Paper P7: Advanced Audit and Assurance - Kit 2016

ACCA APPROVED
CONTENT PROVIDER

ACCA Approved
Practice & Revision Kit

Paper P7
Advanced Audit and Assurance
(United Kingdom)
Practice & Revision Kit for exams from
1 September 2015 to 31 August 2016

Free access
to our Exam
Success site
Look inside


ACCA APPROVED CONTENT PROVIDER

As the irst accredited publisher of ACCA materials, BPP Learning Media has set the benchmark for
producing exceptional study materials for students and tutors alike.
Our Study Texts, Practice & Revision Kits and i-Passes (for ACCA F1/FIA FAB, ACCA F2/FIA FMA, ACCA F3/
FIA FFA and ACCA F4) are reviewed by the ACCA examining team and are written by our in-house authors
with industry and teaching experience who understand what is required for exam success.

EXAM SUCCESS SITE
To help maximise your chances of succeeding in your exams, we’ve put together a suite of exclusive ACCA
resources. Our Exam Success site provides you with access to a free digital version of this publication, as
well as extra resources designed to focus your efforts on exams and study methods.
To access the Exam Success site, please email with the subject line “Access to Exam

Success site - eBook”, including your order reference number and the name of the book you’ve bought (ie
ACCA F7 Study Text) for your access code. Once you have received your code, please follow the instructions
below:

To access the BPP ACCA Exam Success site for this material
please go to:
www.bpp.com/ExamSuccessSite
n Create a user account if you don’t already have one.

Make sure you reply to the conirmation email.
n Log in using your registered username and password.

Select the paper you wish to access.
n Enter the code you received when prompted. You will only

have to do this once for each paper you are studying.


PAPER P7
ADVANCED AUDIT AND
ASSURANCE
(UNITED KINGDOM)

BPP Learning Media is an ACCA Approved Content Provider for the ACCA qualification.
This means we work closely with ACCA to ensure our products fully prepare you for
your ACCA exams.
In this Practice & Revision Kit, which has been reviewed by the ACCA examination
team, we:







Discuss the
Ensure you are well
Provide you with
Provide you with
Provide

for revising and taking your ACCA exams
for your exam
on tackling questions
mock exams
as well as our own for selected questions

Our Passcards product also supports this paper.

FOR EXAMS FROM 1 SEPTEMBER 2015 TO 31 AUGUST 2016

P
R
A
C
T
I
C
E
&
R

E
V
I
S
I
O
N
K
I
T


First edition 2007
Ninth edition April 2015
ISBN 9781 4727 2697 1
(previous ISBN 9781 4727 1112 0)
e-ISBN 9781 4727 2749 7
British Library Cataloguing-in-Publication Data
A catalogue record for this book
is available from the British Library
Published by
BPP Learning Media Ltd
BPP House, Aldine Place
London W12 8AA
www.bpp.com/learningmedia
Printed in the United Kingdom by
RICOH UK Limited
Unit 2
Wells Place
Merstham

RH1 3LG

Your learning materials, published by BPP Learning
Media Ltd, are printed on paper obtained from
traceable, sustainable sources.

ii

All our rights reserved. No part of this publication may be
reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior
written permission of BPP Learning Media Ltd.

We are grateful to the Association of Chartered Certified
Accountants for permission to reproduce past
examination questions. The suggested solutions in the
practice answer bank have been prepared by BPP
Learning Media Ltd, except where otherwise stated.

©
BPP Learning Media Ltd
2015


Contents
Page

Finding questions
Question index .................................................................................................................................................................. v

Topic index .................................................................................................................................................................... viii

Helping you with your revision .................................................................................................................... ix
Revising P7
Topics to revise................................................................................................................................................................. x
Question practice .............................................................................................................................................................. x
Passing the P7 exam........................................................................................................................................................ xi
Exam information .......................................................................................................................................................... xvii
Examinable documents ................................................................................................................................................ xviii
Useful websites ............................................................................................................................................................. xxi
Analysis of past papers ................................................................................................................................................ xxii

Questions and answers
Questions..........................................................................................................................................................................3
Answers ..........................................................................................................................................................................85

Exam practice
Mock exam 1

Questions ............................................................................................................................................................367

Plan of attack .......................................................................................................................................................375

Answers...............................................................................................................................................................376
Mock exam 2

Questions ............................................................................................................................................................395

Plan of attack .......................................................................................................................................................403


Answers...............................................................................................................................................................404
Mock exam 3 (December 2014)

Questions ............................................................................................................................................................425

Plan of attack .......................................................................................................................................................433

Answers...............................................................................................................................................................434
ACCA’s exam answers

June 2014............................................................................................................................................................459

December 2014 ...................................................................................................................................................481

