September 2020 exam short form Qs

Question 1

You are the audit manager responsible for the audit of Fiver Ltd for the year ending 31
October 20X0.
Requirements
Outline the actions you would take in relation to junior members of the audit team, before and
during the audit fieldwork, to ensure the quality of their work will be of a high standard.
(3 marks)

Question 2

Explain why the Competition and Markets Authority (CMA) has recommended the introduction
of mandatory joint audits for the UK’s biggest companies.
(3 marks)

Question 3

Your firm has accepted a non-audit engagement to perform a review of Bigwig Ltd’s financial
statements.
Requirement
List the matters that your firm should include in the engagement letter in respect of this
engagement.
(4 marks)

Question 4

look at question bank, question 85.4, page 149

Answer 4

look at question bank, question 85.4, page 536

Question 5

look at question bank, question 85.4, page 149

Answer 5

look at question bank, question 85.4, page 536

Question 6

On 18 August 20X0, your firm was appointed as the external auditor of Lapine Ltd (Lapine) for
the year ended 30 June 20X0. Consequently, it did not attend the year-end inventory count.
No other procedures could be performed during the audit to obtain sufficient evidence in
respect of the existence of inventory at 30 June 20X0.
Requirement
The directors of Lapine have included closing inventory of £1.9 million in the financial
statements at 30 June 20X0. Lapine’s profit before tax for the period is £14.8 million.
State, with reasons, the implications for the auditor’s opinion on the financial statements for the
year ended 30 June 20X0.
(2 marks)

Answer 6

Implications for auditor’s opinion
* Modified opinion
* Unable to obtain sufficient appropriate evidence
* 12.8% of profit
* Material
* Not pervasive
* Isolated to one area/inventory
* Qualified opinion/‘Except for’