P7: Advanced Audit & Assurance (INT)

2 Syllabus AAA (P7) CR (P2) AA (F8)

3 Relational Diagram of main capabilities Regulatory environment (A) Current issues and development (G) Practice management (C) Professional and ethical considerations (B) Audit of historical financial information (D) Other assignments (E) Reporting (F)

4 The three-hour exam consists of five questions, within Sec A and Sec B Section A  This section consists of two compulsory 'case study' style questions,  together worth 50 to 70 marks.  For each case study question, a range of requirements will be set e.g. it could contain requirements on planning, evidence, and ethics. Section B  This section will be worth a total of 30 to 50 marks.  It will contain three questions from which two should be attempted. Format of paper

5 Section A: Regulatory Environment Designed to give you knowledge and application of: A1. International regulatory frameworks for audit and assurance services A2. Money Laundering A3. Laws and regulations

6  The need for laws, regulations, standards and other guidance relating to audit, assurance and related services. [2] Learning Outcomes A1. International regulatory frameworks for audit and assurance services

7  Money laundering and its process. [1]  The need for ethical guidance in this area. [2] Learning Outcomes A2. Money Laundering

8 Need for laws, regulations, standards & other guidance Audit: provides a high level of assurance that financial statements are free from material misstatement. Assurance: an assertion that the statements presented are correct. Regulation of audit & related services Protect public interest Maintain dignity of profession Reduce risk & increase public confidence Act as a guide for auditors & bring uniformity in audit Enhance quality of work

9 Need for standardsExplanation Maintain independenceRegulates and guides the member and thereby avoids government interference Act as a guide in a court case The court decides the extent of care to be taken by the auditor Give an idea to individualsGives an idea of the minimum level of performance Example ISA 220 deals with quality control of audit work. It provides guidance on quality control of the policies and procedures of an audit firm in general and of the procedures regarding the work delegated to assistants on an individual audit. Continued…

10 Money laundering (ML) ML is the process by which criminals attempt to conceal the true origin and ownership of the proceeds from their criminal activity, allowing them to maintain control over the proceeds and, ultimately, providing a legitimate cover for their source of income. ML process Placement Insertion of illegitimate funds into a legitimate financial system Layering Series of movements of legitimate funds Integration Illegitimate funds re-enter into economy Making continuous deposit & withdrawal Wire transfer Bank to bank transfer

11 Need for Ethical guidance To protect accountants / members from liability arising from ML To protect against criminal action in respect of accountants’ confidentiality requirements To clarify reporting responsibility in case of ML To prevent accountants / members from (un) intentionally getting involved in ML Need for ethical guidance on ML

12 Need for ethical guidance on ML Criminal offences of money laundering  terrorism, including terrorist financing  corruption and bribery, fraud  counterfeiting currency  counterfeiting and piracy of products  environmental crime  murder, grievous bodily injury  kidnapping, illegal restraint and hostage-taking  robbery or theft, smuggling  forgery, piracy  insider trading and market manipulation Refer to SEQ 1 on (page 36)

13 RECAP  The need for laws, regulations, standards and other guidance relating to audit, assurance and related services. [2]  Money laundering and its process. [1]  The need for ethical guidance in this area. [2]

14 Identify: Pick out a relevant issue / point from the scenario (you need to list the issues) Comment on: Offer an opinion, debate a topic, express a reaction Explain: Clarify and provide extra details on a subject matter Evaluate / assess: Weigh up advantages and disadvantages and make a judgment Critically discuss: Consider a subject in depth and come to an opinion Justify: Come to a conclusion and provide a strong argument for a decision Contrast: Make a comparison Requirement Meaning