hkicpa qp examination technique...
Post on 07-Sep-2018
222 Views
Preview:
TRANSCRIPT
HKICPA QP Examination
Technique Workshop
www.hkcaexam.com Copyright reserved
HKICPA QP Module C
Business Assurance - Section B
By Allan Lee – for June 2012
About HKCA
• HKCA Learning Media Limited (HKCA) is established to provide professional accountancy training to university graduates and working adults who are keen to pursue an accountancy qualification in Hong Kong and Mainland China.
www.hkcaexam.com Copyright reserved
• We offer highest standard of accountancy training through our experienced tutors who will lead our students towards examination successes in QP. Our tutors are specialists in relevant papers and give you “IDEAS to Pass”.
• HKCA is here “All for You to Pass”.
About the Speaker
Allan LeeLecturer - HKCA
MSc (UK), BA(Hons.), ACA, ACIS, ACS(PE), AIAS, CPA, CPA(Aust.), FCCA, M.I.H.R.M.(HK), RCC
o Started his career as an auditor and was a Senior Manager responsible for Business Assurance professional exam papers of a Big Four firm in HK.
www.hkcaexam.com Copyright reserved
Assurance professional exam papers of a Big Four firm in HK. o Left an international accounting firm as the Director of Learning & Development
Division in 2008. o Currently manages his own training and consulting company o Has more than 10 years of extensive experience in designing, developing and
delivering various kinds of learning programmes, including technical skills, leadership skills and exam skills.
o An experienced facilitator and marker of HKICPA QP Modules C and Do Is the Co-chairman of the Student Affairs Subcommittee of Professional Body in
Hong Kong.o As a regular speaker and writer on professional exam papers, Allan wishes to bring
his expertise helping students to pass the professional exams.
孫子曰 :「知彼知己,百戰不殆。」孫子兵法《謀攻》
Sun Tsu said, “If you know the enemy
www.hkcaexam.com Copyright reserved
Sun Tsu said, “If you know the enemy and know yourself, you need not fear the result of a hundred battles.”
《The Art of War》
Objectives
� Develop your exam techniques in HKICPA QP Module C Section B
� Review selected exam questions and answers – December and June
www.hkcaexam.com Copyright reserved
and answers – December and June 2011
� Highlight important points to note in exams
Agenda
� Introduction
� Common Weaknesses – Exam Panelists’ comment
What’s New?
www.hkcaexam.com Copyright reserved
� What’s New?
� Exam Techniques
� Question Analysis
� Review of Selected Exam Questions
� Keys to Success in Exams
Questions for You
� Have you completed study of your materials?
� Have you started practising past exam questions?
www.hkcaexam.com Copyright reserved
exam questions?
� Have you prepared your critical files?
� Have you read the examination panelists’ report?
� Do you have confidence to pass?
Exam Panelists’ Comment
Section B (Dec 2011 session)
� Generally performed unsatisfactorily in Section B.
� Candidates should stay touch with current events and be able to apply
www.hkcaexam.com Copyright reserved
current events and be able to apply business sense to engage more professionally in dealing with practical issues.
Exam Panelists’ Comment
Section B (Dec 2011 session)
� Some candidates wasted a lot of time in copying definitions and recommendations of auditing standards, some of which were
www.hkcaexam.com Copyright reserved
standards, some of which were irrelevant or were not required by the questions.
Exam Panelists’ Comment
Section B (Dec 2011 session)
� Candidates should note that marks are awarded mostly on how well relevant auditing standards are applied rather than how precisely
www.hkcaexam.com Copyright reserved
applied rather than how precisely auditing standards are described.
� Candidates are also reminded to read the questions thoroughly in order to fully understand the exact requirements.
Exam Panelists’ Comment
Section B (Dec 2011 session)
� Some candidates did not present their answers in a logical and structured manner, whilst some others gave incomplete answers.
www.hkcaexam.com Copyright reserved
others gave incomplete answers.
� Candidates are also reminded to make a reasonable attempt at answering each part of the questions.
What’s New?
