Exam Approach Interview: F8 Audit and Assurance

Interviewer: Welcome to the F8 Examiners Approach interview.

The following is an Examiners Approach interview for Paper F8, Audit and Assurance. The content of this interview has been prepared by the examiner, working with the Qualifications team at ACCA, and is presented by actors representing an interviewer and the examiner in discussion.

For more detail on the examiners approach, please see the article produced by the examiner in the March 2010 archive edition of student accountant. In addition, the previous F8 examiner has written two further articles which are useful when preparing for the exam. One is aimed at students, entitled How to pass F8 and appears in the April 2008 edition of student accountant. The other is written for tutors, and is entitled How to teach F8; this appears in the May 2008 edition of teach accounting.

The examiner is Pami Bahl. She is a qualified accountant, who has previous experience of working in a large International accounting and audit firm. Pami has over 10 years experience as an accounting and audit lecturer.

I suppose it would be most appropriate to start off by asking where F8 fits within the overall structure of the ACCA Qualification.

Examiner:

F8 is one of the six Skills module subjects which comprehensively cover the main technical areas that any accountant, regardless of their future career aspirations, is expected to have mastered. These comprise law, performance management, taxation, financial reporting, auditing and financial management.

All Skills module exams are three-hours long and make use of a range of assessment methods such as short-answer questions, extended computational exercises, essays, scenarios and case studies.

Interviewer: How does F8 link with other papers, or other components, of the ACCA Qualification?

Examiner:

F8 expects students to use accounting knowledge obtained in F3, Financial Accounting.

Corporate governance and the requirement for company auditors are first introduced in F4, Corporate and Business Law and are built on in F8, while the knowledge is further developed in P7, Advanced Audit and Assurance.

The knowledge and capabilities acquired in F8 will also be applied in P1, Professional Accountant; in particular the areas of governance and ethics.

Finally, all knowledge and capabilities acquired in F8 will be applied in context within the practical experience requirements. More information on practical experience requirements can be found on the ACCA website.

Interviewer: What is the overall concept or theme for F8 as a paper?

Examiner:

F8 is about introducing the student to the regulatory framework governing the practice and process of auditing and assurance both external and internal. It is also about exploring the purpose, scope and processes of audit and assurance. F8 is concerned with both statutory and internal audit.

The paper covers the importance of the audit function in assuring stakeholders usually shareholders from the external perspective that their fiduciary interests are being safeguarded; that adequate controls exist to verify this and that business performance is reported in a proper and transparent manner.

F8 is, therefore, concerned with exploring how auditors act as scrutinisers of the management and directors of companies, who themselves act as stewards or agents on behalf of shareholders.

Interviewer: What are the other broad themes which run through the syllabus?

Examiner:

Well, as previously mentioned, F8 examines the scrutiny of agency relationships, and how audit gives assurance to the main principles therein. There are four main themes.

The first theme is about understanding why an audit and assurance function is necessary in business.

The second theme explores how audit is governed by law and regulation, to help ensure it is a robust and reliable process.

The third theme looks at differences in aims and scope between internal and external audit. It also examines how scrutiny and assurance differs between the two both in terms of the process, controls and investigations involved, and also in the reporting structure and accountability. This is the broadest theme; exploring the functions, techniques and audit processes, plus the evidence required for these.

The final theme is around how auditors come to their conclusions. It covers the review function, and how audit reports should be prepared and presented.

Interviewer: The syllabus for F8 is structured into seven main sections. Can you briefly explain the main content of these syllabus sections?

Examiner:

The first syllabus section covers several areas: the concept, scope and objectives of audit and assurance engagements; the audit framework and regulation including corporate governance and the ethical dimension underpinning the process.

Section B is about internal audit, and the controls and governance necessary to assure compliance.

Section C covers the planning of an audit and making risk assessments to prevent fraud within business. It also examines analytical procedures and audit documentation.

Section D is about internal control and transaction cycles; including the specific tests of control required, how they are evaluated and how the findings are communicated.

Section E looks at all forms of audit evidence, such as transactions and systems sampling, the use of relevant computer assisted audit techniques, relying on the work of others and not for profit organisations.

Sections F and G cover the conclusion of an audit engagement and how all evidence is reviewed and reported to management.

Interviewer: Thank you. Can you tell us how the exam itself is structured?

Examiner:

First of all it is worth noting that, as F8 is a Fundamentals paper, all students who do not hold an exemption for prior learning must sit this exam.

As with all papers within the Skills module, the writing time for this exam is three hours.

All ACCA three hour papers have 15 minutes reading and planning time, within which students can read the paper and understand the requirements. An article explaining how this time should be productively used has been published in the August 2007 edition of student accountant.

Interviewer: Can students do anything else in reading and planning time?

Examiner:

Yes. They can also make notes and plan answers, but this may only be done on the question paper and not on the answer booklet. The answer booklet cannot be used until the exam begins.

Interviewer: What kind of questions will appear in the exam?

Examiner:

The bulk of the questions will be discursive, but some questions involving computational elements will be set from time to time.

Interviewer: So, how many questions are there in the exam and what choice, if any, exists?

Examiner:

As with other papers at the Fundamentals level, this exam has all compulsory questions. F8 contains 5 questions, all of which must be answered.

The first question is worth 30 marks, and will be a scenario-based question on audit procedures. The second question is worth 10 marks. This will be a knowledge-based question. The remaining three are each worth 20 marks.

Remember, the student must answer all questions. For more information about the exam itself and how it is structured please refer to past exam papers available on the ACCA website.

Interviewer: Thanks for explaining all that. What are the key features of F8?

Examiner:

First of all, it is worth noting that the paper is designed to be practical in application. Given that it is the only compulsory auditing paper in the syllabus, it also aims to ensure that candidates who pass this paper understand the basics of an audit.

