This article explains the changes affecting paper P7 from June 2013 and candidates are encouraged to familiarise themselves with the content of this article while preparing for exams in June 2013 and subsequent sittings.
Format of the paper
The main change is that the format of the paper is being standardised from June 2013 onwards. There will still be two compulsory questions in Section A and a choice of two from three questions in section B. It is only the mark allocation that is changing. The questions in section A will be for 35 and 25 marks. In section B each of the optional questions will be for 20 marks. This standardisation is common to the Optional level examinations and has been introduced to help candidates to manage their time in the exam, and to improve exam technique.
It would normally be the case that the syllabus and study guide published for June and December 2013 is relevant for exams in 2013. ACCA made an exception and has now extended the syllabus and Study Guide of 2013 to June 2014. So, exam for June 2014 will be based on the 2013 Syllabus and Study Guide.
There have been a few small changes made to the syllabus. In syllabus area D Planning an Audit, two new learning outcomes have been included, both of which are relevant to the demonstration of higher skills rather than the additional of technical content to the syllabus. The first new learning outcome relates to the identification of additional information. Candidates need to be able to identify and explain the additional information that would be relevant to audit planning in a given scenario. Candidates who have familiarised themselves with past papers will have seen requirements similar to this in various questions, for example in relation to planning a due diligence assignment. The new learning outcome simply clarifies that a similar requirement could be asked in respect of planning an audit.
The second new learning outcome relates to the identification of matters not relevant to planning an audit. This is a different skill being tested – the ability to prioritise information that has been given in an audit planning scenario, and to focus on the most important information relevant to audit planning. This learning outcome is unlikely to appear as a specific requirement, but is implied in all audit planning scenarios, and simply means that candidates will produce a good answer if they select and prioritise the most important information and spend less time discussion the less relevant i matters from the scenario provided.
Both of these learning outcomes have been added to the paper P7 syllabus following recommendations from ACCA’s regulatory authorities who periodically review the Syllabus and Study Guide.
Candidates are also encouraged to read an article which first appeared on ACCA’s website in May 2012, which describes the appropriate exam technique to use in an audit planning question, as it contains important guidance on tackling this type of question.
A second area of the syllabus where new learning outcomes have been included is syllabus area B Professional and Ethical considerations, where two new learning outcomes have been included in relation to professional scepticism. The first learning outcome that has been added to syllabus area B is 'Discuss the importance of professional scepticism in planning and performing an audit', and the second is 'Assess whether an engagement has been planned and performed with an attitude of professional scepticism, and evaluate the implications'.
The syllabus has been made more robust in respect of professional scepticism due to its being a matter of increasing importance in the profession, with the IAASB issuing in February 2012 a document entitled Questions and Answers - Professional Skepticism in an Audit of Financial Statements, which explores the importance of professional scepticism as a concept to be employed during an audit. Similarly, the UK’s Financial Reporting Council issued a Briefing Paper on Professional Skepticism in March 2012, covering similar ground to the IAASB document. On issuing the IAASB document, the Chairman of the IAASB stated the following. 'The IAASB’s International Standards on Auditing (ISAs) explicitly recognize the fundamental importance of professional scepticism. Nevertheless, adopting and applying a sceptical mindset is ultimately a personal and professional responsibility to be embraced by every auditor. It is an integral part of the auditor’s skill set, is closely interrelated to the fundamental concepts of auditor independence and professional judgment, and contributes to audit quality. The auditor’s education, training, and experience are therefore critical.' This highlights the importance of professional scepticism not just as an attitude to be employed by the auditor, but as a crucial part of quality control including ethical considerations. A sceptical attitude enhances the auditor’s ability to identify and respond to conditions that may indicate possible misstatement due to error or fraud and critically assess audit evidence.
Candidates are reminded that current issues remains a feature of the syllabus and that they should be aware of IAASB developments and matters being debated within the profession. The IFAC website contains information on the work of the IAASB including its current projects and consultations. Such matters have formed the basis of discussion questions in paper P7, in which candidates are required to discuss a statement and are expected to form their own views and opinions on such matters. Current issues can also be embedded within scenario based questions. Current issues encompasses a wide variety of areas, and the topics of current issues requirements in past examinations have included for example, the audit of complex and subjective transactions and matters such as going concern and revenue recognition, developments in ethical standards and in the regulation of the auditing profession, and revisions to auditing standards.
The list of examinable documents for Paper P7 is updated annually and candidates should ensure that their study material includes the relevant examinable documents for the exam sitting they are preparing for. This is important for many reasons, one of which is that changes to examinable documents may be linked to a current issue, so clearly using out of date study materials means that a candidate may not perform well on a current issues question. However reading beyond the study text is very much encouraged in relation to current issues as this will help candidates to understand issues from a broad perspective, enabling a proper discussion in the examination.
This short article has highlighted the way that mark allocations between questions will be standardised from June 2013 onwards, and the changes made to Paper P7 syllabus and study guide for the June 2013 sitting onwards. These changes are not major, but in part help to ensure that Paper P7 covers matters of increasing importance to the profession.