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ISA 315: material misstatement riskProperly and carefully applied, the sometimes onerous requirements of ISA 315 shouldensure that audits are tailored to individual clients circumstances, says Lisa Weaver
ISA 315, Identifying and Assessing
the Risks of Material Misstatement
Through Understanding the Entity
and Its Environment, is one of the
International Standards on Auditing
(ISAs) redrafted by the International
Auditing and Assurance Standards
Board (IAASB) as part of its Clarity
project. It lists the requirements for
obtaining business understanding, the
risk assessment and internal controls,
and so is key to successfully planning
an audit. This article explores some ofthe ISAs main requirements and the
practical implications for the auditor.
What is a misstatement?The term misstatement is not defined
in ISA 315 but in ISA 450,Evaluation of
Misstatements Identified During the Audit,
which defines it as: a difference between
the amount, classification, presentation
or disclosure of a reported financial
statement item and the amount,
classification, presentation or disclosure
that is required for the item to be in
accordance with the applicable financialreporting framework. Misstatements can
arise from fraud or error.
In other words, a misstatement
arises where there is a difference
between the reported figures and
what is expected to be reported for
a true and fair presentation of the
financial statements. Misstatements
can be factual, in the case of a clear
breach of a requirement of a financial
reporting standard, or they can be
judgmental, arising from unsuitable
estimation techniques or the selection
of inappropriate accounting policies.
ISA 315 requires that the engagement
partner and other key engagement team
members discuss the susceptibility of
the entitys financial statements to
material misstatement, and that the
partner determines which matters are
to be communicated to the rest of the
audit team. The discussion should place
emphasis on any indicators that the
financial statements may be at risk of
material misstatement due to fraud
(ISA 240.15). This discussion, along
with the significant decisions reached,
must be documented.
Obtaining and documenting anunderstanding of the entityWithout an in-depth understanding of
the audited entity, it is impossible to
properly assess the risk of material
misstatement. ISA 315.11 requires the
auditor to obtain an understanding of
five aspects of the audited entity:
a) relevant industry, regulatory and
other external factors including
applicable financial reporting
framework
b) the nature of the entity including its
operations, ownership andgovernance structures, the types of
investments it makes, and the way it
is structured and financed
c) the entitys selection and application
of accounting policies
d) the entitys goals and strategies, and
business risks that may result in
risks of material misstatement
e) the measurement and review of
the entitys financial performance.
It is worth looking at a couple of
these areas in more detail. First, the
requirement to understand the
applicable financial reporting framework
entails understanding not only the
relevant financial reporting standards
(IFRS or national) but also any relevant
industry-specific regulations. Under the
requirements of ISA 210, Agreeing the
Terms of Audit Engagements, the auditor
should already have determined the
acceptability of the financial reporting
framework as an audit precondition.
Second, obtaining knowledge of the
entitys objectives, strategies and
business risks is a crucial step in audit
planning because, according to the
application guidance (ISA 315.A30),
business risk is broader than the riskof material misstatement, though it
includes the latter. A successful
identification of risks of material
misstatement requires the auditor to
use a business risk approach.
A simple example is that a company
may face a business risk such as a fall
in demand for its products. The
associated risk of material
misstatement lies in the valuation of
inventory, therefore there is a risk of
misstatement at the assertion level.
However, the fall in demand could also
have a longer-term impact on thecompanys going concern status,
leading to a potential risk of
misstatement at the financial statement
level. Appendix 2 of ISA 315 has a
useful list of examples of events and
conditions that may indicate risks of
material misstatement.
The key elements of the business
understanding obtained about each of
the aspects outlined above must be
documented (ISA 315.32). However, the
ISA does not stipulate a method or level
of detail required for this
documentation, leaving it to the
auditors judgment to determine the
extent of documentation needed.
GET VERIFIABLE CPD UNITSAnswer questions about this article onlineStudying this article and answering the questions can count towards your verifiable CPD if you arefollowing the unit route and the content is relevant to your development needs.One hour of learning equates to one unit of CPD
52 Technical
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In the audit of smaller entities,
which often have a small range of
products or services, operate from a
limited number of locations and have a
simple ownership structure, the
documentation may be simple in form
and relatively brief and it is not
necessary to document the entirety of
the auditors understanding of the
entity. Documentation may be prepared
by using narrative notes or by
completing a structured form. The
notes may be maintained separately orincorporated in the documentation of
the overall audit strategy.
Internal controlISA 315 requires the auditor to obtain
an understanding of the internal
control relevant to the audit. This is
a crucial step in assessing the risk of
material misstatement, as one of the
components of audit risk is control risk,
defined as the risk that a misstatement
that could occur will not be prevented,
or detected and corrected, on a timely
basis by the entitys internal control.Internal control has five components,
each of which must be understood and
documented by the auditor:
a) the control environment
b) the entitys risk assessment
procedure
c) the information system, including
the related business processes,
relevant to financial reporting and
communication
d) control activities
e) monitoring of controls.
