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

ESRA to Drive European Sustainability Reporting

Helle Bank Jørgensen, chair of ESRA and Partner with PricewaterhouseCoopers explained: “The launch is very timely as more and more companies disclose how they comply with the growing demand from stakeholders to take responsibility and operate transparently, by issuing sustainability reports outlining their social and environmental policies and performance.”
The aim of this new, exciting ESRA project is to improve sustainability reporting in Europe. Each European participant (all committed sustainability experts) provides a summary of their respective country’s reporting developments. These reports, along with key regional statistics provided by Corporate Register, have today been launched on the new ESRA website – www.sustainabilityreporting.eu

Robert Strauss, head of unit in DG Employment at the European Commission says: “This is a particularly useful project as it acts as an information source for anyone wanting information on European sustainability reporting. It also drives performance improvements and enables countries and individual reporters to compare their performance with other reporting regions and potentially learn new best practice methods and trends that could be implemented in their own reporting.”

Participating countries in this pilot year are the UK, France, Portugal, Switzerland, Belgium, Russia Austria, Denmark, Finland, Ireland, Italy, Netherlands and Sweden, along with a contribution from Robert Strauss describing the overall situation in Europe. There are plans to invite other European countries to participate in the 2007 project.

Vicky McAllister, social and environmental project co-ordinator at ACCA and the UK’s participant in ESRA says “These reports will be useful for companies, governments and assurance providers to benchmark sustainability reporting practices against other countries, for example, there is a clear trend towards integrated financial and sustainability reporting, to varying degrees for each country. The UK is one of the countries who are moving towards this method of reporting, with many large listed companies including detailed sustainability information in their Annual Reports, some even integrating their entire report. SRI analysts can also consult the website to get an overall picture of which European countries are ahead in the field of sustainability reporting”

Triumvirate Join Forces for Indian Training

The diploma provides extensive knowledge about the concepts, principles and applications of international accounting standards in the marketplace. Starting April, the staff will be trained by specialist finance and management tuition providers from GTG.

ACCA is the largest and fastest-growing global professional accountancy body and has 296,000 students and 115,000 members in 170 countries.

Commenting on this initiative, Piyush Mehta, Senior Vice President & HR Leader, Genpact said, “Genpact is pleased to offer its employees in India access to an internationally recognised qualification, in partnership with ACCA and GTG. This programme provides our employees with the platform to further their domain knowledge and augment their understanding of international accounting standards. This alliance is yet another step in our quest to facilitate growth and excellence among Genpact professionals.”

Andrew Steele, Head of ACCA’s Strategic Business Unit - Middle East and South Asia, said: “Modern day accountants are aware that the profession’s focus is shifting from national to international standards. As the business world shrinks, this Diploma equips financial professionals with the necessary knowledge and skills to enable them to operate even more successfully on the international stage.

The benefits of the DipIFR are therefore clear for a company such as Genpact, which has a global outlook and reputation. By signing-up its staff to study for the DipIFR, Genpact is investing in its people. It is also ensuring that the company continues to play its important role in a competitive global marketplace.”

Get Through Guides’ CEO, Vandana Saxena Poria said, “It is wonderful to see global companies in India realising the importance of IFRS training. GTG’s training programme will ensure that Genpact staff will not only learn international accounting standards, but are able to competently and confidently apply the standards with the same skill level as a seasoned IFRS professional.”
ACCA has designed the programme to be flexible, so that the diploma can be completed in three to six months. The candidates enrolled in this programme are assessed by a single three hour examination. Any accounting practitioner or auditor, qualified in accordance with national accounting standards, is eligible to take the qualification.

For further detail of Genpact and GetThroughGuides, see:
http://www.imakenews.com/eletra/gow.cfm?z=accamember%2C174483%2Cb4pWgTbs%2C1404845%2Cb9kLq7P

Salaries Lift as Professional Shortages Bite

There is a consensus across the recruitment market that accountants need to develop additional skills to attract the highest possible salaries. Recent research from the UK's Association of Graduate Recruiters concluded that many job vacancies remain unfilled because employers look for stronger 'soft skills' from candidates, particularly in communications abilities.
Ian Graves, managing director for continental Europe of consultants Robert Half International, explained: “The traditional model of the accountant has changed. Today's accountants not only need financial acumen, but must also find a balance between leadership and managerial skills.”
A survey for Robert Half found that managers nominated communications skills (13%) and an open minded attitude (12%) as the most important attributes to develop. These were regarded as far more important than credit control management (named by 4%), risk management (2%) or corporate governance (1%).

Chris Cole, managing director of recruitment consultants Finance Professionals, said that several factors had driven up salaries. “There is a demographic shortage of candidates,” he argued, “with a shortage of candidates compared with peak years. There has been an increase in regulation – the Sarbanes-Oxley Act, MiFID, plus IFRS, and companies have become more aware of the need for stronger controls – and economic growth. That means a well qualified accountant with robust skills and who can work well with others can charge a premium.” Cole calculates that salaries have typically risen 10% to 20% in the last three years.

According to the annual survey of another consultancy, Robert Walters, “2006 [in London] has been characterised by a notable shortage of newly qualified accountants entering the job market.” Bonus packages have increased by 15% for newly qualifieds and by 50% for senior accountants. Employers have found the recruitment of internal auditors a particular problem, says Robert Walters.