� HK Listing Rules Appendix 14 Code on Corporate Governance (effective on 1 January 2012 or on 1 April 2012
www.hkcaexam.com Copyright reserved
2012
� To encourage better accountability of issuers and directors
What’s New?
� The Anti-Money Laundering and Counter-Terriorist Financing (Financial Institutions) Bill
� To improve HK’s anti-money laundering
www.hkcaexam.com Copyright reserved
� To improve HK’s anti-money laundering (AML) regime
� Customer due diligence (CDD)
� Record keeping requirements for financial institutions
What’s New?
� HKSAE 3402 Assurance Reports on Controls at a Service Organisation
� Revised HKSIR 400 Comfort Letters and Due Diligence Meetings on
www.hkcaexam.com Copyright reserved
and Due Diligence Meetings on Financial and Non-Financial Information (effective on or after 1 January 2012)
� Limited assurance approach is now permitted when reporting subsequent changes
Read Requirement
� Assess
� Comment
� Consider
Define
� Explain
� Evaluate
� Identify
List
www.hkcaexam.com Copyright reserved
� Define
� Describe
� Determine
� Discuss
� Do you concur
� Draft
� List
� Outline
� State
� Suggest
� What/Why/How?
Presenting the answers
� Use the correct answer booklet –Section B
� Use headings and sub-headings to give the answer a logical flow
www.hkcaexam.com Copyright reserved
give the answer a logical flow
� Use paragraphs to answer questions
� Use clear handwriting
� Start each answer on a new page of the answer booklet
Corporate Governance Questions
� December 2011 – Audit committee (14 marks) [Section A]
� June 2011 – Corporate governance improvements (9 marks)
www.hkcaexam.com Copyright reserved
improvements (9 marks)
Corporate Governance
Best Practices
� Separation of roles of Chairman & CEO
� Director’s training
Performance review
www.hkcaexam.com Copyright reserved
� Performance review
� Balanced composition of board
� 1/3 of the board are INEDs
Corporate Governance
Best Practices
� Board committees
� Audit committee
� Nomination committee
� Remuneration committee
www.hkcaexam.com Copyright reserved
� Remuneration committee
� Corporate governance committee
� Internal audit department
June 2011
Questions 5(a) – 9 marks
� Three possible improvements to corporate governance
� Split the roles of chairman and CEO
� Lack of audit committee
www.hkcaexam.com Copyright reserved
� Lack of audit committee
� Balanced compositions of the board
� Elaborations in the context of the entity’s situations
Ethics Questions
� December 2011 – [Section A]
� June 2011 – [Section A]
� December 2010 – [Section A]
www.hkcaexam.com Copyright reserved
� February 2010 – [Section A]
� May 2009 - Ethical issues (10 marks)
� September 2008 – Independence issues (10 marks)
Ethics Questions
� February 2008 – [Section A]
� May 2007 – Independence consideration (15 marks)
September 2006 – [Section A]
www.hkcaexam.com Copyright reserved
� September 2006 – [Section A]
� February 2006 – Professional & ethical issues (11 marks)
� May 2005 – [None]
� September 2004 – Independence (13 marks)
HKICPA COE (Revised)
Fundamental Principles
� Integrity
� Objectivity
www.hkcaexam.com Copyright reserved
� Professional competence & due care
� Confidentiality
� Professional behaviour
HKICPA COE (Revised)
Threats to Independence
� Self-interest threat
� Self-review threat
www.hkcaexam.com Copyright reserved
� Advocacy threat
� Familiarity threat
� Intimidation threat
Dealing with Ethical Issues
� Use common sense
� Apply rules & guidelines
� Identify threats to independence
Evaluate whether threats are
www.hkcaexam.com Copyright reserved
� Evaluate whether threats are insignificant (Material? Nature? Who? Role of owner interest?)