Review form

iii


A note about copyright
Dear Customer
What does the little © mean and why does it matter?
Your market-leading BPP books, course materials and e-learning materials do not write and update themselves.
People write them: on their own behalf or as employees of an organisation that invests in this activity. Copyright law
protects their livelihoods. It does so by creating rights over the use of the content.
Breach of copyright is a form of theft – as well as being a criminal offence in some jurisdictions, it is potentially a
serious breach of professional ethics.
With current technology, things might seem a bit hazy but, basically, without the express permission of BPP
Learning Media:


Photocopying our materials is a breach of copyright



Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to
Facebook or emailing them to your friends is a breach of copyright

You can, of course, sell your books, in the form in which you have bought them – once you have finished with
them. (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single
user licence basis: we do not supply 'unlock' codes to people who have bought them second-hand.
And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can
afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website. A
tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting
organisations that do. If they act illegally and unethically in one area, can you really trust them?

iv


Question index
The headings in this checklist/index indicate the main topics of questions, but questions are expected to cover
several different topics.
Questions set under the old syllabus paper Audit and Assurance Services (AAS) are included because their style and
content are very similar to that of the current P7 exam. The questions have been amended to reflect the current
exam format.

Marks

Time
allocation

Mins

Page number
Question

Answer

Parts A and B: Regulatory environment and
professional and ethical considerations
1

Lark (6/12)

15

27

3

85

2

Plant (12/12)

16

29

3

87

3

Becker (12/08)

20

36

4

90

4

Peaches (12/09) (amended)

16

29

5

94

5

Chester (12/13)

20

36

5

97

6

Smith & Co (6/08)

17

31

6

100

7

Carter (6/10)

20

36

7

104

8

Ryder (6/14)

20

36

7

107

9

Clifden (6/09)

17

31

8

110

10 Hawk Associates (AAS 6/04)

15

27

9

113

11 Grape (12/09)

36

65

9

116

12 Retriever (6/13)

25

45

10

123

13 Nate & Co (12/07)

20

36

12

128

14 Wexford (6/11)

18

32

12

132

15 Spaniel & Bulldog (6/13)

20

36

13

135

16 Raven (6/12)

15

27

14

138

17 Dragon Group (6/09)

34

58

14

141

18 Pulp (6/08)

17

31

16

146

19 Aspersion (AAS 12/01)

20

36

16

150

20 Mac (6/10)

26

47

17

154

21 Falcon

32

58

18

158

22 Juliet (6/10)

20

36

20

162

23 Apricot (12/09)

16

29

20

165

24 Poppy (12/08)

20

36

22

168

25 Magpie (6/12)

37

67

22

171

26 Beech (12/11)

18

32

24

177

27 Setter (6/13)

20

36

25

180

28 Lamont (AAS 6/07)

20

36

26

184

Part C: Practice management

Parts D and E: Audit of historical financial
information and other assignments

Finding Questions

v


Marks

Time
allocation
Mins

Page number
Question

Answer

29 Papaya (12/09)

36

65

26

186

30 Bill (6/11) (amended)

39

71

27

191

31 Mizzen (12/13)

25

45

29

197

32 Parker (6/13)

35

63

30

202

33 Lapwing (6/12)

33

59

33

208

34 Azure Airline (AAS 12/04)

35

63

35

214

35 Stow (12/13)

35

63

36

219

36 Cooper (6/14)

20

36

38

225

37 Butler (6/11) (amended)

32

58

39

229

38 Grohl (12/12)

40

72

41

234

39 Champers (6/09)

36

65

43

239

40 Grissom (6/10)

38

68

44

245

41 Jacob (6/11)

18

32

46

250

42 Waters (6/14)

25

45

46

253

43 Oak (12/11) (amended)

41

74

48

257

44 Dasset (12/13)

20

36

50

262

45 Cedar (12/11)

18

32

51

266

46 Willow (12/11) (amended)

27

49

51

269

47 Jovi (12/12)

28

50

53

272

48 Kobain (12/12)

16

29

56

276

49 Cuckoo Group

34

61

57

279

50 Bluebell

36

65

58

282

51 Robster (6/09)

17

31

60

287

52 Efex Engineering (Pilot paper) (amended)

34

61

60

289

53 Adams (6/14)

35

63

62

293

54 Sci-Tech (12/07) (amended)

34

61

64

300

55 Rosie (6/08) (amended)

36

65

66

305

56 Medix (6/08) (amended)

36

65

68

310

57 Prosperitas

18

32

70

316

58 Peter

18

32

71

318

59 Yew (12/11)

18

32

72

320

60 Snipe (6/12)

15

27

73

322

61 Nassau Group (6/11)

18

32

73

326

62 Cinnabar Group (AAS 6/02)

15

27

74

329

63 Poodle (6/13)

20

36

75

331

64 Dexter (12/08)

20

36

75

334

65 Johnston and Tiltman (AAS 6/06) (amended)

15

27

76

338

66 Lychee (12/09)

16

29

77

340

67 Marr (6/14)

20

36

77

344

68 Pluto (6/09)

17

31

78

346

Part F: Reporting

vi

Finding Questions


Marks

Time
allocation
Mins

Page number
Question

Answer

69 Burford (12/13)

20

36

79

349

70 Blod (6/08)

17

31

80

352

71 Axis & Co (Pilot Paper) (amended)

15

27

81

355

72 Dylan (12/12)

16

29

81

357

73 Bertie & Co (12/07)

20

36

82

360

Mock exam 1
Mock exam 2
Mock exam 3 (December 2014)

Finding Questions

vii


Topic index
Listed below are the key Paper P7 syllabus topics and the numbers of the questions in this Kit covering those
topics.
If you need to concentrate your practice and revision on certain topics or if you want to attempt all available
questions that refer to a particular subject, you will find this index useful.