This requirement appears onerous,
and the documentation of internal
control for large and complex
organisations can indeed be laborious.
But it is important to remember that
the auditor is required to understand
and document only those elements of
internal control that are relevant to the
audit, in particular to the auditors risk
assessment, which is a matter of
professional judgment.
In determining whether a control is
relevant to the audit, matters such as the
significance of the related risk,
materiality, and the complexity of
operations should be considered. In
relation to control activities, ISA 315.20
states that an audit does not require an
understanding of all of the control
activities related to each significant class
of transaction, account balance and
disclosure in the financial statements or
to every assertion in them.
The documentation of internal control
should therefore be commensurate with
the nature, size and complexity of the
53 TO GET THE QUESTIONS GO TOwww.accaglobal.com/ab_tech
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CPDunits on the web
entity. The ISA also suggests that the
extent of documentation should be
appropriate to the experience and
capabilities of the audit engagement
team, as less experienced members of
the audit team may require more
detailed documentation to assist them
in obtaining appropriate understanding
of the entity and its controls.
In a smaller entity, the audit
documentation on internal control is
likely to be relatively simple, focusing on
how sales and purchasing cycles operateand highlighting the risks of material
misstatement that arise from the
controls in place. It is tempting to think
that in a simple system operating in a
small company there is little risk of
material misstatement, but there are
risks associated with this type of
company, especially those posed by
opportunities for management override,
and the limited scope for segregation of
duty and authorisation controls. In a
smaller company, the extent and nature
of managements involvement in internal
control is likely to be a key aspect in thedocumentation of internal control.
Given that the underpinning concept
of ISA 315 is risk assessment, it is not
surprising that one of the elements of
internal control the auditor must
understand and document is the
entitys own risk assessment process.
Most large organisations will have an
internal risk management function, the
effectiveness of which may be assessed
by the auditor.
Smaller entities will not have such a
function, and risk assessment will be
performed in an ad hoc manner by the
companys owners and/or managers. In
this case, ISA 315.17 requires the
auditor to discuss with management
whether business risks relevant to
financial reporting have been identified
and addressed, and to consider whether
this represents a significant deficiency
in internal control.
Assessing the risks of materialmisstatementHaving obtained and documented an
understanding of the entity including
its internal control, the auditor will now
be in a position to identify and assessthe risks of material misstatement,
which should be done at the financial
statement level, and at the assertion
level for classes of transactions,
account balances and disclosures.
The point of the risk assessment is
to provide a basis for designing and
performing further audit procedures,
which should include inquiries of
management and other relevant
individuals, analytical procedures,
observation and enquiry (ISA 315.6).
An important part of assessing the
risk of material misstatement is thatthe risks identified should be prioritised.
This is because ISA 315 determines
that risks which are identified as
significant require special audit
consideration. It is a matter of
judgment as to whether a risk
constitutes a significant risk, and
matters such as the complexity of the
transaction, the risk of fraud, the
involvement of related parties, and
whether the transaction is outside the
normal course of business should be
considered (ISA 315.28).
Where a significant risk is identified,
the relevant controls, including control
activities, should be understood. ISA
330, The Auditors Responses to Identified
Risks, then deals with the action that
should be taken in obtaining evidence in
relation to significant risks. If the
auditor plans to rely on controls over a
significant risk, the controls must be
tested in the current period, and
substantive procedures should be
performed in response to significant
risks at the assertion level.
Continual revision of risk
assessmentThe risk assessment outlined abovetakes place in the planning phase
of the audit. Of course, as the audit
progresses, further information may
come to light which provides additional
insight into the companys operations
and internal control. It may therefore
be necessary to revise the original risk
assessment, and modify the planned
audit procedures in response to new or
amended risks that have been identified.
Conclusion
Auditors should not underestimatethe importance of ISA 315, as
its requirements relating to risk
assessment help to ensure that audits
are responsive to individual audit
clients circumstances. When applied
properly, ISA 315 should help to reduce
audit risk. Although the requirements
of the ISA can seem onerous, careful
application of the standard and
appropriate use of auditors judgment
should mean that compliance with
documentation requirements is a
relatively straightforward process.
Lisa Weaver is advanced audit and
assurance examiner at ACCA
54 Technical
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FINANCIAL REPORTING
IFRS FOR SMES
The SME Implementation
Group of the IFRS
Foundation has issued for
comment five draft Q&As
relating to IFRS for SMEs. Thedrafts address the following:
*The application of IFRSfor SMEsto periods that
end before the application
date of the standard.
