Paper 2.6 – Hot Topics for June 2007 exams

Paper 2.6 – Hot Topics for June 2007 exams

Professional ethics including conflict of interests (see June 2003 Q3a) and confidentiality (See

Dec 2003 Q6).

Factors to consider before accepting an engagement (a fairly standard question that every student

must prepare) plus appointment clearance procedures and engagement letter (content, must we

send it every year?) – See new Pilot Paper F8 Q2, June 2004 Q2.

Internal audit (IA) will be featured. The role of IA in risk management and organizational control

(See Dec 2001 exam qn). IA vs External Audit, scope and objectives of IA (See old Pilot Q3)

Probably one question on risk assessment, identify risks and what audit procedures will you

perform to address the risks. Could combine with analytical procedures (see below), given two

years of BS and P&L, use AP to comment on the company’s performance and identify the risks

and then what you will do in response to those risks. (Practice lots of risk questions). See

management of risk – See June 2004 Q1. (can combine with role of IA in risk mgt, Dec 2002 Q6)

The control objectives and internal control procedures you would expect to find in a purchase or

payroll systems. Recommendations for improving weaknesses found. Theory of IC important too!

The substantive tests used to gather audit evidence in respect of major assertions (completeness,

existence, valuation and allocation, accuracy, cutoff), especially in relation to accounts receivable

and creditors/accrual audit. See Pilot F8 Q1 (Important to note Alan’s style of procedures)

Prepare for contingent liability, provision audit. (see June 2003 Q3b)

Review stock audit – see perpetual inventory system, stocktake instruction (See June 2003 Q2

and June 2004 Q3).

Corporate governance (benefits, why the codes are not compulsory) audit committee (functions,

how it increase EA effectiveness).

Review vs Audit (See Dec 2001 Q5).

The use of analytical procedures during the planning, evidence gathering and review stages of the

audit process. (IMPORTANT TOPIC!) – do all past papers with this AP topic.

Working papers (types - permanent vs current file, content of WP, and what makes a good set of

WP, see the latest Feb 07 article on WP).

Responsibilities of auditors and directors over detection of fraud. Actions by auditors if fraud

discovered.

Never give up audit reporting. Must know the types of report and what report to give under

different situations. Link up fraud and audit report. (See June 2002 Q3)

Audit of small company (See Dec 2004 Q5)

Take a look at the entire new Pilot Paper for the new syllabus Paper F8 (it’s set by Alan!)

** LOOK OUT FOR ANY ARTICLES BY ALAN, maybe one more nearer the exam. This is the

fifth exam by Alan. The above topics are just my GUESSES. Use at own risk!

Best Of Luck For the Exams