Syllabus topic

Question numbers

A
1

20(d), 44(b)

2
3
B
1

viii

REGULATORY ENVIRONMENT
International regulatory frameworks for audit and
assurance services
Money laundering
Laws and regulations
PROFESSIONAL AND ETHICAL CONSIDERATIONS
Code of Ethics for professional accountants

2
3
C
1
2
3

4
D
1(i)

Fraud and error
Professional liability
PRACTICE MANAGEMENT
Quality control
Advertising, publicity, obtaining professional work and fees
Tendering
Professional appointments
AUDIT OF HISTORICAL FINANCIAL INFORMATION
Planning, materiality and assessing the risk of material
misstatement

1(ii)
1(iii)

Evidence
Evaluation and review

2
E
1
2
3
4
5
6
F

1

Group audits
OTHER ASSIGNMENTS
Audit-related and assurance services
Prospective financial information
Forensic audits
Internal audit
Outsourcing
Auditing aspects of insolvency (and similar procedures)
REPORTING
Auditor's reports

2
3
G
1
2
3
4

Reports to those charged with governance and management
Other reports
CURRENT ISSUES AND DEVELOPMENTS
Professional and ethical
Transnational audits
The audit of social, environmental and integrated reporting
Other current issues

Finding Questions

1, 8(a), 11(c), 13(a), 42(b)
39, 56(b)(ii), 69(a)
1(b), 2(b), 3–7, 8(c)–(d), 9, 13, 14(a),
15(a), 16, 22(b), 25(b), 35(c), 56(a), 70(b),
72(a)
15(b)–(c), 20(d), 68(a)
15(d), 68(b), 70(c)
2, 11, 12(a), 18(c), 43(b), 68(c)
4, 10
9(b), 17(b)
7, 14(a), 17(a), 33(a), 56(a), 72(a)
8(a), 14(b), 22(b), 25(a), 29–30, 32(a)–(b),
37–40, 43(a), 47–51, 52(c)–(d), 53, 54,
56(b)–(d)
18(a), 24, 47(c)
11(a), 18(b), 19, 26–28, 35(c), 36, 38(b)–
(c), 39(c), 40(c), 44(a), 46, 47(d), 52(c)–
(d), 54(b)–(c), 55(b), 60(a), 63(a), 64(a),
65(a), 66(a), 69(a)
25(a), 40, 49–50, 55(c), 59(b), 69(b)
31, 34, 41, 55(a), 73(b)–(c)
21, 23, 33(a), 37(a), 42(a)
12(b), 20(c), 31(c), 45(a)–(b), 52(a)–(b)
20(a)–(b)
8(b), 20(a)–(b), 54(a)
33(b), 37(b), 59, 60
59, 60(b), 61–62, 63(b), 64(b)–(c), 65(b),
66(b), 67(a), 68(b), 69(b), 70(c), 71(b),
73(a)

70(a)
70(a)
22(a), 45(c)
17(c)
32(c), 50(c)
22(a), 24(a), 71(a)


Helping you with your revision
BPP Learning Media – Approved Content Provider
As an ACCA Approved Content Provider, BPP Learning Media gives you the opportunity to use exam team
reviewed revision materials. By incorporating the examination team’s comments and suggestions regarding
syllabus coverage, the BPP Learning Media Practice & Revision Kit provides excellent, ACCA-approved support for
your revision.

Tackling revision and the exam
Using feedback obtained from the ACCA exam team review:


We look at the dos and don'ts of revising for, and taking, ACCA exams



We focus on Paper P7; we discuss revising the syllabus, what to do (and what not to do) in the exam, how
to approach different types of question and ways of obtaining easy marks

Selecting questions
We provide signposts to help you plan your revision.


A full question index



A topic index listing all the questions that cover key topics, so that you can locate the questions that provide
practice on these topics, and see the different ways in which they might be examined

Making the most of question practice
At BPP Learning Media we realise that you need more than just questions and model answers to get the most from
your question practice.


Our Top tips included for certain questions provide essential advice on tackling questions, presenting
answers and the key points that answers need to include.



We show you how you can pick up Easy marks on some questions, as we know that picking up all readily
available marks often can make the difference between passing and failing.



We include marking guides to show you what the examiner rewards.