*Interpretation of theterms undue cost and
impracticable.
*The circumstances wherea jurisdiction permits
all entities meeting the
definition of an SME to
apply IFRS for SMEs, but
requires reference to full
IFRS in circumstances
where IFRS for SMEsdoes
not address a particular
transaction, event or
condition.
*Departure from a principlein IFRS for SMEs.
*Prescription of the formatof financial statements by
local regulation.
IASB ISSUES ANALYSES
The International Accounting
Standards Board (IASB) has
issued effect analyses for
two new standards: IFRS
10, Consolidated Financial
Statementsand IFRS 11,
Joint Arrangements. Both
analyses also consider the
relevant effects of IFRS 12,
Disclosure of Interests in Other
Entities. The IASB documents
provide insights into the
most significant effects of
the new standards.
AUDIT AND ASSURANCE
IAASB ISSUES DRAFT
The International Auditing
and Assurance Standards
Board (IAASB) has
issued an exposure draft
of a revised version ofInternational Standard on
Assurance Engagements
(ISAE) 3000, Assurance
Engagements Other Than
Audits or Reviews of Historical
Financial Information.
The proposed revisions
incorporate enhanced
requirements and
guidance in the light of
concerns raised by users
and to reflect the growing
use of ISAE 3000 by
professional accountants
and national standard-
setters. ISAE 3000 has
also been redrafted to
achieve consistency with
the approach taken in
clarified ISAs where
relevant.
AUDITOR REPORTING
The IAASB has also issueda consultation paper,Enhancing the Value of
Auditor Reporting: Exploring
Options for Change, which is
seeking to establish whether
there are common views
among users of audited
financial statements as to
the usefulness of reporting
by auditors.
The paper suggests a
number of options and
invites views.
Yvonne Lang, director,
Smith & Williamson
A round-up of the latest developments in financial reporting and audit
Technical update 55
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Contrasting pictures
[Don Strickland enjoyed a high-flying career as a top executive at Kodak and Apple. In this interview, heexplains the impact of differing management styles on the two companies
Q:What impact did different leadership
styles have on Kodak and Apple?
A:The two companies have ended up invery different positions. Kodak has not
coped with change as well as Apple. Ithas gone from being one of the worldslargest companies to one with a marketvalue of less than US$1bn. Apple,in contrast, thrived on the changingconditions and has become theworlds most innovative and successfulcompany. The results show financially.Apple is one of the worlds highest-value companies with a market valueof US$350bn. Why the difference? Myanswer is leadership culture.
It is not that one leadership culture
is right and another wrong. Rather, it isabout matching the leadership cultureto the corporate culture and theenvironment in which the companyoperates. When change occursgradually and predictably, as was thecase until the 1990s, leadership fromthe top works extremely well. Executive
management knows what needs to bedone; middle managementcommunicates, sets goals and tracksprogress; workers get it done. This is
the classic model of efficiency that hasdominated business for hundreds ofyears. Indeed, this leadershipmodel served Kodak well for over 100years, since it was founded in 1880.
However, in times of rapid andunpredictable change, leadership fromthe top just doesnt work. In a rapidlychanging environment, top executivesdo not know what needs to be done.They know some but not all of whatneeds to be done. In fact, no singleperson in the organisation knows what
needs to be done. The organisation justneeds to react and move quickly basedon a distributed consensus. If thecompany takes a wrong turn, it needsto quickly find out and changedirection. This can only happen withdistributed leadership. This is whyApple has achieved such success.
Q:We have seen a lot of change in
recent years. Do you anticipate a return
to the leadership from the top style?
A:I believe that the pace of change
since 1990 will continue for at least thenext generation. In fact, it is probablythe new norm. I am not just talkingabout technological change such asthe internet, mobile devices and cloudcomputing. Even more important arethe changes taking place outside ofthe technology sphere. The formationof geopolitical federations, such asthe European Union, the African Unionand the Association of Southeast AsianNations, is levelling the economic
Don Stricklands first job after
graduating was as an engineer with
Eastman Kodak, where he helpeddesign the first cameras that went
to the moon. Over the following 20
years he worked his way across and
up the company.
From the day he joined Kodak hewas struck by how the top executivesknew everything about the business.They said do this, and the rest ofthe company loyally followed andmade it happen. That leadershipculture, which he now callsleadership from the top, was highlysuccessful for Kodak.
But in the 1990s with theintroduction of digital technology, theinternet, new sources of competition,
and many more changes that wouldtransform the landscape of business,
Strickland became frustrated by thecompanys inability to adapt. Heremembers a speech that the KodakCEO gave to employees in which hesaid: We will make the elephantdance. The intention was good, butthe lesson Strickland learnt was thatelephants dont dance!
