ACCA F8 Audit Test - Answers

F8 Answers to Revision Test!
Answer 1
Which of the following is a test of control and which a substantive test?!
ToC
ST
20 purchase invoices for expenses amounts are traced to debit entries in the
appropriate nominal ledger accounts.
Expenses are compared to similar expenses in the previous year.
20 purchase invoices are inspected to see if they had been stamped

Approved for payment by the chief accountant
20 cars are inspected to see if they exist

15 Capital expenditure authorisations for purchases over $1,000 are
inspected to see if they have been signed-off by the finance director
15 capital expenditure invoices are traced to the appropriate non-current

asset and VAT accounts
Depreciation calculations are re-performed by the auditor
10 records in the fixed asset register are inspected to verify that the assets
were physically inspected within the last 12 months.
The receipt of goods into the factory is observed to ensure that deliveries
are counted by staff upon receipt
The auditor inspects inventory to see if any appears damaged.
A ToC has to test a control. The auditor tracing amounts, comparing amounts, inspecting
assets are not internal controls!
Answer 2
Total assets = $10m. What is the preliminary estimation of materiality?!
1 2% ie $100,000 to $200,000!
Answer 3
If a preliminary estimation of materiality is $2m, is performance materiality more likely to be
$1m or $3m?!
$1m performance materiality is a more rigorous test!
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Answer 4
An internal control system is found not to be operating effectively. Which of the following is
the appropriate audit response?!
(a)!
(b)!
Carry out more tests of control!

Carry out more substantive tests !
Answer 5
Which three of the following terms are the odd ones out?!
Honesty, objectivity, confidentiality, independence, secrecy, professional competence and
due care, professional behaviour, integrity!
!
[Note: see the ACCAs fundamental ethical principles]!
Answer 6
The question Can non-current assets be bought without proper authorisation? is an
example of:!
(a)!
(b) !
A control objective !
A control procedure !
and would the question be found on an!
(a)
ICQ!
(b)
ICEQ? !
Answer 7
What are the preconditions of an audit?!
!
!
!
(a) An acceptable financial reporting framework!

(b) Management accepts the premise of an audit!
Answer 8
Are the following methods of sampling statistical or non-statistical?!
Statistical
Non-statistical
Block sampling
Monetary unit sampling
Random sampling
Haphazard sampling
Answer 9
Fill in the blanks:!
Internal auditors
External auditors
Report to?
Management/audit
committee
Members
Employed by?
Company, management/
audit committee
An independent audit firm
Work determined by?
Management/audit
committee
Statute, ISAs, IFAC
Purpose of work?
Test internal control, value

for money audits,
investigate fraud almost
anything managements
requires.
To collect sufficient
appropriate audit evidence
to be able to give
reasonable assurance (or
otherwise) that the FS are
free of material
misstatement
Answer 10
What are the 5 elements of an assurance engagement?!
(a)
(b)
(c)
(d)
(e)
!
!
!
A three party arrangement (responsible party, person to whom to report, practitioner)!

Suitable criteria!
Sufficient appropriate evidence!
Appropriate subject matter!
A written report in the prescribed form!
Answer 11
Indicate the relevance of the following list of assertions to the audit of
account balances, transactions and events, and presentation and disclosure:!
!
!
Period end
balances
Transactions and
events
Presentation and
disclosure
Accuracy
Completeness
Cut-off
Allocation
Existence
Classification
Occurrence
Valuation
Rights and
obligations
Answer 12
Is the following statement true or false? !
A contingent liability is caused by a future event. !
False. It relates to a past event whose outcome will only be known upon some future
event!
Answer 13
What is wrong with the following description of an audit procedure? !
Inspect the cash book for amounts received after year end in respect of amounts
owing at year end. !
Audit procedures should state what assertion they are designed to verify.!
Answer 14
Could a sharp fall in sales after year end be an adjusting event?!
Yes, it could be. It might indicate that inventory at year end is not saleable and so it
should be written down.

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F8 Answers to Revision Test!

Expenses are compared to similar expenses in the previous year.

20 purchase invoices are inspected to see if they had been stamped

20 cars are inspected to see if they exist

15 capital expenditure invoices are traced to the appropriate non-current

Depreciation calculations are re-performed by the auditor

The auditor inspects inventory to see if any appears damaged.

Carry out more tests of control!

[Note: see the ACCAs fundamental ethical principles]!

and would the question be found on an!

(a) An acceptable financial reporting framework!

Monetary unit sampling

An independent audit firm

Work determined by?

Statute, ISAs, IFAC

Test internal control, value

A three party arrangement (responsible party, person to whom to report, practitioner)!

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