We include comments from the examiners to show you where students struggled or performed well in the
actual exam.



We refer to the 2015 BPP Study Text (for exams from September 2015 to August 2016) for detailed
coverage of the topics covered in questions.



In a bank at the end of this Kit we include the official ACCA answers to the June and December 2014
papers. Used in conjunction with our answers they provide an indication of all possible points that could be
made, issues that could be covered and approaches to adopt.

Attempting mock exams
There are three mock exams that provide practice at coping with the pressures of the exam day. We strongly
recommend that you attempt them under exam conditions. Mock exams 1 and 2 reflect the question styles and
syllabus coverage of the exam; Mock exam 3 is the December 2014 paper.

Helping you with your revision

ix


Revising P7
Topics to revise
Paper P7 is a challenging higher level paper consisting of two compulsory case-study style questions in Section A
(worth a total of 60 marks) and two out of three short scenario questions in Section B.
The P7 examiner has stated that planning and risk assessment are key areas which are likely to form part of a
compulsory question. Evidence is also likely to feature in Section A. Reporting could come up in either a
compulsory or optional question (although it has tended to be optional), similarly ethical and professional issues.
Current issues could come up anywhere on the paper so it is important that students do not ignore this area and
make sure they keep up to date by reading Student Accountant and reviewing the accountancy and financial press.
It has been a feature of P7 in recent years for questions to mix together several different syllabus areas. One

consequence of this is to make it more difficult for candidates to avoid areas of the syllabus that they do not like,
because exam questions would include this area along with others that the student might be strong on,
One of the general features of Professional level papers is the availability of professional marks. These will generally
be awarded in Section A and comprise four marks. They will be awarded for the degree of professionalism with
which answers are presented. For example, if you are asked to set out your answer as a letter or a report, marks will
be awarded for presentation – using the correct heading at the start, and including an appropriate introduction and
conclusion. Other professional marks could be awarded for the form of your answer such as the structure or logical
flow of arguments, as well as your appropriate use of language.
To summarise, although this paper does contain an optional element, we strongly advise that you do not selectively
revise certain topics – any topic from the syllabus could be examined anywhere on the paper. Selective revision will
limit the number of questions you can answer and hence reduce your chances of passing.

Question practice
You should use the Passcards and any brief notes you have to revise the syllabus, but you mustn't spend all your
revision time passively reading. Question practice is vital; doing as many questions as you can in full will help
develop your ability to analyse scenarios and produce relevant discussion and recommendations.
Make sure you leave enough time in your revision schedule to practise Section A questions, as such questions are
compulsory in the exam. The requirements of Section A questions are more complex and will integrate several parts
of the syllabus, therefore practice is essential. Also ensure that you attempt all three mock exams under exam
conditions.

x

Revising P7


Passing the P7 exam
Displaying the right qualities and avoiding weaknesses
(a)

Reading time
You have 15 minutes of reading time – make sure you use it wisely. Given that Section A will consist of two
compulsory questions, worth 60 marks in total, you could spend the time analysing and planning these
questions and doing them first, and then choose and tackle the optional questions from Section B.

(b)

The following are examples of things to avoid – and note our comments about action to take in each case.

Failure to complete the paper

This problem can be avoided by ensuring that you have a very disciplined exam
technique and that you set times in which to answer questions and, when that
time is over, you move on to the next question. Lots of practice at answering
questions in timed conditions will help you to discipline yourself in this way.
Remember, it is easier to get marks at the outset of answering a question
(when all the marks are still available) than to get the last few remaining marks
for a question (when you have made all the easy points and are struggling with
the most difficult aspects of the question).

Not reading the question

We recommend that you read each question more than once. Try to force
yourself to read slowly as well. Although the exam is time-limited, reading the
question properly is a good investment.

Lack of comprehension and
analytical skills

These are higher level skills which you have to learn at this level and the best

way to enhance them is to practise as many questions as you can. In addition,
once you have completed your own answer, you should always work through
the suggested answer referring back to the question so that you can see the
links that have been made.

Lack of lower level assumed
knowledge

You should endeavour not to commence your P7 studies until you have
completed your F8/2.6 studies. It is not possible to pass P7 unless you have a
very firm understanding of basic auditing theory.

Lack of awareness of current
issues

You should ensure that you keep up to date with current issues in the auditing
and business world, by reading examiner articles as a minimum, but preferably
by keeping an eye on the accountancy press throughout your studies.

Failure to respond in a
practical/commercial way

The answer to this problem is to practice lots of questions, read other people's
answers to questions in this Kit and on the ACCA website and to try and think
about how you would respond in practice if it were one of your clients.

Lack of relevant practical
experience

You may not be able to do anything about this if you are not employed in a

relevant field. However, if you can, do. For example, if you can discuss with
your managers the necessity of getting relevant experience and they are able to
meet that need, try and obtain as much relevant experience as you can. If not,
the best you can do is follow the advice for the previous point, which should
stand you in good stead.