In 1990, Kodak appointed him asthe executive contact for Apple. A fewyears later, he joined Apple as theexecutive in charge of the publishingdivision. The challenge was huge: torefocus the publishing business fromprint media to the internet. Apple wasclose to bankruptcy at the time, butStrickland knew he had a tremendous
*CAREER HISTORY
asset in the leadership culture. AtApple, every employee was expected tobe a leader. Nobody was expected toknow everything, but everybody wasexpected to contribute to the solution.He calls this leadership culturedistributed leadership.
Strickland went on to head up asuccessful Silicon Valley startupcompany and then a public company,before becoming a consultant andmotivational speaker.
56 Careers
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Career resources
Professional developmentACCA provides you with a host of
global and local learning opportunities
to meet your development needs after
you qualify. From face-to-face courses
to online learning, and from IFRS to
leadership skills, ACCA has a wide
range of resources to support yourprofessional development.
www.accaglobal.com/members/cpd
Members magazineYoure holding this benefit in your
hands right now! All ACCA members
have Accounting and Businessmagazine
delivered to their door 10 times a
year. With six regional issues, the
magazine addresses critical topics
in international accountancy and
business, with news, analyses and
features. You also receive a weekly
e-bulletin, AB Direct, with all the latest
news about the profession.
www.accaglobal.com/ab
Dedicated careers portalWeve recently launched a new and
improved ACCA Careers portal, with
exclusive access to job openings inaccounting and finance from around
the world. Within a month of its launch
ACCACareers.com has had more
than a thousand jobs posted by over
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Ethics resourceACCA has developed a wealth of ethics
resources ranging from guidance on
how to create a code of conduct, to
providing advice on how to solve an
ethics problem.
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professional_standards/ethics
Further qualificationsGain access to a variety of further
qualifications including an MBA
and specialist certificates from topacademic and professional partners
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qualifications_partners
Unrivalled customer supportOur customer service centre ACCA
Connectoffers a commitment to care
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accountancy body. We operate 24
hours a day, seven days a week, 365
days a year.
Phone: +44 (0)141 582 2000
Email: [email protected]
www.accaglobal.com/contacts/connect
ACCABENEFITSAre you making the mostof your membership? As
an ACCA member youare part of a recognisedglobal brand and can takeadvantage of exclusiveresources to help youprogress in your career.Heres a reminder of someof the benefits available
ACCA58
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THE RECIPE FOR SUCCESSA recognised global brand
Employer recognitionA recent independent global surveyof 1,300 employers showed that 50%
rated ACCA as the leading global
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influence and size more than three
times the level of recognition achieved
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71% of CFOs and FDs agreed or
strongly agreed that ACCA is a world-
class organisation.
Global representationACCA and our members play key roles
in building the global accountancyprofession, working with many other
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Research programmeAs a member of ACCA you gain first-
hand access to our well-respected
research programme, which helps to
shape government policies aroundthe world. Members are also invited
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Insights Conference, which showcases
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researchandinsights
Flexible career
Cross-sector flexibilityACCA offers you the opportunity fora more varied, flexible career. While
some accountancy bodies focus on
specific areas of accounting, the ACCA
Qualification trains you to be both
technically robust and strategically
excellent. Through in-depth knowledge
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ACCA accountants are equipped
to ensure that organisations in all
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with a corporate, an auditor for local
government or start your own firm, youwill have the expertise and capability to
make your organisation thrive.
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global network of over 70 formal
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A global networkWe are ready to support you through
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through a network of 83 offices and
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Members can access e-learning,
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A connected community
Exclusive face-to-face eventsMeet your fellow members and learndirectly from top experts at one of
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Engage on social mediaOur exclusive LinkedIn group is one of
the largest professional accountancy
groups on the social networkingplatform. Youre also welcome to join
our Facebook pages or follow our
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global professional community.
LinkedIn: ACCA Official members
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Network with other membersAs an ACCA member you have the
opportunity to be involved in specialist
committees and panels according to
the sector you are employed in and the
region where you work.
ACCA CouncilAs a member of a truly democratic
and transparent body for professional
accountants you have the opportunity
to stand for Council, which
decides ACCAs strategy, monitors
our performance in relation to
our objectives and oversees the
organisations annual budget.
VIJAY BALA FCCA, CFO, MICROSOFT MALAYSIA:
ACCA GAVE ME PRACTICAL KNOWLEDGE THATCOMPLEMENTED MY UNIVERSITY QUALIFICATION
59
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1NOTICE AND AUDITORS REPORTThe notice of meeting and auditors report
on the accounts for the period 1 April 2010
to 31 March 2011 were taken as read.
2THE MINUTESThe minutes of the AGM held on 16September 2010 and published in the
November 2010 issue of Accounting
and Business were taken as read, and
signed as correct.
