From September 2022, we'll be introducing professional skills marks into the ACCA Strategic Professional Options exams. Find out more about how professional skills will be assessed in the AAA exam.
Section A questions in AAA always ask for a set of briefing notes requested by an audit engagement partner or senior manager, which address key matters facing the engagement team at the planning stage of an audit.
This report should have appropriate headings, sub-headings and a brief introduction which explains the content of the report to follow. Candidate’s response in the body of the report should look professional, use appropriate language and be clear and effective. It is vital that the report content is relevant to the requirements, including adhering to any specific instructions given in the examination requirement.
All AAA questions will include this professional skill as it is fundamental that candidates can demonstrate their assessment of a given scenario and the application of their knowledge.
The scenario will require an assessment of the financial reporting issues of the client, the ethical or legal and regulatory issues and their impact on the audit process. This may be at the planning or completion and reporting stage of the audit, so candidates need to ensure that any recommendations for further actions are relevant to that point of the engagement.
It is important that candidates ensure that any analysis or evaluation is contextual and must take into account the situation in which the organisation in the question operates.
Analysis can be demonstrated by appropriate use of the information to determine suitable calculations to support your evaluation. The ability to draw appropriate conclusions from the analysis should be demonstrated, so that appropriate responses or actions can be proposed.
Identifying where data or information appears to be omitted or where further analysis is needed to make a recommendation is also important, as that means a full evaluation cannot be performed, for example, understanding the basis of a provision and understanding how the audit team can gain sufficient and appropriate audit evidence in the circumstances.
An evaluation is a balanced appraisal to determine the impact of a course of action, for example, if a client does not amend a material misstatement in the financial statements, candidates need to be able to explain the implications on the auditor’s report.
Candidates are expected to demonstrate professional scepticism and judgement when assessing the information given in the scenarios. This is key when asked to evaluate the significant risks in a scenario, or challenging information which has been provided.
In line with the revisions and introduction of the ‘spectrum of risk’ in ISA 315 (Revised 2019) Identifying and Assessing the Risks of Material Misstatement, candidates will need to demonstrate their application of professional judgement by prioritising risks (audit risks or risks of material misstatement only) in their answers. Candidates should be prioritising the most significant risks first, and in a brief conclusion, justifying their decision.
Information may come from the client, such as in the basis for a provision or the basis of amortisation of purchased intangible assets. Other scenarios may ask the candidates to review the audit work and evidence obtained during the engagement and assess whether it is sufficient to support a decision or information in an auditor’s report.
Questions are set in commercially realistic scenarios ranging from private to public sector organisations, not-for-profit organisations, and regulated industries.
Candidates may be asked to demonstrate their commercial acumen by assessing the business risks affecting the client at the audit planning stage, for example, specific regulatory requirements or the impact of competition on future business. Factors affecting a client may highlight issues regarding the future trading success of the business, for example, there is an opportunity to expand the business, but consideration needs to be given as to how this will affect the current operations.
Candidates need to look at external constraints and opportunities where relevant and also consider the validity/reasonableness of any assumption that the organisation may be working under, given the external environment.
Candidates may show commercial acumen by assessing the impact of the engagement on the audit firm. This may be relevant in a scenario which requires an evaluation of whether to accept an engagement, for example, whether the audit firm is happy to be associated with the client or industry.