Inability to reach a
conclusion/make a decision

You must get into the habit of drawing conclusions where the requirement is to
do so. Again, practise questions where this is required, and, when reading
questions note whether you are required to draw a conclusion or make a
decision.

Poor exam technique/time
allocation

This point links to the first point made above. There is a great deal of guidance
concerning exam technique in this kit. Read it and put it into practice.

Revising P7

xi


Using the reading time
We recommend that you spend the first part of the 15 minutes reading time choosing the Section B questions you
will do, on the basis of your knowledge of the syllabus areas being tested and whether you can fulfil all the question
requirements. Remember that Section B questions can cover different parts of the syllabus, and you should be
happy with all the areas that the questions you choose cover. We suggest that you should note on the paper any

ideas that come to you about these questions.
However don't spend all the reading time going through and analysing the Section B question requirements in
detail; leave that until the three hours' writing time. Instead you should be looking to spend as much of the reading
time as possible looking at the Section A scenario, as this will be longer and more complex than the Section B
scenarios and cover more of the syllabus. You should highlight and annotate the key points of the scenario on the
question paper.

Choosing which questions to answer first
Spending most of your reading time on the compulsory Section A questions will mean that you can get underway
with planning and writing your answer to the Section A questions as soon as the three hours start. It will give you
more actual writing time during the one and a half hours you should allocate to it, and it's writing time that you'll
need. Comments from examiners of other syllabuses that have similar exam formats suggest that students appear
less time-pressured if they do the big compulsory questions first.
During the second half of the exam, you can put Section A aside and concentrate on the two Section B questions
you've chosen.
However our recommendations are not inflexible. If you really think the Section A questions looks a lot harder than
the Section B questions you've chosen, then do those first, but DON'T run over time on them. You must leave
yourself almost one hour and 50 minutes (108 minutes to be exact) to tackle the Section A questions. When you
come back to it, having had initial thoughts during the reading time, you should be able to generate more ideas and
find the question is not as bad as it looks.
Remember also that small overruns of time during the first half of the exam can add up to your being very short of
time towards the end.

xii

Revising P7


Tackling questions
Scenario questions

You'll improve your chances by following a step-by-step approach to Section A scenarios along the following lines.

Step 1

Read the background
Usually the first couple of paragraphs will give some background on the company and what it is
aiming to achieve. By reading this carefully you will be better equipped to relate your answers to the
company as much as possible.

Step 2

Read the requirements
There is no point reading the detailed information in the question until you know what it is going to
be used for. Don't panic if some of the requirements look challenging – identify the elements you are
able to do and look for links between requirements, as well as possible indications of the syllabus
areas the question is covering.

Step 3

Identify the action verbs
These convey the level of skill you need to exhibit and also the structure your answer should have. A
lower level verb such as define will require a more descriptive answer; a higher level verb such as
evaluate will require a more applied, critical answer. It should be stressed that higher level
requirements and verbs are likely to be most significant in this paper.
Action verbs that are likely to be frequently used in this exam are listed below, together with their
intellectual levels and guidance on their meaning.
Intellectual level
1

Define

Give the meaning of

1

Explain

Make clear

1

Identify

Recognise or select

1

Describe

Give the key features

2

Distinguish

Define two different terms, viewpoints or
concepts on the basis of the differences between
them

2

Compare and
contrast

Explain the similarities and differences between
two different terms, viewpoints or concepts

2

Contrast

Explain the differences between two different
terms, viewpoints or concepts

2

Analyse

Give reasons for the current situation or what has
happened

3

Assess

Determine the strengths/weaknesses/
importance/ significance/ability to contribute

3

Examine

Critically review in detail

3

Discuss

Examine by using arguments for and against

3

Explore

Examine or discuss in a wide-ranging manner

3

Criticise

Present the weaknesses of/problems with the
actions taken or viewpoint expressed, supported
by evidence

Revising P7

xiii


Intellectual level

3

Evaluate/critically
evaluate

Determine the value of in the light of the
arguments for and against (critically evaluate
means weighting the answer towards
criticisms/arguments against)

3

Construct the case

Present the arguments in favour or against,
supported by evidence

3

Recommend

Advise the appropriate actions to pursue in terms
the recipient will understand

Also make sure you identify all the action verbs; some question parts may have more than one.

Step 4

Identify what each part of the question requires
Think about what frameworks or theories you could choose if the question doesn't specify which one

to use.
When planning, you will need to make sure that you aren't reproducing the same material in more
than one part of the question.
Also you're likely to come across part questions with two requirements that may be at different
levels; a part question may for example ask you to explain X and discuss Y. You must ensure that you
fulfill both requirements and that your discussion of Y shows greater depth than your explanation of
X (for example by identifying problems with Y or putting the case for and against Y).

Step 5

Check the mark allocation to each part
This shows you the depth anticipated and helps allocate time.