� If not, identify & apply safeguards
� Reduce the threat to acceptable level
Conceptual Approach
to Independence
Safeguards
ThreatsThreatsThreatsThreats
significant
insignificant
Identify and address threats
Evaluate significance
www.hkcaexam.com Copyright reserved
Safeguards
To reduce threats to an acceptable level
YesNo
Reject /Resign engagement
Accept / Continue
engagement
Evaluate significance
of threats
Apply safeguards, if
applicable
Accept / resign
Reference: Code of Ethics for Professional Accountants (Revised), HKICPA
Risk & Audit Procedures
� December 2011
� Risk of material misstatements relating to valuation assertion of goodwill and intangible assets (13 marks)
Risk of material misstatements of the
www.hkcaexam.com Copyright reserved
� Risk of material misstatements of the financial statements (13 marks)
� June 2011
� Risk of material misstatements relating to valuation and allocation assertions of the overall trade receivables balance (12 marks)
Risk Assessment
� Financial statement level
� Assertion level
� Inherent risk
� Control risk
www.hkcaexam.com Copyright reserved
� Control risk
� Internal controls
� Client and engagement acceptance
� Change in auditors
� Opening balances / comparatives
Audit Responses
� Audit strategy
� Appendix to HKSA 300 (Clarified)
� Audit approach
Control approach
www.hkcaexam.com Copyright reserved
� Control approach
� Substantive approach (substantive analytical procedures & test of details)
� Combined approach
� Audit procedures
� 8 types
Audit Procedures
� Analytical Procedures
� Confirmation
Inquiry
� Inspection of assets
� Observation
Re-calculation
www.hkcaexam.com Copyright reserved
� Inquiry
� Inspection of documents / records
� Re-calculation
� Re-performance
December 2011
Question 7 - 13 marks
� Evaluate and explain the risk of material misstatement relating to the valuation assertion of goodwill and intangible assets. (4 marks)
www.hkcaexam.com Copyright reserved
and intangible assets. (4 marks)
� Suggest and discuss the audit procedures on goodwill and intangible assets in response to the risk assessment (9 marks)
December 2011
Question 7 - 13 marks
� Specific risks of goodwill and intangible assets -> Specific procedures
� Accounting treatment of goodwill
www.hkcaexam.com Copyright reserved
� Accounting treatment of goodwill and intangible assets
� Not just accounting estimates and experts
� Annual impairment test
December 2011
Question 8 – 13 marks
� Re-assess the risk of material misstatement of financial statements as a whole (4 marks)
� Suggest and explain the audit
www.hkcaexam.com Copyright reserved
� Suggest and explain the audit procedures in response to the reassessed risk of material misstatements [further audit procedures] (9 marks)
December 2011
Question 8 – 13 marks
� Subsequent event
� Potential recoverability problem of the receivables
Going concern issue
www.hkcaexam.com Copyright reserved
� Going concern issue
June 2011
Question 6 – 12 marks
� Evaluation of the valuation and allocation assertions of the overalltrade receivables balance
� Carrying value of trade receivables
www.hkcaexam.com Copyright reserved
� Carrying value of trade receivables
� Combined audit procedures – sales and trade receivables
� Design, implementation and operating effectiveness of the accounting procedures and internal controls
� Substantive procedures
Client acceptance procedures
� HKSQC 1 (Clarified) Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related
www.hkcaexam.com Copyright reserved
and Other Assurance and Related Services Engagements
� Three matters for consideration:
� Entity’s integrity
� Firm’s competence
� Ethical considerations
June 2011
Question 7 – 13 marks
� Relevant factors for the CPA firm to consider before continuing to serve as the auditor
� HKSQC 1 (Clarified)
www.hkcaexam.com Copyright reserved
� HKSQC 1 (Clarified)
� Three matters for consideration
� Elaborate the requirements by referencing the entity’s situation
� Possibility of threat to independence
