ADVANCED AUDITING

ICAP Module – F

Refresher Session

December 2009

Prepared by: Zaryab Hyder

 SEMINAR OBJECTIVES
• How to start advanced audit preparations?

• What to study and how?

• Practice material.

• Key areas of study.

• Analysis of June 2009 attempt

• Question Answer session.

 STARTING PREPARATIONS
Advanced auditing is the extension of Audit exam of Mod D.
Things covered at Mod D level may or may not be asked
directly but it lays the foundation for the examination at
Mod F level.

Grip and revise things of Mod D. Students at this level have

at least 2.5 years of practical audit experience, which is
also necessary to handle the practical situations.

“Avoid being a Doctor without MBBS”

In open book exams, students are expected to have grip on

auditing standards i.e. which requirement is written where.
Further, answers require knowledge from other areas which
are not covered in ISA handbook.
 STARTING PREPARATIONS (cont….)

“If you fail to plan, you are planning to fail”

1. Studying this subject in isolation is a blunder.

2. Mock exams specially between 2-5pm will be

very fruitful.

3. Revision is necessary. This subject is very

lengthy therefore having synopsis or pass cards
could make all the difference.
 WHAT TO STUDY?
Advanced Audit is the last paper in Mod F. Beside
studying material related to audit, it also requires
knowledge of others papers studied earlier i.e.
Corporate Laws and IFRS.

• International Standards on Auditing (ISAs)

• Audit TRs issued by ICAP.
• Members handbook containing CA Ordinance and Bye-
Laws.
• Selected Opinions by ICAP.
• Accounting TRs issued by ICAP.
• Relevant requirements of Corporate Laws.
• Relevant requirements of IFRS.
• Circulars relevant to the audit.
• Current issues and articles i.e. ACCA or ICAEW.
 PRACTICE MATERIAL
• Past ICAP papers. Last 4 to 5 attempts.

• ACCA P7 ethical related matters and ISQC.

• ICAEW for specific practice i.e. going concern etc.

• Practical issues i.e. Satyam / Enron for

weaknesses.

• Matters raised at ICAP for discrepancies in the

audit / matters raised by SECP.
 KEY AREAS
S.N Marks asked in past papers
Key areas
O June09 Win08 June08

Ethical requirements including

1 22 marks 22 marks 25 marks
quality control considerations.

Requirements of ISAs including

2 51 marks 58 marks 32 marks
ICAP TRs and Corporate Laws.

Requirements of ISRE, ISRS, ISAE,

3 17 marks 10 marks 29 marks
IAPS and reports relating to them.

Reporting requirements for audits

4 10 marks 10 marks 14 marks
and special audits.
 KEY AREAS cont……
Ethical considerations including quality control
Important areas of code of ethics:

- Independence (Link with ISQC requirements relevant)

- Confidentiality
- Fees and related matters
- Professional appointments (This is to be read with ISQC – client acceptance)
- Ethical conflicts

Major areas of quality control are:

- Client acceptance and continuance requirements
- Engagement performance

Study the above topics from:

a) Code of ethics
b) ISQC-1 + ISA 220
c) CO 1984, CA bye-laws and CCG + ICAP QCR related circulars etc.
d) SO and audit TRs relevant to above topics.

Practice them from:

a) ICAP past papers
b) ACCA P7 questions are relevant here
c) ICAEW part A questions
d) Ethical lapses in Satyam or Enron scandals etc.
 KEY AREAS cont……
ISAs along with ICAP TRs and Corporate Laws

Specific questions can be set on requirements of a particular ISA i.e.

going concern or management representations. Therefore students
should hold strong grip on ISAs. In case of open book, this can be
achieved through summaries of requirements in a particular ISA
coupled with the related matters specified in IFRS or local laws +
SO / TRs of ICAP. Correlation is extremely important here, which
can never be achieved by merely studying the ISAs.

Questions will be scenario based thus practical knowledge plays a vital

role. Every question has answer in ISA coupled with in IFRS or local
laws. Therefore students should understand and answer from ISAs
and not on baseless grounds.

Students should be able to remember the matters right from planning till
the conclusion, including issues they encounter and its resolution
throughout their practical exposure with the firm.

Example of CO 1984 is question in June09 requiring to prepare AP on

dividend, in which students also required to mention CO
requirements.
 KEY AREAS cont……
ISRE, ISRS, ISAE, IAPS and reports relating to them
These are specific standards and question can be set considering any one
of them. Not knowing a particular standard can cause a whole
question loss in the exam.

The important thing relating to them is to understand the scope of the

question. Example would be a particular scenario requiring
procedures and subsequently report. Students need to understand
the scope i.e. whether assurance is needed or not and if yes what
level. This would make all the difference in losing or getting marks.

ACCA or ICAEW questions are not relevant and should not be considered
for this portion unless specifically having matching requirements.

IAPS are now part of ICAP syllabus. However students need not to make
synopsis of IAPS. Knowing the core requirements will be enough
except IAPS relating to small companies and compliance with IFRS,
which have very few requirements. Example would be in case of
IAPS relating to bank audits, knowledge of risks relevant to banks
or specific procedures will ensure passing marks in the exam.
 KEY AREAS cont……
Reporting

Reporting can be asked in three manners:

1. One requires reports to be drafted.

2. Others which requires student’s opinion on specific matters and its
impact on the audit report.
3. Reporting to management. (Management letter etc).

Reports can be asked from ISA 700 to 720 and ISA 800. Reports relating
to ISRE, ISRS and ISAE have already been covered. Other
reporting responsibilities are mentioned in Corporate Laws, which
may not may not be asked. Example would be auditor certificates
on free reserves or dividend remittance. Knowledge acquired in
Mod E Corporate Laws plays a significant role.

Students should be good at drafting. Watch your grammar, punctuation,

handwriting and spelling.
 Analysis of June2009 attempt
Question Level of
Key areas How to answer
# difficulty
1 Average Area 2 and 4 Consider materiality & relevant IAS. Further accounting TR
is asked. Based on materiality & treatment justify impact or
10 marks report. Practical exposure plays vital role.
2 Average Area 2 and 4 Answer from ISA 570. Specific requirements given.
Reproduce the adverse opinion from ISA 570.
10 marks
3 Difficult Area 2 Warrant is an accounting estimate, covered under ISA 540,
therefore ISA 540 matters should be considered. Further
15 marks practical exposure would be vital.
4 Easy Area 2 Easy marks. ISA 315 provides guidance, however can not
be answered specifically. Knowledge of RPTs are also
9 marks important.
5 Average Area 2 and 3 This requires knowledge of accounting TR & scope of the
report. It is very imp as students can answer it from ISAE
15 marks or ISRS.
6 Easy Area 1 Easy to obtain as simple things relating to confidentiality
written in code of ethics.
10 marks
7 Easy Area 3 Simple marks from compilation. Reproduce report from
ISRS 4410.
7 marks
8 Average Area 1 Answer from ISQC and code of ethics independence & ICAP
Ordinance.
12 marks
9 Difficult Area 2 It requires knowledge of CO 1984 provisions and audit
experience to prepare AP considering all assertions.
12 marks
 Question Answer session

Questions are appreciated !!!

Thank you and best of luck for your exams.