3RESOLUTION 1Adoption of the report of the Council and
accounts for the period 1 April 2010 to 31
March 2011
Mark Gold gave his presidential
address and asked Helen Brand (chief
executive) to give a presentation. He
then invited questions and commentson the report and accounts.
The president drew members
attention to the statement which had
been circulated and which showed that
valid proxy votes had been cast in
respect of Resolution 1 as follows:
FOR:4,588 AGAINST:43
The president then put the resolution
to the meeting and, on a show of
hands, declared it carried, the votes
being cast as follows:
FOR:48 AGAINST:0
4 RESULT OF THE BALLOT FOR THEELECTION OF MEMBERS TO COUNCIL
The scrutineers report and the number
of votes received by each candidate in
the ballot for the election of members
of Council were reported, as follows:
Name Votes1 Laura Perrin 3,543
2 Pauline Hobson 3,250
3 Alexandra Chin 3,182
4 Rosanna Choi 3,095
5 Francis Chittenden 2,950
6 Coutts Otolo 2,811
7 Stephen Bailey 2,514
8 Anthony Tyen 2,399
9 Taiwo Oyedele 2,270
10 Dat Khalid Ahmad 2,251
ACCA 106th AGMMinutes of the 106th annual general meeting of ACCA at 29 Lincolns Inn Fields, London WC2,on 15 September 2011, chaired by ACCA president Mark Gold in the presence of 59 members
....................................................................
11 Orla Collins 2,231
12 Nisreen Rehmanjee 2,195
13 Datuk Nasir Ahmad 2,137
14 Peter Fee 2,059
15 Patrick Chan 1,948
16 Isabelle Li 1,58917 David Li 1,481
18 Bolivia Cheung 1,448
19 Frankie Ho 1,313
20 Samreen Ashraf 1,301
21 Nestor Wang 1,254
22 Hin Leong 1,074
23 Noman Tahir 853
The president, therefore, declared
the following members elected or
re-elected to Council: Stephen Bailey,
Alexandra Chin, Francis Chittenden,
Rosanna Choi, Pauline Hobson,
Dat Khalid Ahmad, Coutts Otolo,Taiwo Oyedele, Laura Perrin and
Anthony Tyen.
5RESOLUTION 3Appointment of auditors
The president reported that Council
recommended that BDO LLP, chartered
accountants and registered auditors,
be re-appointed as ACCAs auditors. He
then invited questions on Resolution 3.
The president drew members
attention to the statement which had
been circulated and which showed that
valid proxy votes had been cast inrespect of Resolution 3 as follows:
FOR:4,482 AGAINST:149
The president then put the resolution
to the meeting and, on a show of
hands, declared it carried, the votes
being cast as follows:
FOR: 45 AGAINST:1
6RESOLUTION 4Bye-law amendments to remove an area of
automatic liability to disciplinary action that
could result in unfairness if the underlying
facts were not investigated
The president invited questions on
Resolution 4. He then drew members
attention to the statement which had
been circulated and which showed
that valid proxy votes had been cast in
respect of Resolution 4 as follows:
FOR: 4,461 AGAINST:169
The president then put the resolution
to the meeting and, on a show of
hands, declared it carried, the votesbeing cast as follows:
FOR: 44 AGAINST:0
7RESOLUTION 5Bye-law amendments to clarify that, unless
there is a statutory obligation to the contrary,
a member must promptly bring to ACCAs
attention any matters that render them or
another member liable to disciplinary action
The president invited questions on
Resolution 5. He then drew members
attention to the statement which had
been circulated and which showedthat valid proxy votes had been cast in
respect of Resolution 5 as follows:
FOR: 4,250 AGAINST:381
The president then put the resolution
to the meeting and, on a show of
hands, declared it carried, the votes
being cast as follows:
FOR: 42 AGAINST:2
8RESOLUTION 6Bye-law amendments to reduce from
six to three the number of consecutive
Council meetings a member can miss
without prior leave of absence beforehaving to vacate office
The president invited questions on
Resolution 6. He then drew members
attention to the statement which had
been circulated and which showed
that valid proxy votes had been cast in
respect of Resolution 6 as follows:
FOR: 4,284 AGAINST:347
The president then put the resolution
to the meeting and, on a show of
hands, declared it carried, the votes
being cast as follows:
FOR: 46 AGAINST:0
The president thanked members for their
attendance and declared the meeting
closed at 2.15pm.
60 ACCA
7/25/2019 Material Misstatement Risk
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61
Have you made your
CPD declaration?
Your annual CPD declaration for 2011 is due for submission to ACCA by 1 January 2012.
The easiest way to make your annual declaration is online, by visiting www.accaglobal.com
and logging into your myACCAe-business account. Alternatively, you can complete the CPD
declaration form which is sent to you with your annual subscription pack in November.