Step 6

Read the whole scenario through, highlighting key data
Put points under headings related to requirements (eg by noting in the margin to what part of the
question the scenario detail relates).

Step 7

Consider the consequences of the points you've identified
Remember that you will often have to provide recommendations based on the information you've
been given. Consider that you may have to criticise the code, framework or model that you've been
told to use. You may also have to bring in wider issues or viewpoints, for example the views of
different stakeholders.

Step 8

Write a brief plan

You may be able to do this on the question paper as often there will be at least one blank page in the
question booklet. However any plan you make should be reproduced in the answer booklet when
writing time begins.
Make sure you identify all the requirements of the question in your plan – each requirement may have
sub-requirements that must also be addressed. If there are professional marks available, highlight in
your plan where these may be gained (such as preparing a report).

Step 9

Write the answer
Make every effort to present your answer clearly. The pilot paper and exam papers so far indicate that
the examiner will be looking for you to make a number of clear points. The best way to demonstrate
what you're doing is to put points into separate paragraphs with clear headers.

xiv

Revising P7


Discussion questions
Remember that depth of discussion will be important. Discussions will often consist of paragraphs containing 2-3
sentences. Each paragraph should:


Make a point



Explain the point (you must demonstrate why the point is important)



Illustrate the point (with material or analysis from the scenario, perhaps an example from real-life)

In this exam a number of requirement verbs will expect you to express a viewpoint or opinion, for example
construct an argument, criticise, evaluate. When expressing an opinion, you need to provide:


What the question wants. For instance, if you are asked to criticise something, don't spend time discussing
its advantages. In addition if a scenario provides a lot of information about a situation, and you are (say)
asked to assess that situation in the light of good practice, your assessment is unlikely to be favourable.



Evidence from theory or the scenario – again we stress that the majority of marks in most questions will be
given for applying your knowledge to the scenario.

Revising P7

xv


Gaining the easy marks
Knowledge of the core topics that we list under topics to revise should present you with some easy marks. The pilot
paper suggests that there will be some marks available on certain part questions for definitions, explanations or
descriptions that don't have to be related to the scenario. However don't assume that you can ignore all the
scenarios and still pass!
As P7 is a Professional level paper, 4 professional level marks will be awarded. Some of these should be easy to
obtain. The examiner has stated that some marks may be available for presenting your answer in the form of a
letter, presentation, memo, report or briefing notes. You may also be able to obtain marks for the style and layout of

your answer.
Reports should always have an appropriate title. They should be formally written, with an introductory paragraph
setting out the aims of the report. You should use short paragraphs and appropriate headings, with a summary of
findings as a conclusion.
Memoranda and Briefing notes should have the following four things at the beginning:
Subject; name of recipient; name of author; date
The language can be less formal than a report but the content should still have an introduction and conclusion,
and be divided into small paragraphs with appropriate headings.
Letters should be addressed appropriately to the correct person and be dated. They should have a short
introductory paragraph, a conclusion and should be in a formally writing style. Letters beginning with 'Dear
Sir/Madam' should end with 'Yours faithfully'.

xvi

Revising P7


Exam information
The exam paper
The exam is a three-hour paper consisting of two sections.
Section A will consist of two compulsory 'case study' style questions. These will include detailed information
including, for example, extracts from financial statements and audit working papers. The questions will include a
range of requirements covering different syllabus areas.
Section B questions will tend to be more focused towards specific topic areas, such as ethical issues and auditor's
reports. Short scenarios will be provided as a basis for these questions.
Number of
marks
Section A:
Two compulsory questions:
Question one

35
Question two
25
Choice of two from three questions (20 marks each)
40
Section B:
100

Revising P7

xvii


Examinable documents
Knowledge of new examinable regulations issued by 31st August will be examinable in examination sessions being
held in the following calendar year. Documents may be examinable even if the effective date is in the future. This
means that all regulations issued by 31st August 2014 will be examinable in the September 2015 to June 2016
examinations.
The study guide offers more detailed guidance on the depth and level at which the examinable documents should be
examined. The study guide should therefore be read in conjunction with the examinable documents list.
Accounting Standards
The accounting knowledge that is assumed for Paper P7 is the same as that examined in Paper P2. Therefore,
candidates studying for Paper P7 should refer to the Accounting Standards listed under Paper P2.
Note. P7 will only expect knowledge of accounting standards and financial reporting standards from Paper P2.
Knowledge of exposure drafts and discussion papers will not be expected.
Title
International Standards on Auditing (ISAs) (UK and Ireland)
Summary of changes to the new ISAs (UK and Ireland)
Glossary of terms 2010

xviii

ISA 200

Overall objectives of the independent auditor and the conduct of an audit in accordance with ISAs
(UK and Ireland)

ISA 210

Agreeing the terms of audit engagements

ISA 220

Quality control for an audit of financial statements

ISA 230

Audit documentation

ISA 240

The Auditor's responsibilities relating to fraud in an audit of financial statements

