TUTOR: MISS AMANI SUPIAN

Let’s pass AAA!

TOPIC: PROFESSIONAL MARKS

Professional marks are allocated as follows:

Question Question Question Total marks

1 2 3
Technical marks 40 20 20 80

Professional marks 10 5 5 20

Total marks 50 25 25 100

Marks will be assessed based on 4 key professional skills:

1 3

2 4

Well explained
answers will naturally
score professional
marks

Page | 1
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

1 Professional skills: COMMUNICATION

1. This skill will be tested only in QUESTION 1

2. Allocated professional marks for this skill is 4 MARKS
3. How to score 4 MARKS:

Marks Details Illustration to score

marks
1m Format & structure
Notes (i)
1m Style & language

1m Adhering to requirements Notes (ii)

1m Effectiveness (relevant & linked/tailored to the scenario) Notes (iii)

Notes (i) – prepare BRIEFING NOTES format

Exhibit 1: Partner’s email

To: Audit manager

From: Norma Star, Audit engagement partner
Subject: Audit planning for the Crux Group
Date: 1 July 20X5

Hello

I have provided you with some information which you should use to help you with planning the audit
of our new client, the Crux Group (the Group), for the financial year ending 30 September 20X5. Based
on the analysis I have done on this industry, it is appropriate for overall materiality to be based on the
profitability of the Group as this is a key focus for investors and providers of finance.

I require you to prepare briefing notes for my own use, in which you:

(a) Using the information in all exhibits, evaluate and prioritise the significant audit risks to be
considered in planning the Group audit.

Note: You are NOT required to consider audit risks relating to foreign exchange transactions
and balances as this will be planned separately. (25 marks)

(b) Design the principal audit procedures to be performed on the segmental information relating to
the Group’s revenue. (5 marks)

Using the information in Exhibit 4:

(c) Evaluate the matters to be considered in deciding whether Pegasus & Co should accept the
engagement to provide advice on the Group’s social and environmental information. (10 marks)

Thank you

Page | 2
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

Briefing Notes
To: Norma Star, Audit engagement partner
From: Audit manager
Subject: Audit planning for the Crux Group
Date: 1 July 20X5

Introduction
This briefing notes include evaluation of audit risks to be considered in
planning the Group audit risk which has been prioritised accordingly based on
its significance, principal audit procedures to be performed on the segmental
information relating to the Group’s revenue and matters to be considered in
deciding whether Pegasus & Co should accept the engagement to provide
advice on the Group’s social and environmental information. (Copy key
requirements from question requirement + include keyword “prioritise”
(applicable for RMM/AR ONLY)

(a) Audit risks To insert sub-heading,

where relevant

(b) Audit procedures to be performed on the segmental information

(c) Matters to be considered in deciding whether Pegasus & Co should

accept the engagement to provide advice on the Group’s social and
environmental information.

Conclusion
This briefing notes includes a number of significant audit risk such as risks
relating to xx, xx, xx. Due to the risks identified, audit team with appropriate
expertise need to be assigned. This briefing notes also cover principal audit
procedures to be performed on the segmental information relating to the
Group’s revenue and matters to be considered in deciding whether Pegasus
& Co should accept the engagement to provide advice on the Group’s social
and environmental information.

 Enough with Bold, no need to waste time to underline and etc your answer

Page | 3
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

Notes (ii) – Adhering to requirements

Please adhere to all requirements.

If you accidentally write business risk answer when questions

ask about audit risk or write any answers that against the
question requirements, then you’re going to lose this 1 mark.

Page | 4
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

Notes (iii) – Effectiveness (relevant & linked/tailored to the scenario)

Sample answer 1:

Revenue recognition

Revenue should be recognized when performance obligation is satisfied.

There could be a risk that revenue is recognized too early which is before
performance obligation is satisfied.

This will cause revenue to be overstated and deferred income to be

understated.

VS

Sample answer 2:

Revenue recognition

The company offers a membership scheme whereby, for an annual

subscription, members can use the facilities at any of the centres.

IFRS 15 requires revenue to be recognized when performance obligation has

been satisfied over time which in this case revenue likely to be recognized
over the membership period.

