iAP

GlynisGlynis Trusted RegularRegistered Posts: 488
I can't believe I have forgotten about this. I thought if I did pass DFS in august that AAT would be done.

Anyone got any helpful tips on how to do the audit sim as fast as possible.


Steve are you running any classes on audit?

Comments

  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    The only way to get through the audit sim as fast as possible is to put the work in as quickly as possible!

    Read the book, do the exercises and then do the sim.

    Who is assessing it for you?
  • GlynisGlynis Trusted Regular Registered Posts: 488
    Thank you. I am going to get my college to assess it but I can't get hold of them to send me the material.

    Do you know of any other sources of info I can be reading about audit whilst I wait.


    Can't believe this has happened.
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    Glynis wrote: »
    Steve are you running any classes on audit?

    Hi Glynis,

    I have not got any audit lectures planned (a) due to time constraints and (b) primarily due to lack of demand.

    I have written several articles which you should find on the AccountancyStudents website concerning audit, though I have to say they are written to ACCA audit paper standards so might go a little more in depth than the AAT actually require, however the fundamental basics are the same.

    You need to understand the types of test (in particular tests of control and substantive testing) as well as what it actually is you are trying to achieve when undertaking audit tests. For a fuller understanding you really need to get a good basic understanding of the financial statement assertions (e.g. completeness, valuation, existence, disclosure etc etc). All these are covered in my articles.

    You won't be able to complete the simulation successfully if you rush as this will be counter-productive. By flying through the sim you will not be fully understanding what an auditor's objective is and how they achieve that objective so I would advise you to treat this more as a marathon rather than a sprint because otherwise you will waste time having to do supplementary questions to prove your competence in the simulation.

    Regards

    Steve
  • GlynisGlynis Trusted Regular Registered Posts: 488
    Thanks steve.
    Will I need to know all the standards. I can't find any guidance on here.
    Also where are those articles you mention.
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    The articles I am referring to are on the AccountancyStudents website - the following might be relevant for you to start with:

    Sampling Techniques in Audit
    An Overview of Auditing
    [url=http://www.accountancystudents.co.uk/news/read/the_auditor_and_fraud/
    ]The Auditor and Fraud[/url]
    Auditing Questions Answered

    The guidance for your unit on here (at least the guidance I can gain access to) is significantly out of date as it refers to SAS's which have been obsolete now for a few years. Auditing standards are now under the international regime (ISA's).

    I do not really know very much about the IAP syllabus but as auditor's are required to have knowledge of the ISA's and the GAAP they are dealing with (in AAT this will be IFRS) then, yes, I would suggest you do get an awareness of them. Your knowledge of the accounting standards from DFS should be sufficient.

    By gaining an awareness of both IFRS (accounting standards) and the ISAs (auditing standards) you can score quite highly by interacting the two. For example if you have an entity that has made an annual provision against a future rectification cost (e.g. as in an onerous contract) then we all know that the provisions in IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) prohibits annual provisioning. Any future liabilities have to be discounted to present day values and included in the cost of the asset with the credit side going to liabilities. If this has happened in an auditing scenario you could link this in to the auditor's opinion. If the annual provision is material and the client refuses to adjust it, then the auditor should qualify their report 'except for'. If the auditor did not know their accounting standards then how would they know IAS 37 prohibits annual provisioning.

    Remember auditors AUDIT the financial statements, they do not prepare them (in exam situations at least) and where they do prepare them they have to have safeguards as there is a threat to independence (a self-review threat). Auditors check the financial statements are prepared in accordance with domestic legislation (e.g. the Companies Act) and the applicable financial reporting framework (IFRS) so an awareness of both auditing and accounting standards is crucial.

    Regards
    Steve
  • GlynisGlynis Trusted Regular Registered Posts: 488
    Is there an easy way to remember all this. I've never done any of this before.


    Why do the AAT do this to us!
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    Glynis wrote: »
    Is there an easy way to remember all this. I've never done any of this before.

    The only way to remember this is to study the syllabus until you feel comfortable with it. Audit papers are full of technical requirements and you need to know the basics before attempting your simulation - you simply cannot race your way through it, especially if you do not work in audit. Use the 'Auditing Questions Answered' article as a starting point.

    Glynis wrote: »
    Why do the AAT do this to us!

    Do exactly what? This is an optional unit so if you don't like audit then the alternative is to do another optional unit. You can't blame the AAT when they are clearly giving you a choice! If you (intend to) work in practice then you should go for the audit unit as it will be particularly relevant, even if you don't work in the audit department.

    Steve
  • GlynisGlynis Trusted Regular Registered Posts: 488
    I have an interview at a practise so the audit sim is most appropriate.

    I'm desparate to finish AAT and this is unbelievable. There must be an easy way to learn this.
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    Not quite sure why it is unbelievable? Surely you knew what units you had to do to attain technician status?

    Why must there be an easy way to get through the qualification? You have to work to get it otherwise it is worth nothing!
  • jorja1986jorja1986 Well-Known Registered Posts: 210
    1. How could you overlook completing a Unit? If you were with a college, my understanding is they provide you with enough units to pass the course in one block as it were. (Others provide per unit I am aware as my provider has just moved over to providing it per unit).

    2. You dont get something for nothing. If you want the qulification you have to work your arse off. Why should life be easy? No fun in that :001_tt2:

    The AAT do nothing to us, they provide a qualification that covers a massive spectrum of job situations and get the flack. Yes I have moaned about them but the Institue have such a massive workload, why should they "make it easy" when most of its employees members and students, are grateful for the opportunity that this qualification has given them.

