Professional Level – Options Module, Paper P7 (UK) Advanced Audit and Assurance (United Kingdom) June 2009 Answers 1

Marks
2
(a)
Identify and explain using examples why an audit firm may not seek re-election
Generally
1
/
2
mark for identification and 1 mark for explanation/example, any FOUR:
–
Disagreement
–
Lack of integrity
–
Fee level
–
Late payment of fees
–
Resources
–
Overseas expansion
–
Competence
–
Independence
–
Conflict of interest
Maximum marks
6
(b)
Contents of tender document
Up to 1 1
/
2
marks per matter described:
–
Outline of firm
–
Specialisms
–
Audit requirement of Dragon
–
Outline audit approach (max 3 marks if detailed description)
–
QC
–
Communication with management
–
Timing
–
Key staff/resources
–
Fees
–
Extra services
Maximum marks
10
(c)
Matters to consider re acceptance
Professional marks to be awarded for clarity of evaluation, use of headings, and conclusion based on points discussed.
2
Generally
1
/
2
mark for identification (to a maximum of 3 marks).
1 further mark for explanation, from ideas list.
–
Large and expanding group – availability of staff now and in the future
–
Use of overseas offices
–
Visits to overseas audit teams
–
Skills/experience in retail/foreign subsidiaries consolidation
–
Timing – tight deadline
–
Mermaid Ltd – implication of prior year qualification
–
Minotaur Ltd – implication of different business activity
–
Highly regulated – risk/additional reporting requirements
–
Reason for previous auditors leaving office
Maximum marks
7

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