� Importance of documenting the appropriate procedures and conclusions
Auditing Standards
� December 2011
� HKSA 240 (Clarified) – Fraud [Section A]
� June 2011
www.hkcaexam.com Copyright reserved
� June 2011
� HKSA 240 (Clarified) - Fraud (16 marks)
Auditing Standards
� December 2010
� HKSA 500 (Clarified) Audit Evidence (17 marks)
� HKSA 545 Auditing Fair Value (6 marks)
www.hkcaexam.com Copyright reserved
� HKSA 545 Auditing Fair Value (6 marks)
� HKSA 620 (Clarified) Auditor’s Expert (10 marks)
� February 2010
� HKSA 550 Related Parties (16 marks)
� HKSA 560 Subsequent Events (9 marks) + Reporting (3 marks)
Auditing Standards
� May 2009
� Analytical procedures (6 marks)
� HKSA 240 Fraud (20 marks)
September 2008
www.hkcaexam.com Copyright reserved
� September 2008
� HKSA 580 Management representations (10 marks)
� Risk management (10 marks)
Auditing Standards
� February 2008
� Impairment loss on bad and doubtful debts (13 marks)
� HKSA 240 Fraud (25 marks)
www.hkcaexam.com Copyright reserved
� May 2007
� HKSA 550 Related Parties (13 marks)
� Impact of F/S and audit procedures [HKSA 330] (15 marks)
Auditing Standards
� September 2006
� HKSA 530 Audit Sampling (6 marks)
� Audit tests (9 marks)
� HKSA 580 Management
www.hkcaexam.com Copyright reserved
� HKSA 580 Management Representations (10 marks)
� HKSA 560 Subsequent Events (13 marks)
� February 2006
� F/S assertions & Audit evidence (12 marks)
Auditing Standards
� May 2005
� Analytical procedures (13 marks)
� HKSA 550 (SAS 460) Related Parties (15 marks)
www.hkcaexam.com Copyright reserved
marks)
� HKSA 545 (SAS 421) Fair Value (12 marks)
� September 2004
� Fraud (10 marks)
� HKSA 560 (SAS 150) Subsequent events (5 marks)
Auditing Standards
� February 2004
� HKSA 570 (SAS 130) Going concern
� HKSA 501 (SAS 401) Inventory count
� HKSA 505 (SAS 402) Confirmation
www.hkcaexam.com Copyright reserved
� HKSA 505 (SAS 402) Confirmation
� HKSA 540 (SAS 420) Accounting estimate
� HKSA 510 & 710 (SAS 450) Opening balances & comparatives
� HKSA 610 (SAS 500A) Internal audit
Auditing Standards
� June 2003
� HKSA 505 (SAS 402) Confirmation
� HKSA 620 (SAS 520) Using the work of an expert
www.hkcaexam.com Copyright reserved
an expert
� October 2002
� HKSA 240 (SAS 110) Fraud and error
� HKSA 505 (SAS 402) Confirmation
� HKSA 550 (SAS 460) Related Parties
June 2011
Question 5(b) – 6 marks
� Auditor’s responsibilities for preventing and detecting frauds in financial statements
� HKSA 240 (Clarified) The Auditor’s
www.hkcaexam.com Copyright reserved
� HKSA 240 (Clarified) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
� Inherent limitations and unavoidable risks of auditing
June 2011
Question 5(b) – 6 marks
� Three pre-requisites
� An incentive or pressure to commit fraud
� A perceived opportunity to commit
www.hkcaexam.com Copyright reserved
� A perceived opportunity to commit fraud
� Some rationalization of the fraudulent act
June 2011
Question 5(c) – 10 marks
� Discuss three fraud risk factors as improvements to corporate governance
� Desire for a listing
www.hkcaexam.com Copyright reserved
� Desire for a listing
� Rapid growth and unusual profitability
� Questionable liquidity
Reporting
� December 2011
� Auditor’s report – Modified opinion, REIT [Section A]
� June 2011 (None)
www.hkcaexam.com Copyright reserved
� June 2011 (None)
� December 2010
� Audit opinion on disclosure requirement (small part only)
Reporting
� February 2010
� HKSRS 4400 - Report of Factual Findings (8 marks)
� HKSA 701 – Subsequent events (3
www.hkcaexam.com Copyright reserved
� HKSA 701 – Subsequent events (3 marks)
� May 2009 (None)
Reporting
� September 2008
� Auditor’s report – going concern [HKSA 570] (12 marks)
� HKSRE 2410 – Interim financial report
www.hkcaexam.com Copyright reserved
� HKSRE 2410 – Interim financial report [Section A]
� February 2008
� Auditor’s report – going concern [Section A]
� May 2007 (None)
Reporting
� September 2006 (None)
� February 2006
� HKSA 701 (SAS 600) Auditors’ Report (14 marks)
