53(a), 54, 56(b)–(d)

1(ii) Evidence 18(a), 24, 47(c) 1(iii) Evaluation and review 11(a), 18(b), 19, 26-28, 33(b), 36(b),

37(b), 38(b)–(c), 39(c), 40(c), 44(b), 46, 47(d), 52(c)–(d), 54(b)–(c), 55(b), 58(a), 61(a), 62(a), 63(a), 64(a)

2 Group audits 25(a), 40, 49-50, 55(c), 59(b), 67(b)

E OTHER ASSIGNMENTS

1 Audit-related services 41, 55(a) 2 Assurance services 31(a)-(b), 34, 71(b)–(c) 3 Prospective financial information 21, 23, 33(a), 37(a), 42(a)–(c) 4 Forensic audits 20(c), 31(c), 45(a)–(b), 52(a)–(b) 5 Internal audit 20(a)–(b) 6 Outsourcing 20(a)–(b), 54(a)

F REPORTING

1 Auditor's reports 37(b), 57, 58(b), 59–60, 61(b), 62(b)–(c), 63(b), 64(b), 65(a), 66(b), 67(b), 68(c), 69, 70(b), 71(a)

2 Reports to those charged with governance and management 68(a) 3 Other reports 68(a)

G CURRENT ISSUES AND DEVELOPMENTS

1 Professional and ethical 22(a), 45(c) 2 IFAC developments 4 3 Transnational audits 17(c) 4 Social and environmental auditing 32(c), 33(b), 50(c) 5 Other current issues 22(a), 24(a)

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Helping you with your revision ix

Helping you with your revision

BPP Learning Media – Approved Learning Partner – content

As ACCA’s Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use exam team reviewed revision materials. By incorporating the examiner’s comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision Kit provides excellent, ACCA-approved support for your revision.

Tackling revision and the exam

Using feedback obtained from the ACCA exam team review:

We look at the dos and don’ts of revising for, and taking, ACCA exams

We focus on Paper P7; we discuss revising the syllabus, what to do (and what not to do) in the exam, how to approach different types of question and ways of obtaining easy marks

Selecting questions

We provide signposts to help you plan your revision.

A full question index

A topic index listing all the questions that cover key topics, so that you can locate the questions that provide practice on these topics, and see the different ways in which they might be examined

Making the most of question practice

At BPP we realise that you need more than just questions and model answers to get the most from your question practice.

Our Top tips provide essential advice on tackling questions, presenting answers and the key points that answers need to include.

We show you how you can pick up Easy marks on some questions, as we know that picking up all readily available marks often can make the difference between passing and failing.

We include marking guides to show you what the examiner rewards.

We include examiner’s comments to show you where students struggled or performed well in the actual exam.

We refer to the 2014 BPP Study Text (for exams up to June 2015) for detailed coverage of the topics covered in questions.

In a bank at the end of this Kit we include the official ACCA answers to the June and December 2013 papers. Used in conjunction with our answers they provide an indication of all possible points that could be made, issues that could be covered and approaches to adopt. Note that the official ACCA answers for the 2013 exams have not been updated for technical changes coming into effect for exams up to June 2015. However, the BPP model answers for these questions have been updated.

Attempting mock exams

There are three mock exams that provide practice at coping with the pressures of the exam day. We strongly recommend that you attempt them under exam conditions. Mock exams 1 and 2 reflect the question styles and syllabus coverage of the exam; Mock exam 3 is the December 2013 paper.

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