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DEC 2016 Question 3C

I. Prospective financial information means financial information based on assumptions about


events that may occur in the future and possible action by the entity.
II. It is highly subjective and can be in forms of a forecast, a projection or a combination of
both.
Financial forecast means prospective financial information prepared, to the best of
responsible partys knowledge and believe, an entitys expected financial position, result of
operation and the cash flow. It is based on the assumptions as to future events which
management expects to take place.
Financial projection means prospective financial information prepared to the best
responsible partys knowledge and believe, given one or more hypothetical assumptions, an
entitys expected financial position, result of operation and cash flow.

JUNE 2016 Question 5

c. Review engagements

Review engagements are often undertaken as an alternative to an audit, and involve a practitioner
reviewing financial data, such as six-monthly figures. This would involve the practitioner undertaking
procedures to state whether anything has come to their attention which causes the practitioner to
believe that the financial data is not in accordance with the financial reporting framework.

A review engagement differs to an external audit in that the procedures undertaken are not nearly
as comprehensive as those in an audit, with procedures such as analytical review and enquiry used
extensively. In addition, the practitioner does not need to comply with ISAs as these only relate to
external audits.

d. Levels of assurance

The level of assurance provided by audit and review engagements is as follows:

External audit A high but not absolute level of assurance is provided, this is known as reasonable
assurance. This provides comfort that the financial statements present fairly in all material respects
(or are true and fair) and are free of material misstatements.

DEC 2015 Question 1

A. Forecasts are prospective that presents an entitys expectation and based on assumptions
reflecting conditions the responsible part expect to exist and expectations whereas projections are
prospective financial information based on one or more hypothetical assumptions about future
events and the responsible partys actions.

JUNE 2015 Question 4B

a. The objectivity of the internal audit function;


b. The technical competence of the internal auditors skill and experience.
c. Whether the work of the internal auditors is likely to be carried out with due professional care ie
proper planned, supervision, review and documentations
d. Whether there is likely to be effective communication between the internal auditors and the
external auditor.
e. Scope of work: Audit evidence obtained is sufficient and appropriate for external auditor to form
an opinion
JUN 2014 Question 1B

(i) Agreed upon procedures is an engagement may involve the auditor in performing certain
procedures concerning individual items of financial data (for example, account payable, account
receivable, purchase from related parties and sales and profits of a segment of an entity), a financial
statement (for example, a balance sheet) or even a complete set of financial statements.

(ii) Review comprises inquiry and analytical procedures which are designed to review the reliability
of an assertion, which is the responsibility of one party, for the use of another party.

DEC 2013 Question 3A

External auditor in order to accept the work of internal auditor should evaluate the internal auditor
in terms of:-
i. Technical competence: The skill and expertise of the internal auditor
ii. Professional due care: The process of internal audit with due care, i.e. proper planned,
supervision, review and documentations
iii. Scope of work: Audit evidence obtained is sufficient and appropriate for external auditor to form
an opinion
iv. The documentation on planning of internal auditor
v. Sample size selected by internal auditor

Question 5

d) (i) Review engagement Review comprises inquiry and analytical procedures which are designed
to review reliability of an assertion, which responsibility of one party, for use by another party.
Review of engagement will involve the application of audit skills and techniques and the gathering
evidence BUT it does not involve and assessment of accounting and internal control systems, tests of
records and other procedures in auditing.
The objective is to enable the Chartered Accountant to state whether, in all material respects, the
financial statements are prepared in accordance with an identified financial reporting framework.

ii. Levels of assurance


The level of assurance provided by audit and other review engagements is as follows:
Audit

External Audit A high but not absolute level of assurance is provided, this is known as reasonable
assurance. This provides comfort that the financial statements are true and fair and are free of
material misstatements.

Other review engagements


Other review engagements where an opinion is being provided, the practitioner gathers sufficient
evidence to be satisfied that the subject matter is plausible; in this case negative assurance is given
whereby the practitioner

JUN 2013 Question 1B

Definition of auditing and assurance engagement

Auditing (broadly defined) is a systematic process of (1) objectively obtaining and evaluating
evidence regarding assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and (2) communicating the
results to interested users.
An assurance engagement is an engagement in which a practitioner expresses a conclusion designed
to enhance the degree of confidence of the intended users other than the responsible party about
the outcome of the evaluation or measurement of a subject matter against criteria.

JUN13 Question 3C

The differences between review of financial information services and agreed-upon procedure. Your
discussion should cover the definition, comparative level of assurance and the report to be provided
by each of the assurance services.

Definition Comparative level Type of report


of assurance
Review of Comprise of Moderate Negative
Financial inquiry & assurance assurance.
information Analytical P Nothing has
designed to review come
the reliability of an
assertion, which is
the responsibility
of one-party, for
the use of another
party.

Agreed-upon Engagement that No assurance Factual finding of


procedures may involve auditor procedures
performing certain
procedures
concerning
individual financial
items (eg: a/c
payable,
receivables, related
party transaction), a
FS (eg: SOFP) or
even a complete set
of FS.

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