    Stop Moaning contact your college buy the books recommended by Steve and get your head down. It will be the only way you will pass.
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    Glynis wrote: »
    I have an interview at a practise so the audit sim is most appropriate.

    I'm desparate to finish AAT and this is unbelievable. There must be an easy way to learn this.

    Bluewednesday and jorja have provided some sound advice here.

    Auditing requires a good understanding of the techniques used to obtain audit evidence to support the amounts and disclosures in the financial statements. Your studies will provide you with knowledge as to the types of testing that is appropriate in differing circumstances as well as an understanding of the rudimentaries of an auditor's duties.

    In addition, do not under estimate the value of your DFS knowledge! Accounting standards are vital to an auditor and as I mentioned earlier in this thread, if you can interact accounting and auditing standards in a simulation/exam paper you will demonstrate wider thinking therefore scoring quite highly.

    You need to get to grips with this understanding, not only to pass the simulation, but if you are planning to work in practice, thus go onto ACA/ACCA you are not going to be able to avoid the subject (auditing is mandatory in ACCA at paper F8, but optional at P7). We require our student accountants to sit the P7 paper (they don't get a choice) so if you are in practice you may be subject to the same ruling, so it is better to slow down and understand IAP at AAT level which will then equip you with the basic knowledge you need to build on during future studies.

    Steve
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Hi

    Sorry it me the pain again :001_smile: i was looking at doing both tax papers as the practise i work at does not perform audits just the box standard self assessments accounts vat ect but are you saying for ACCA you will need to do the auit simulation?
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    No you don't need to do the audit sim to get on to ACCA. Some colleges don't even allow you to make a choice - they tell you what options at AAT you will sit.

    When you complete AAT you will be exempt from F1 to F3 papers. There is an audit paper at F8 which you will be required to sit.

    At the professional level, there is a further audit paper (P7 - 'Advanced Audit and Assurance') but this is an options paper so you don't have to sit it if you don't want to, you can choose another optional paper within the option papers. It is our policy at my firm that students doing ACCA must sit P7 whether they want to or not because we have an audit department plus it also helps with due diligence assignments.

    Regards

    Steve
  • A-VicA-Vic Expertise Guaranteed Registered Posts: 6,970
    Thanks Steve :001_smile:
  • GlynisGlynis Trusted Regular Registered Posts: 488
    Steve I understand what you are saying but I need to get my AAT asap. This has set me back.

    Is there any advice you can offer about studying IAP effectively.

    Thanks
  • heartsandstarsheartsandstars Feels At Home Registered Posts: 76
    Glynis,

    I took one of the Audit sims on Monday and it wasn' too painful,I found the articles that Steve linked very useful and thre are a few good books out there as well.

    I would say you are best off taking your time with it, as if you try and rush it you will possibly have to retake the whole sim (I am assuming you are doing the sim and not submitting WBE?) which will defeat the object of trying to complete the unit quicker.
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    Glynis wrote: »
    Is there any advice you can offer about studying IAP effectively.

    Thanks

    You need to understand the basic objectives of audit - this is to report on the truth and fairness of a set of financial statements. This goes beyond the amounts contained in the primary financial statements, but also about the disclosures contained in the disclosure notes.

    You need to understand the financial statement assertions:

    Transactions: are tested for occurrence, completeness, accuracy, cut off and classification.

    Accounts: are tested for existence, rights, completeness, valuation and allocation.

    Presentation and disclosures: are tested for occurrence, rights and obligations, completeness, classification, accuracy and valuation.

    You also need to understand the concepts of materiality. For example if inventory is immaterial to the financial statements, you are not going to go to the n'th degree to check existence, rights, completeness, cut offs, valuation etc etc. You would undertake more audit work on material areas of the financial statements and high risk areas (for example cash in a cash-based business).

    You need to understand when substantive (tests of details) testing can be reduced i.e. if you are placing reliance on internal controls. You need to understand that you increase substantive testing in areas where weaknesses/errors have been found.

    As I also keep mentioning, do not forget your accounting standards. Just because this is an auditing paper does not make accounting standards any less relevant.

    You need to understand the types of testing e.g. interval sampling, haphazard sampling, stratified sampling etc and when each method is appropriate. Knowing the limitations of each type of test is also a good idea.

    You also need to understand the auditor's report and the types of opinion: unqualified, qualified, adverse and disclaimer and when each opinion is appropriate and WHY. The number of auditing students I come across who do not understand (a) an opinion and (b) WHY and WHEN it is issued is staggering.

    You also need to liaise with your college about this unit. The forums are limited to the information I can give and it is not practical to do tuition on the forums. I regularly produce articles on auditing and the ones I have provided links to on this thread are relevant and will help you. They are intended to aid study as opposed to be a substitute for study.

    Regards
    Steve
  • JuliaJulia Feels At Home Registered Posts: 78
    Glynis

    i advise all my students to take their time with this simulation as the marking criteria are quite strict. Steve has produced some absolutely fantastic replies on this thread and you should use all his articles as an aid to your Unit 17 studies, but you need to have some tutor support to get through the unit; particularly if you do not have any auditing knowledge or experience.

    Julia (BPP)
  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    You're making me blush, Julia!:laugh:
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