Interviewer: How should students deal with a requirement that asks the candidate to do something AND something else?

Examiner:

In this paper, it is quite usual to ask the candidate to do something and something else. For example, a question might ask candidates to State the additional audit procedures and the actions you should now take in respect of the above matter.

The candidate will have to use their judgement to decide how much effort to devote to each aspect. In doing this, it helps to be aware of the meaning of the requirement verbs.

Interviewer: In other words you are saying that students should be aware of cognitive levels when answering questions?

Examiner:

Yes, this is very important. As I mentioned earlier, there are articles written for student accountant and teach accounting,

respectively entitled How to pass auditing and How to teach auditing. These articles include a list of the typical verbs used in the F8 exam and the marks that would normally be allocated to that part of a requirement.

It is very important to be familiar with this list. It is my experience that not understanding the use of a requirement verb is a key reason why students do not pass. For example, they write too much when asked to list and too little when asked to explain or discuss.

Interviewer: Why is there no choice offered at the Fundamentals level?

Examiner:

The reason that all questions are compulsory at the Fundamentals level is because, as the name of the level implies, all subject areas and main capabilities within these syllabuses are fundamental to having a sound grasp of, and technical proficiency in, all these subject areas. This ensures that members are capable in all the mainstream accounting disciplines before admission to membership. It also ensures that the Professional level subjects are properly underpinned, which allows a full and free choice of Options papers for students to specialise in.

Interviewer: Are any ethical issues introduced in this paper?

Examiner:

Yes, students are expected to gain a good understanding of Professional ethics and ACCAs Code of Ethics and Conduct in this paper, as referred to in the study guide. In the exam, they may be asked to examine the ethical dimensions of an audit situation.

Interviewer: Can you tell us why it is important to practise exam style questions before the exam?

Examiner:

Certainly. Lack of examination practice clearly shows through in a significant number of scripts, where it appears that candidates have not attempted any mock examinations prior to the real examination. Poor examination technique is demonstrated by: Answering questions in a random sequence (eg 1a, 3b, 2c) Spending far too much time on the first question, leaving too little or no time for the last answer Not writing in the required style (for example providing the answer in one long paragraph rather than splitting the answer up into individual points) Focusing on theory only with no attempt at all to use the scenario

A key reason why students fail is because they show a significant lack of understanding when answering questions on audit procedures and the audit process. For example, where a question asks for audit procedures to be listed and explained, a typical

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answer is check the ledger providing no indication of which ledger will be checked or what the ledger is being checked for. It is important to be precise. Students will become accustomed to generating appropriate audit procedures by carrying out lots of question practice. They cannot simply learn a list of procedures. Remember, answers must be tailored to the scenario given.

Interviewer: What do you think needs to be included in a pass standard script?

Examiner:

I am looking for students to apply their knowledge and understanding to the case or scenario provided, where this is required. Students should not answer a scenario question without reference to the information contained in the scenario. Be positive; apply yourself to the scenario and express an opinion using evidence from the scenario to support this opinion.

Another thing I would look for is good presentation. It helps when a script is well presented, with appropriate use being made of paragraphs, sentences and table formats where needed. Also, students should always begin each new question on a fresh page, as instructed.

Interviewer: So what would you say are the keys to success?

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Examiner:

I have noticed that most students who pass, have attempted all questions! Certain sections may not be answered well, but a few marks are generally obtained from a valid attempt; no marks can be awarded if the question is not attempted at all.

It also helps if students tackle the 30 mark scenario question early on in the exam, rather than leaving it until the end, when they may be tight on time.

In addition, a very good knowledge of auditing, and the ability to apply that knowledge to the question, clearly and succinctly is critical. Having said that, there are always 10 marks available for pure knowledge in question 2 and I expect most students who pass the exam will be capable of getting 8-10 marks on this question.

It is also important that students know what constitutes an audit procedure. If students look back at past papers what I am looking for by way of a procedure is demonstrated. It is essential for a student to be clear about what they are doing, why they are doing it and what it will achieve for them in audit terms. This is a skill that very much improves with practice.

Interviewer: What do you believe to be the main potential pitfalls in the F8 exam?

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Examiner:

Students not learning the basic knowledge correctly, and therefore being unable to apply it to a given scenario, is clearly a potential pitfall. For example, some students describe completeness as agreeing details in ledgers back to source documents, rather than agreeing source documents to the ledgers.

A specific example is students who do not have a clear understanding of the sequence of operations in processing documents. This was particularly apparent in the December 2007 sitting with regard to the process involving Goods Received Notes (GRN).

Interviewer: Is there other information about student performance which may help students prepare for exams?

Examiner:

After each examination session, all ACCA examiners are required to produce an exam report. These reports highlight key issues arising in the last exam and focus on where students performed particularly well or badly. These are published in February and August, and can be found under paper resources on the website.

In addition, after each exam session has been completed, the exam review board meets. This is a board consisting of ACCA internal Education staff and six representative members of the approved

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learning partner community. Minutes from this board summarise the comments made by tuition provider representatives, report survey results about the exams from student questionnaires and detail the responses from ACCA staff. Again, this information is available on the ACCA website.

Interviewer: And finally, do you have any concluding advice about the F8 examination paper?

Examiner:

First, students must always read the question as carefully as they can, identifying clearly the instructional verbs contained within each requirement.

Secondly, it is important to properly understand the requirements, assessing how much the examiner is really looking for in each question part, being fully aware of the marks available for each requirement.

Finally, dont forget that answers given should relate to the question actually asked, not the one that a candidate would have liked to answer!

Interviewer: Thank you very much for sharing your insight into this exam paper. Im sure it has given students and tutors lots of useful information.

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Examiner:

Thank you.

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