For more information on your CPD requirements, visit www2.accaglobal.com/members/cpd/
7/25/2019 Material Misstatement Risk
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For the first time e-learning was
identified as the top learning method
for developing business and technical
skills, with an increase of 16% fromlast year. By partnering with the top
CPD providers, ACCA has sourced a
variety of new e-learning content to
enhance the services already available.
This article offers a brief overview
of the partners we are currently
working with and the products and
services they provide.
Harvard ManageMentorACCA has partnered with Harvard
Business Publishing to give you access
to more than 40 management andleadership courses, from decision-
making and change management to
presentation skills and employee
retention essential skills for finance
professionals looking to assume wider
business responsibilities.
Kaplan HawksmereACCA is working with Kaplan
Hawksmere to produce a series of
webinars on IFRS for SMEs and risk
management. Each series consists of
four one-hour webinars. The risk
management series starts on 10November, and the third IFRS for SMEs
webinar on 8 December. Recordings of
previous webinars are available.
BPPDiscounted BPP courses include
presentations, reports, podcasts and
interactive modules. Module topics
include auditing, business and
finance, financial reporting, taxation,
law, marketing, and operational and
strategic management.
W.ConsultingW.Consulting is a technical accounting
training and advisory business. Its
IFRS Fundamentals programme has a
number of modules, each of which is
based on a particular standard.
Accountingcpd.netAccountingcpd.net from Nelson
Croom is an online resource for
high-quality accounting CPD. Written
by some of the fields leading names,
the courses are designed to
stimulate, challenge and help you
grow professionally. Topics include
management accounting, corporate
finance and business skills.
The VLC
Members can access the productsand services described here by
logging into the Virtual Learning
Centre (VLC), through ACCAs
e-learning gateway at
virtuallearn.accaglobal.com/pages
The VLC is ACCAs dedicated online
platform for flexible learning and
professional development. It brings
together a variety of business skills
and technical subjects in a
combination of frameworks, case
studies and quizzes.
Everything in the VLC can
contribute towards CPD requirementsprovided it is relevant to your career.
If the learning contributes to general
knowledge and skills, it should be
recorded as non-verifiable CPD. If you
can apply the learning in the
workplace, it will contribute to
verifiable CPD. Keep a record of why
the learning was relevant and how
you applied it.
We have recently made changes to
the VLC to improve the experience for
members and make it easier to find
whats on offer. We will continue to
develop this area as we increase the
range of learning opportunities and
services for members.
Welcome to the e-learning suite
[Online is the most popular learning delivery mechanism for accountancy professionals, according to asurvey of members. To meet the demand, ACCA has teamed up with a range of e-learning experts
Thanks to all of you who took part in
the recent Training Needs Analysis
survey. Your responses have helped us
to identify key areas and skills wheremembers require further training for
professional development and career
progression. We have reviewed the
products, services and activities we
offer and looked for ways to enhance
these to meet your learning needs.
ACCA62
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ACCA
Ready for your CPD declaration?
[Now is the time to start thinking about completing your CPD activity for 2011, and submitting your CPDdeclaration to ACCA. If youre not sure what to do or what counts, youll find the answer here
A) NEED TO COMPLETE
SOME LAST MINUTE
LEARNING?
Make sure its relevant to your
role or it will not contribute
towards your CPD activity. Have
you tried:
*ACCAs virtual learning centre(VLC)?
*Harvard ManageMentor?*BPPs CPD Centre?*The Open Universitys CPD
modules?
Go to virtuallearn.accaglobal.comto find a range of free or
discounted resources.
B) ANY CPD QUESTIONS?
Visit our new CPD i-guide. Its
an interactive tool you can click
through and answers questions
such as:
*What are the main benefits ofdoing CPD?
*How flexible is CPD to mycircumstances?
*Could I be exempt?*What will happen if I dont
meet the requirement?
For an answer to these and
many more questions visit
www.accaglobal.com/cpdi-guide
C) HOW DO I SUBMIT MY
CPD DECLARATION?
You can submit your annual CPDdeclaration online at any point in
the year by logging into myACCA.
Alternatively you can complete
a paper version, which you will
receive as part of your annual
subscription renewal notification.
This must be returned to ACCA by
1 January of the following year.
The annual declaration process
is simple and should only take you
a few minutes.
*Indicate your chosen CPD routeand whether you are involved inthe audit of historical financial
information.
*Confirm that you have keptyour professional ethics up
to date.
*Members who have not beenable to meet the CPD
requirement are given an
option to declare this on the
form, and ACCA will contact
them to ensure they make up
any CPD shortfall.
D) WHATS THE BEST WAY
TO KEEP EVIDENCE?
