01

technical

examiners
RELEVANT to ACCA Qualification paper f8

This article considers the examiners

approach to the Paper F8 exam
and aims to recognise a change in
examiner with effect from the June
2010 exam.
The aim of Paper F8, Audit and
Assurance is to develop knowledge
and understanding of the process
of carrying out the assurance
engagement and its application in the
context of the professional regulatory
framework. The paper continues to
be practical in application, as well as
aiming to ensure that candidates who
pass this paper understand the basics
of anaudit.
The exam strikes a balance of
technical knowledge as well as a
practical application of this knowledge.
The case study Question 1, illustrates
this well and Question 1 from the
December 2008 exam is a good example
of technical knowledge beingapplied.
This syllabus builds on the
knowledge gained in Paper F3,
Financial Accounting and then
prepares candidates for PaperP1,
Professional Accountant and PaperP7,
Advanced Audit and Assurance.
The accounting standards examined
in Paper F3 form the basis of
questions on how to apply auditing
procedures in respect of those
standards, and candidates must not
be afraid to bring their accounting
knowledge into this paper. Question
1e from the December 2009 exam
demonstratesthis.

The exam will continue to contain

questions set in as practical an
application as possible. I recognise
that it has become more common that
candidates have not been involved in, or
had exposure to, a realaudit.
That aside, this paper is like any
other, and the basic principles must
be understood. Therefore, application
questions will continue to feature
heavily in the exam as they demonstrate
whether candidates have understood a
topic or just rote learnt it.
It is crucial that candidates practise
the skills required for application
questions by working through past
papers to time and reviewing the
examiner solutions to identify areas
for improvement. Rote learning of
technical material alone will not
result in exam success; however,
practising questions, reading examiner
reportsand relevant technical articles
will improve the chances of passing
theexam.
Explanation of capabilities
Paper F8 focuses on seven capabilities.
Table 1 on page 3 shows how I expect
each of these capabilities to be
examined, and details comments on the
type of questions that could be asked.
Format of the exam
The exam format will continue in
the same style as the past five exam
sessions. There are five questions and
they are all compulsory.

Section A contains Question 1 for

30marks and question 2 for 10 marks.
Section B contains three questions
each for 20marks.
All questions require some form
of written response. However, a
few questions will also require the
calculation and interpretation of some
basic ratios in the context of audit
planning or review.
Question 1
This question will be a case study and
will always be based on a scenario,
and will be broken down into a series
of subquestions, which will examine a
range of audit procedures.
Candidates will need to analyse the
scenario to identify the appropriate
points to make in their answers.
Candidates are provided with
15minutes of reading time, and I
would encourage them to use some
of this time reading the scenario and
thinking about therequirements.
The sub-requirements are usually a
mixture of technical knowledge and
scenario specific points. Candidates
are encouraged to spend time
analysing the requirement in detail,
noting whether the requirement is to
list/state/identify/define/explain/
describe or discuss as these all require
differing levels of detail. In addition,
it is important to identify whether the
question requiresgeneral knowledge
or the application of this knowledge to
thescenario.

Rote learning of technical material alone will not result in exam

success; however, practising questions, reading examiner reports
and relevant technical articles will improve the chances
of passing the exam.

student accountant issue 05/2010

Studying for Paper F8?
Performance objectives 17 and 18 are linked

02

approach
My aim is that Paper F8 can be passed by a candidate who understands
the underlying theory of auditing and can apply that theory to
relatively basic audit situations knowledge itself is not sufficient
to pass this exam.
The scenario is more likely to be
based on an organisation which is profit
making rather than non-profit making.
It is to be assumed that all entities will
use computerbased systems, however
detailed knowledge of how to use
computer-assisted audit techniques will
not beexpected.
Questions in the past have focused
on areas such as identification of
system deficiencies, implications of
these and recommendations, writing of
management reports, control objectives
and tests of control, substantive
procedures over income statement
and statement of financial position
entries, audit evidence and audit
planning. These areas will all continue
to be examined as Question 1 topics
as well as areas such as audit risk,
internal audit and assurance. This list is
notexhaustive.
Question 2
The question for 10 marks, will, as in
previous exams, be a shorter factual
question. This question will normally
be based on International Standards on
Auditing (ISAs), but will also cover other
key technical areas of the Study Guide.
As with previous exams, there will
normally be two or three requirements
covering different areas, and this allows
candidates to demonstrate their basic
knowledge of auditing.