ISA 250A

Consideration of laws and regulations in an audit of financial statements

ISA 260

(Revised – October 2012) Communication with those charged with governance

ISA 265

Communicating deficiencies in internal control to those charged with governance and
management

ISA 300

Planning an audit of financial statements

ISA 315

(Revised – June 2013) Identifying and Assessing the Risks of Material Misstatement through
Understanding the Entity and Its Environment

ISA 320

Materiality in Planning and Performing an Audit

ISA 330

The Auditor's Responses to Assessed Risks

ISA 402

Audit Considerations Relating to an Entity Using a Service Organisation

ISA 450

Evaluation of Misstatements Identified During the Audit

ISA 500

Audit Evidence

ISA 501

Audit Evidence – Specific Considerations for Selected Items

ISA 505

External Confirmations

ISA 510

Initial Audit Engagements – Opening Balances

ISA 520

Analytical Procedures

ISA 530

Audit Sampling

ISA 540

Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related
Disclosures

ISA 550

Related Parties

ISA 560

Subsequent Events

ISA 570

Going Concern

ISA 580

Written Representations

Revising P7


Title
ISA 600

Special Considerations – Audits of Group Financial Statements (Including the Work of
Component Auditors)

ISA 610

Using the Work of Internal Auditors

ISA 620

Using the Work of an Auditor's Expert

ISA 700

(Revised – June 2013) The independent auditor's report on financial statements

ISA 705

(Revised – October 2012) Modifications to the Opinion in the Independent Auditor's Report

ISA 706

(Revised – October 2012) Emphasis of Matter Paragraphs and Other Matter Paragraphs in the
Independent Auditor's Report

ISA 710

Comparative Information – Corresponding Figures and Comparative Financial Statements

ISA 720A

(Revised – October 2012) The auditor's responsibilities relating to other information in
documents containing audited financial statements

ISA 720B

The auditor's statutory reporting responsibility in relation to directors' reports
International Standards on Quality Control (ISQC)

ISQC 1

Quality control for firms that perform audits and reviews of financial statements and other
assurance and related services engagements
Practice Notes (PNs)

PN 16

Bank reports for audit purposes in the United Kingdom (Revised – February 2011)

PN 23

Special considerations in Auditing Financial Instruments

PN 25

Attendance at stocktaking

PN 26

(Revised) Guidance for smaller entity documentation (December 2009)
Ethical Standards (ESs)

ES

(Revised – December 2010) Provisions available for small entities

ES1

(Revised – December 2011) Integrity, objectivity and independence

ES2

(Revised – December 2010) Financial, business, employment and personal relationships

ES3

(Revised – December 2009) Long association with the audit engagement

ES4

(Revised – December 2010) Fees, remuneration and evaluation policies, litigation, gifts and
hospitality

ES5

(Revised – December 2011) Non-audit services provided to audit clients
Glossary (Revised December 2010)
Bulletins

2008/01

Audit issues when financial market conditions are difficult and credit facilities may be restricted

2008/06

The 'senior statutory auditor' under the United Kingdom Companies Act 2006

2008/10

Going Concern Issues During the Current Economic Conditions

2009/4

Developments in corporate governance affecting the responsibilities of auditors of UK companies

2010/1

XBRL tagging of information in audited financial statements – guidance for auditors

2010/2

(Revised) Compendium of illustrative reports on United Kingdom private sector financial
statements for periods ended on or after 15 December 2010. Revised example reflecting the
requirements of ISA (UK and Ireland) 700 (Revised June 2013)

Bulletin 4

Recent Developments in Company Law, The Listing Rules and Auditing Standards that affect
United Kingdom Auditor’s Reports.
Statement of Standards for Reporting Accountants (SSRAs)

ISRE (UK and
Ireland) 2410

Review of Interim Financial Information Performed by the Independent Auditor of the Entity
Exposure Drafts (EDs) (UK and Ireland)
FRC Invitation to Comment on IAASB Exposure Draft (July 2013) Reporting on Audited Financial
Statements: Proposed new and Revised International Standards on Auditing (ISAs)

Revising P7

xix


Title
FRC Invitation to Comment on IAASB Exposure Draft (April 2014) ISA 720 (Revised) The
Auditor’s Responsibilities Relating to Other Information
FRC Invitation to Comment on IAASB Exposure Draft (May 2014) Proposed changes to the
International Standards on Auditing (ISAs): Addressing Disclosure in the Audit of Financial
Statements
Other Documents
ACCA's 'Code of Ethics and Conduct'
IESBA's 'Code of Ethics for Professional Accountants'
The UK Corporate Governance Code (Revised September 2012)
FRC Guidance on Audit Committees (Revised September 2012)
FRC Going Concern and Liquidity Risk : Guidance for Directors of UK Companies 2009
Scope and Authority of Audit and Assurance Pronouncements March 2013
ACCA's Technical Factsheet 145 – Anti-Money Laundering (Proceeds of Crime and Terrorism)
Guidance for the Accountancy Sector
IAASB Practice Alert Challenges in Auditing Fair Value Accounting Estimates in the Current
Market Environment (October 2008)
IAASB Applying ISAs Proportionately with the Size and Complexity of an Entity (August 2009)
IAASB Auditor Considerations Regarding Significant Unusual or Highly Complex Transactions
(September 2010)
FRC Briefing Paper : Professional Scepticism (March 2012)
IAASB A Framework for Audit Quality: Key Elements that Create an Environment for Audit Quality
(February 2014)
Note. Topics of exposure drafts are examinable to the extent that relevant articles about them are published in
Student Accountant.