Risk is that the company may recognize the annual subscription in full upon
payment by the members as its revenue instead of spreading it over 1 year.

This could lead to the overstatement in revenue and understatement in

deferred income.

Page | 5
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

2 Professional skills: ANALYSIS AND EVALUATION

- Candidates need to demonstrate their assessment of a given scenario and the

application of their knowledge.

TIPS Where relevant, to link information from various parts of

the scenario // different exhibits

Example:

incorporate any relevant financial information (calculation

for materiality // trend // ratio) from Exhibit: SOFP / SOPL
to support your risk answer or etc.

- Examples of issues to be assessed:

 Financial reporting = Accounting standard
 Ethical
 Legal and regulatory issue = NOCLAR related
 Impact of those issues on audit process

- Ensure any recommendation for further actions are relevant to the point of the
engagement (Planning / completion / reporting stage)

- Able to analyse the impact of a course of action, for example, if client does not amend
a material misstatement in the FS, candidates need to be able to explain the
implications on the auditor’s report.

- Identifying where data or information appears to be omitted or where further analysis

is needed to make a recommendation is also important, as that means a full evaluation
cannot be performed, for example, understanding the basis of a provision and
understanding how the audit team can gain sufficient and appropriate audit evidence
in the circumstances.

Page | 6
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

3 Professional skills: SCEPTICISM

- Candidates are expected to demonstrate professional scepticism and judgement when

assessing the information given in the scenarios. This is key when asked to evaluate the
significant risks in a scenario, or challenging information which has been provided.

- Candidates need to prioritize risks (audit risks / risks of material misstatement only)
in their answers and in a brief conclusion, justifying their decision.

Sample answer 1:

Revenue recognition

The company offers a membership scheme whereby, for an annual subscription, members
can use the facilities at any of the centres.

IFRS 15 requires revenue to be recognized when performance obligation has been satisfied
over time which in this case revenue likely to be recognized over the membership period.

Risk is that the company may recognize the annual subscription in full upon payment by
the members as its revenue instead of spreading it over 1 year.

This could lead to the overstatement in revenue and understatement in deferred income.

Risk related to revenue recognition is to be considered as a significant risk since the area
likely to be associated with fraud risk.

TIPS In Question 1, also to reflect this

skill in “Conclusion” section.

Please refer Illustration Notes (i)

under “COMMUNICATION” skill.

- It is not essential to place all of the risks in order of importance. Instead, to highlight
the most important risks in the scenario.

- Candidates need to review the audit work and evidence obtained during the
engagement and assess whether it is sufficient to support a decision or information in
an auditor’s report.

Page | 7
 TUTOR: MISS AMANI SUPIAN
Let’s pass AAA!

4 Professional skills: COMMERCIAL ACUMEN

- Candidates may be asked to demonstrate their commercial acumen by assessing the

business risks affecting the client at the audit planning stage.

Example:
Specific regulatory requirements or the impact of competition on future business.

- Candidates need to look at external constraints and opportunities where relevant and
also consider the validity/reasonableness of any assumption that the organisation may
be working under, given the external environment.

- Candidates may show commercial acumen by assessing the impact of the engagement
on the audit firm. This may be relevant in a scenario which requires an evaluation of
whether to accept an engagement.

Example:
Whether the audit firm is happy to be associated with the client or industry

EXTRA ADVICE related to professional skills

- Demonstrating professionalism is not about linguistic eloquence or having an

extensive vocabulary or having perfect grammar, it is about the ability to express
points clearly, factually, and concisely and show credibility in what you are saying.

- Avoid repeating points already made. Professionally competent candidates do not

repeat information. They may reinforce a previous point, but this is usually made as a
development of a point rather than repetition.

- Make sure to include the most important & crucial points relating to the
requirement. Use your judgement to consider which points are the most important
and only include additional less important points if you are not sure you have made
enough valid points to achieve all the technical marks available for the requirement.

- Try not to include unnecessary information or make unsupported points. Bland

statement with no application does not demonstrate professionalism.

- Address the requirement. Answering the question asked is an indication of ability of

a candidate to read and understand instructions which represents demonstration of
professionalism expected in the workplace.

- Present your answers in a professional manner –> leave a line between each point.

Page | 8