You are required to keepevidence of your participation
in the appropriate CPD route
for three years as it may be
required as part of ACCAs CPD
review process.
For tools and examples to
support you in keeping your
records, visit www.accaglobal.
com/members/cpd/evidence
E) CAN I CARRY OVER UNITS
TO NEXT YEAR?You can carry forward up to 21
units of verifiable CPD to the
following year if you exceeded
the requirement.
Now is a great time to start
planning your learning and
development through 2012. How
will your CPD help support your
business goals?
For more information go to
www.accaglobal/members/cpd
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Beyond the headlines
[While the media is focusing on the stagnatingeconomy, ACCA president Dean Westcottstresses that the news is not all bad
One of the key issues which has struck me in my time
as an officer with ACCA has been the importance of
ACCA members engaging with their organisation.I have seen that in action in meetings, at Continuing
Professional Development events, roundtables and in
the new global forums, which will draw on our global
expertise to help shape future policy.
It is your membership body and we rely on your input
to help guide our strategy and work.
Nowhere is the value of that engagement more
evident and welcome than in our Global Economic
Conditions Survey, which gathers the views of 2,800
members from around the world and gives a real sense
of the issues which the profession and businesses face.
The survey paints a depressing picture, with the view
that any signs of a global recovery have disappeared three-quarters of all respondents thought economic
conditions were deteriorating or stagnating with half
no longer having confidence in the economic prospects
of their own organisations.
But what is also significant is that while the situation
is serious, the report has suggested that the constant
flow of negative headlines in the media is actually
making finance professionals more pessimistic than
they need to be.
Certainly, we know things are tough and we all live in
a world where media sentiment has a major influence on
our working lives and on the decisions we take.
But it is also critical for us all to look at the reality of
the situation which we face and to act and advise thosewe work for with that in mind.
We need to ensure that we continue to tell it as
it is. Where things are bad we need to say so, but,
equally, where there are opportunities we need to
point them out.
We have a unique insight into the situation that
organisations of all sizes and in all sectors face, and we
need to ensure that the wider public is aware of what is
really going on.
While it would be nave to suggest that we are not
affected by what we see in the media, it is incumbent on
us to provide the facts as they are, to ensure our clients
and employers can see beyond the headlines.
Dean Wescott FCCA is finance director at Hinchingbrooke
Hospital in Cambridgeshire, England
Comment64
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01Both Bangladesh president Zillur Rahman and ACCA
chief executive Helen Brand addressed the event
TO READ MORE ON THE GEC SURVEY GO TOwww2.accaglobal.com/gep
BEHAVIOUR TOPS THE
BILL IN BANGLADESHAt an ACCA Bangladesh event on ethics on 21 September,
ACCA chief executive Helen Brand declared: Demands for
transparency put greater pressure on finance professionals toact ethically and to be transparent, whether here in Bangladesh
or around the world. This is why its critical that finance
professionals have a very strong ethical compass at their core.
The high-profile event was attended by Bangladesh president
Zillur Rahman, Standard Chartered Bank CEO Jim McCabe and
ACCA Bangladesh manager Mohua Rashid, along with hundreds
of other guests.
President Rahman strongly urged businesses to embed ethics
in everything they do and praised ACCAs efforts in endorsing
ethics and developing the profession. Without ethical
accountants and without ethical business practices, businesses
suffer Bangladesh suffers, he said. You can have the right
kind of regulations, but if you dont have the right kind of
people, you wont get the right kind of decisions.The event helped demonstrate ACCAs commitment towards
ensuring that ACCA-qualified professionals have an ethical core.
LATEST TRENDSAny signs of a recovery in the global economy have
disappeared, according to the largest ever survey of
finance professionals undertaken by ACCA. But the
report stresses that, while the economic situation
is tough, the constant flow of depressing headlines
may be making finance professionals even more
pessimistic than conditions warrant. Here is a
snapshot of the picture from around the world.
Middle EastThe Middle East has outperformed all other major
regions in business confidence, although by the
smallest of margins. Just over a quarter (26%) ofthe 84 respondents in the region reported confidence
gains, compared with 42% three months ago. Two-
thirds (65.5%, up from 40%) believe the global
economy is stagnating or has gone into reverse.
However, access to finance is not as much of a
problem as it was, and demand appears to be
strengthening; even investment is picking up.
CyprusRespondents in Cyprus were among the most
pessimistic, as was notably the case in other small,
open economies. In Cyprus this was combined with
the specific effects of the explosion at Zygi thatinterrupted power supplies. As a result, 58% of the
sample of 80 finance professionals in Cyprus (up from
37.5%) reported loss of confidence in the prospects
of their organisations, with 84% (up from 67%)
believing the economy is stagnating or slumping.