xx

Revising P7


Useful websites
The websites below provide additional sources of information of relevance to your studies for P7 Advanced Audit
and Assurance.


www.accaglobal.com
ACCA's website. The students' section of the website is invaluable for detailed information about the
qualification, past issues of Student Accountant (including technical articles) and a free downloadable
Student Planner App.



www.bpp.com
Our website provides information about BPP products and services, with a link to the ACCA website.



www.ft.com
This website provides information about current international business. You can search for information and
articles on specific industry groups as well as individual companies.



www.ifac.org

This site has links to the International Auditing and Assurance Standards Board for up-to-date information
on auditing issues.

Revising P7

xxi


Analysis of past papers
The table below provides details of when each element of the syllabus has been examined and the question number
and section in which each element appeared.
Covered
in Text
chapter

D 14

J 14

D 13

J 13

D 12

J 12

D 11

J 11

D 10

J 10

D 09

J 09

D 08

Regulatory environment
1

International regulatory
frameworks for audit and
assurance services

1

Money laundering

1

Laws and regulations

2(d)

3(a)

2(c)

3 (b)

4(b)

Professional and ethical
considerations
2

Code of ethics for
professional accountants

3

Fraud and error

3

Professional liability

1(d), 4(c)-(d)
4(b)

1(c),
4

1(b),
2(a)

1(a),
3(b)

1(b),
3(b), 4

2(b)

3(a)

2(a),
4(b)

4(a)

3(b),
4

4(b)

2(d)

3(b)

4

4

5(a)

5(b)

Practice Management
4

Quality control

5

Advertising, publicity,
obtaining professional
work and fees

5

Tendering

5

Professional appointments

5(a)

2(a)

1(b)

2(b)

1(b)

4(a)

4(a)

5(c)

4(b)

3(a)

2(b),
2(c)
3(a)

4(a)

2(a),
2(c)

Assignments
6,7,8,
9,10



11

1(a)-(c), 1, 3, 1, 3, 5 1(a), 3, 1, 2,
1(a),

1(a), 1, 2(a), 1(a), 1, 3(b),
1,
1(a),
2, 3(a), 4(a)-(b)
4 (b), 3(a)-(b), 3(a)-(b), 2(a)-(b), 3(b),
2(c),
5(a) 2(a)-(b), 1(b),
5(b)
5(b-c) 5(a)
5(a) 3(a)-(c), 5(b) 3(a)-(c),
5
1(c),
5(a)-(b)
3(a),
Planning, materiality
3(b)
and assessing the
risk of misstatement

The audit of historical
financial information
including:



Evidence



Evaluation and review

Group audits

1

1(b)

5(a)

1(a)

1(a),
1(b),
3, 5

2(d)

Other assignments

xxii

12

Audit-related services

12

Assurance services

13

Prospective financial
information

2(a)

2(a)

2(a)

13

Insolvency

2(b)

2(b)

2(b)

14

Forensic audits

15

Social and environmental
auditing

16

Internal audit and
outsourcing

Revising P7

2

4

3(b)
2(a),
2(b)

2(b)

3(c)

3(b)
3

4(a)–(b)

2(c)

3(b)

2(a),
2(b)
4(a)

2
1(c)

2(b),
(b)


Covered
in Text
chapter

D 14

J 14

D 13

J 13

D 12

J 12

D 11

J 11

D 10

J 10

5

5(b)

5

5

5(b)

5(a)-(b)

5(a)

5(a)

5(a)

D 09

J 09

D 08

Reports
17

Auditor's reports

17

Reports to management

17

Other reports

5(b)

5(b)
3(b)

Current issues and
developments
1,2,3

Professional, ethical and
corporate governance

6

Information technology

11

Transnational audits

15

Social and environmental
auditing

18

Other current issues

3(b)

4(c)

4(b)

4

2(d)

5(a)

4(a)

3(a)

4(a)

5(a)

IMPORTANT!
The table above gives a broad idea of how frequently major topics in the syllabus are examined. It should not be

used to question spot and predict for example that Topic X will not be examined because it came up two sittings
ago. The examiner's reports indicate that the examiner is well aware some students try to question spot. You can
assume that she will therefore take care to ensure that the exams avoid falling into a predictable pattern, and may
examine the same topic two sittings in a row for example.

Revising P7

xxiii