www.hkcaexam.com Copyright reserved
(14 marks)
� May 2005 (None)
� September 2004
� Auditors’ Report – Subsequent events (8 marks)
Auditors’ Opinion
� Unmodified [HKSA 700 (Clarified)]
� Modified [HKSA 705 (Clarified)]
� Limitation on scope – qualified / disclaimer of opinion
www.hkcaexam.com Copyright reserved
disclaimer of opinion
� Disagreement – qualified / adverse opinion
� Additional Communication [HKSA 706 (Clarified)]
� Emphasis of matter paragraphs
� Other matter paragraphs
Computerized Business Systems
� Discuss the features of a computerized business system
� Assess and advise on risk on control frameworks
www.hkcaexam.com Copyright reserved
frameworks
Computerized Business Systems
� New Learning Outcomes (Enhanced QP)
� Impact of increasing use and share of ownership by accountants in corporate information system
www.hkcaexam.com Copyright reserved
� Impact of e-commerce
� Opportunities and threats to corporate information system - capabilities in data treatment and analysis, data integrity, system security and issues in access restriction, and business contingency/ continuity
Computerized Business Systems
� December 2011 – IT controls (6
marks) & audit approach and procedures on IT (18 marks)
� June 2011
www.hkcaexam.com Copyright reserved
� June 2011
� December 2010 - System conversion
approaches (5 marks) & Security controls (12 marks)
Computerized Business Systems
� February 2010 - Internal controls:
software development & management of IT assets (14 marks)
� May 2009 - Use of IT in audit, CAAT (14
www.hkcaexam.com Copyright reserved
� May 2009 - Use of IT in audit, CAAT (14
marks)
� September 2008 - Internal controls:
database environment (8 marks)
� February 2008 – E-commerce:
business risks & IC [PN1013] (12 marks)
Computerized Business Systems
� May 2007 – System weaknesses &
recommendations (7 marks)
� September 2006 – Impact of IT on
audit (12 marks)
www.hkcaexam.com Copyright reserved
audit (12 marks)
� February 2006 – Online system /
standalone PC (13 marks)
� May 2005 – Characteristics of online IS
& security measures (10 marks)
Computerized Business Systems
� September 2004 – Tests of controls &
CAAT on inventory balance (14 marks)
� February 2004 – CIS environment (10
marks)
www.hkcaexam.com Copyright reserved
marks)
� June 2003 – System conversion method
& reliability of new system (10 marks)
� October 2002 – Disaster recovery plan
(9 marks)
December 2011
Question 6(a) - 6 marks
� Identify and explain the two types of IT controls that are usually in place when the system is computerized.
www.hkcaexam.com Copyright reserved
computerized.
� Basic concepts of computer controls
� General IT controls
� Application controls
December 2011
Question 6(b) - 18 marks
� Determine the most appropriate audit approach for testing data integrity and reliability
� Design and explain the audit
www.hkcaexam.com Copyright reserved
� Design and explain the audit procedures for an IT general controls test and data reliability test
� 2 cases – 9 marks for each case
Exam Panelists’ Comment
Overall (Dec 2011 session)
� Should pay attention to the question requirements and structure their answers in a more systematic manner
� Should not copy directly from the study materials
www.hkcaexam.com Copyright reserved
materials
� Need to use their analytical skill-set, digest and apply the relevant audit standards and knowledge to the situations in the questions
� Use plain English
� Write legibly
Keys to Success in Exams
Preparation
� Study the basics of auditing
� Read Exam Panelists’ reports
www.hkcaexam.com Copyright reserved
� Practise questions
� Manage time well
Keys to Success in Exams
Examination
� Keep calm
� Read the requirements first
www.hkcaexam.com Copyright reserved
� Select the order of questions and allocate time for questions
� Attempt all questions and answer relevantly
� Manage time well
www.hkcaexam.com Copyright reserved
Thank You Very Much!
Good Luck!
www.hkcaexam.com Copyright reserved66
top related