Questions will normally be based

on ISAs. However, answers will obtain
credit if valid points are made. I am not
expecting rote learning of ISAs; rather,
an understanding of the key principles
underlying auditing.
Also, candidates should not worry
about learning ISA numbers, as there
is no credit available for listing the
ISAnumbers.
It is particularly important that
candidates focus on the requirements
in this question, as if they are
required to list then their answer
should contain brief points, it
should not stretch to pages of text.
Many candidates are writing far too
much and this is at the expense of
otherquestions.
Questions 3 and 4
These questions, each worth 20 marks,
will usually be loosely based around
a scenario, and could cover any of
the topic areas within the Study Guide.
The formatwill be similar to past
examquestions.
These scenarios could be based on
either profit or non-profit marking
organisations such as Question4 from
theDecember2008 exam, which was
based on a charity.

These questions will aim to test a

balance of technical knowledge, but
also an application of this knowledge to
the given scenario.
Question 5
This question, for 20 marks, will, as
in previous exam sessions, be mainly
based on the topic areas of audit review
andreporting.
The question format will also be
similar to previous exams.
Candidates are reminded that audit
reports in particular represent the only
output for the shareholders after the
audit is completed and, therefore, it is
important that candidates understand
what an audit report is, how it may be
modified, and when these modifications
are relevant.
Conclusion
My aim is that Paper F8 canbe passed
by a candidate who understands the
underlying theory of auditing and
canapply that theory to relatively
basic audit situations knowledge
itself is not sufficient to pass
thisexam. My advice, therefore, is
to study the basics of auditing, read
examiners reports on past exams, read
relevant technical articles and then
practise applying their audit knowledge
to scenarios, as this is the key to being
successful in this exam.
Pami Bahl is examiner for PaperF8
with effect from the June 2010 exam

03

technical

TABLE 1: PAPER F8 CAPABILITIES

Capability
Explain the nature, purpose and scope of assurance
or engagements, including the role of the external audit
and its regulatory and ethical framework.

Comment
Questions may focus on the factual areas of the legal
aspects, they may cover the ethical framework in a
scenario-based question. Assurance could feature in any
question in the exam.

Explain the nature of internal audit and describe its role as

The work of internal audit could feature in any question in
part of overall performance management and its relationship the exam. However, there may not always be an internal audit
with the external audit.
question. It is more likely to appear in Questions 1, 3 or 4.
Demonstrate how the auditor obtains an understanding of
the entity and its environment, assesses the risk of
material misstatement (whether arising from fraud or other
irregularities) and plans an audit of financial statements.

Questions in this area will relate to the planning of the

audit. They will normally feature aspects of audit risk, audit
audit planning process, fraud and error as well as
analytical procedures. These areas are more likely to
appear as scenario- based questions, however knowledge
based elements could appear in Question 2.

Describe and evaluate information systems and internal

controls to identify and communicate control risks and their
potential consequences, making appropriate.
recommendations.

This capability, and the next, will relate to the testing of

controls, and the collection of audit evidence using
compliance and substantive testing as appropriate. It is
important that candidates understand the difference
between these two types of procedures. Reporting of
recommendations regarding deficiencies in internal
controls, or other issues found in an audit, will continue to
be examined in terms of production of management reports.

Identify and describe the work and evidence required to

meet the objectives of audit engagements and the
application of the International Standards on Auditing.

Questions for this capability are likely to focus on the

application of substantive procedures to either income
statement or statement of financial position areas (refer to
the Study Guide). This will usually feature in Question 1 as
well as elsewhere in the exam.

Evaluate findings and modify the audit plan as necessary.

This area will generally be tested in Question 5 however

knowledge-based elements could appear in Question 2.

Explain how the conclusions from audit work are reflected

in different types of audit report, explain the elements of
each type of report.

Candidates will not be required to draft an entire audit

report. The emphasis of questions in this area will instead
be on explaining audit reports. If extracts are provided
such as Question 5 December 2007, this will normally
relate to an explanation of standard terms, or an
explanation of how a standard report can be modified, or
(in a limited number of cases) supplying appropriate
wording for the modification only. Candidates are also likely
to be required to review a scenario and explain the
implications for the audit report including relevant
modifications. Knowledge of the content of ISAs in the 700
series will be expected (where relevant to this paper).
Questions will potentially provide extracts of audit reports,
and require candidates to identify where ISA guidance has
not been followed.