Central and Eastern EuropeHere, business confidence is significantly affected by
economic developments in the rest of the continent,
and while the East outperforms the West, neither is
in very good shape. Just over half of the CEE sample
of 147 reported a loss of confidence in their own
organisations (up from 25% three months ago), and
two-thirds (67%, up from 51%) see only stagnationor decline ahead for the global economy.
The AmericasOf the 182 respondents in the region, those in the
Caribbean were more confident about the prospects
of their organisations than their North American
colleagues (20% reporting confidence gains vs 12%).
However, the Caribbean view of the global economy
was decidedly gloomier (73% vs 63% anticipating
deterioration or stagnation).
In North America, demand for and access to
finance are improving, while cashflow problems and
business failures are down. In the Caribbean, on the
other hand, demand is weaker and so business
opportunities tend to focus mostly on niche markets
or serving the needs of cost-conscious customers.
AfricaWhile Africa is still the region with the most economic
optimism, lagging only behind the Middle East for
business confidence, it is now in negative territory on
both counts. Many of the 396 respondents (44.3%,
up from 31.5%) in Africa reported loss of business
confidence, and for the first time most respondents
(51%) feel the global economy is deteriorating or
stagnating. However, in Ghana, the worlds fastest-
growing economy, more than half the sample (51%)
reported gains in business confidence, as did 48% of
respondents in briskly growing Zambia.
ACCA news 65
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InsideACCA
ACCA CONNECT OPEN 24/7
The ACCA Connectcontact centre will
now be providing global support 24
hours a day, seven days a week, 365
days a year.
Judith Bennett, director of service
delivery, says: ACCA is the first
professional accountancy body to
provide this round-the-clock service.
Tel: +44 (0)141 582 2000
Email: [email protected] or
IPSC 2011
ACCA is to host its third annual
International Public Sector
Conference with a theme of audit
and financial management adding
public value on 15 December.
It will focus on the value of audit
and scrutiny, environmental audit and
financial management and reporting.
A free webcast will be available
after the event at http://uk.
accaglobal.com/databases/events/
uk/members/IPSC2011
NEW HEAD FOR CAMBODIA
Senaka Fernando MBE has become
the new head of ACCA Cambodia,
taking over from Dalis Chhorn, who is
leaving to return to her own business.
Fernando was previously a director at
PwC in Cambodia.
IFAC UNDER DISCUSSION
ACCA-sponsored members
of International Federation of
Accountants (IFAC) boards and
committees have met with theACCA president, chief executive
and senior staff to discuss public
interest issues, accountants in
the corporate sector and IFACs
strategy. They also explored ways
for ACCA to continue to support
IFAC in representing and developing
the profession.
There are three new ACCA
nominees for 2012: Brendan
Murtagh joins the International
Auditing and Assurance Standards
Board, Clare Minchington the
International Accounting Education
Standards Board, and Phoebe Yu
the Compliance Advisory Panel.
Council highlightsNewly elected members help makeACCA a more diverse organisation
65Ethics event inBangladeshACCAs efforts inendorsing ethics praised
64Dean WestcottEngagement is all, says
ACCA president
63Something to declareIts time to start planningyour CPD declaration
62Digital ageIntroducing thee-learning suite
60AGM proceedingsMinutes of the 106thannual general meeting
58ACCA benefitsMake the most of yourmembership
ACCAs IFAC representatives: (clockwise from right)
Japheth Katto, Irene Ngandwe, ACCA president Dean
Westcott, Dorothy Ngwira, Brendan Murtagh, Phoebe Yu,
Marta Rejman and Alan Johnson
Council held its annual meeting on Thursday 15
September. Before the meeting, the 106th annual
general meeting of ACCA took place (see page 60).
Members voting at the AGM gave overwhelming
support to the various resolutions that were put.
At the annual Council meeting, Council chose
ACCAs officers for the coming year. ACCAs newpresident is Dean Westcott; he will be supported by
Barry Cooper (deputy president) and Martin Turner
(vice president).
Council also welcomed three new members whose
election was declared at the AGM: Stephen Bailey
(UK), Rosanna Choi (Hong Kong SAR) and Taiwo
Oyedele (Nigeria). There are now 17 different
nationalities represented on ACCAs 36-member
Council (up from 16 in 2010), reflecting the
increasing diversity of ACCA.
Council took a number of other decisions at its
annual meeting:
*It approved Council standing orders for20112012, in accordance with the bye-laws.
*It chose three Council members to serve on thenominating committee in 20112012, along with
the officers.
*It agreed to re-appoint Council member BrianMcEnery as a director of CCAB.
*It agreed a Council work plan and a set ofobjectives for the Council year 20112012.
The next meeting of Council is on 26 November,
immediately following the 2011 meeting of the
International Assembly.
66 ACCA news
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