Paper P7 Advanced Audit and Assurance (International) Practice & Revision Kit for exams up to June 2015 ACCA Approved Practice & Revision Kit ACCA APPROVED CONTENT PROVIDER Free access to our Exam Success site Look inside ThiNganHang.com ThiNganHang.com
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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
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.
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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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
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)
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.