Technical articles

A library of articles to help you develop broader insight into the subject, split by syllabus section.

Technical articles (A)

Corporate governance and its impact on audit practice
P7 candidates are expected to be conversant with corporate governance principles, many of which they will have seen in previous exams like F8 and P1. In P7, the focus is on the impact that corporate governance principles and practice can have on the audit process, and this article explores some of these issues.

Laws and regulations
It is important that candidates preparing for P7 have an understanding of how laws and regulations affect an audit, not only in terms of the work the auditor is required to do, but also to appreciate the responsibilities of both management and the auditor where laws and regulations are concerned. 

Professional and Ethical Considerations (B)

Exam technique for Advanced Audit and Assurance: part 1 – ethics
Ethical standards and their application form a major part of the Advanced Audit and Assurance syllabus and are examined regularly. This article demonstrates how to maximise marks on these areas using effective exam technique.

Auditor liability 
Also available as a podcast on iTunes
This article focuses on the issue of auditor’s liability in the UK, and therefore contains references to the UK Companies Act 2006, as well as UK-specific legal cases. Candidates other than those attempting the UK adapted paper are not expected to have UK-specific knowledge. The concepts discussed in this article however are broadly relevant and will help candidates to understand why this is an important issue within the auditing profession.

Massaging the figures
Earnings management – what it is, when it becomes fraud, and implications for auditors.

Quality Control and Practice Management (C)

Planning and conducting an audit of historical financial information (D)

Exam technique for Advanced Audit and Assurance: part 2 – risk
Risk is examined in several ways within the Advanced Audit and Assurance syllabus and understanding the difference between these can be key to scoring good marks in the exam. This article demonstrates how to maximise marks on these areas using effective exam technique.

Exam technique for Advanced Audit and Assurance: part 4 – audit procedures
This article examines the key syllabus requirements in relation to procedures and considers the level of detail needed in order to obtain credit at this level. It also looks at some examples of past questions on this syllabus area and explains the difference between a strong answer and a weak answer to illustrate the detail and specificity that candidates should produce in their answers to attain marks in the exam.

Group audits
This article focuses on the key areas of group audit, highlighting sections of ISA 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). Candidates should be familiar with the standard prior to sitting the AAA exam.

Risk and understanding the entity
Candidates studying Audit and Assurance (AA) and Advanced Audit and Assurance (AAA) are often presented with questions that focus on the planning stage of the audit. A sound understanding of ISA 315 (Revised 2019) is therefore essential.

Auditing in specialised industries
This article provides some insight into the matters that need to be considered by auditors when engaged to provide the external audit service to a client operating in a specialised industry.

Auditing disclosures in financial statements
This article looks at auditing disclosures in financial statements, an issue that has been considered by the IAASB in recent years following developments in IFRS requirements and the increased level of complexity and subjectivity involved in the preparation of information to be disclosed in financial statements.

Using the work of internal auditors
Also available as a podcast on iTunes
This article focuses on the provision of direct assistance by the internal auditors, which – to date – has been a very controversial issue. Although internal auditors are the employees of the entity, which could result in threats to independence (either in fact or perceived) if direct assistance is provided by the internal auditors, there are benefits relating to this provision which cannot be ignored.

Audit risk
This article outlines and explains the concept of audit risk, making reference to the key auditing standards which give guidance to auditors about risk assessment.

Audit working papers
How working papers provide evidence that an effective, efficient, and economic audit has been carried out.

Auditing in a computer-based environment
The aim of this article is to help students improve their understanding of computer-assisted techniques by giving practical illustrations of computer-based controls and the way they may feature in exam questions. (Also G)

Specific aspects of auditing in a computer-based environment
This article provides guidance on various aspects of auditing in a computer-based accounting environment. (Also G)

Completion, review and reporting (E)

Exam technique for Advanced Audit and Assurance: part 3 – accounting issues
Candidates will be required to discuss accounting issues in many contexts in the Advanced Audit and Assurance exam. This article utilises past questions from the exam to illustrate how accounting issues could be examined and to recap the accounting treatment on some of the areas candidates typically find difficult in this exam.

Exam technique for Advanced Audit and Assurance: part 5 – auditor reporting
This article focuses on auditor reporting to shareholders. It is imperative for candidates to be prepared to answer questions on auditor reporting and will need an understanding of the format of the report, the types of opinions which may be given by the auditor and the other modifications which could be required to an auditor’s report.

Evaluation of misstatements
The completion stage of the audit is when the auditor reviews the work performed and considers the implications for the auditor’s report. A crucial part of this review is the evaluation of misstatements found during the audit.

Completing the audit
This article explores some of the key requirements of International Standards on Auditing (ISA) that are relevant at the completion stage, and discusses the practical implications of those requirements.

Going concern
The additional guidance given for ISA 570, Going Concern.

Auditors' reports to those charged with governance
This article discusses the important reporting 'output' produced as a result of the audit process, that of the auditor's communication to those charged with governance

Examining evidence
This article explains the importance of understanding audit evidence.

 

Other assignments (F)

The assurance of social, environmental and sustainability information (part 1)
This is the first of two articles that considers why sustainability information is published and a brief coverage of the measurement issues.
An assurance professional is most likely to review sustainability information as part of the strategic report. This article looks at the implications of ISA 720 (Revised), The Auditor’s Responsibilities Relating to Other Information.

The assurance of social, environmental and sustainability information (part 2)
This is the second of two articles that considers why sustainability information is published by companies. Assurance professionals are increasingly being engaged to review specific environmental and sustainability reports and the article considers some of the challenges this presents to firms. This article also includes useful tips on how to approach questions that may include elements of sustainability information in the AAA exam.

Performance information in the public sector
The Syllabus and Study Guide for P7 (INT), Advanced Audit and Assurance (and SGP adapted paper) includes a section entitled ‘The audit of performance information (pre-determined objectives) in the public sector’. This article is intended to provide insight into this syllabus area and explain some of the issues of which candidates should be aware when studying this aspect of the syllabus.

Forensic auditing
This article explores some of the key issues relevant to forensic investigations.

Current Issues and Developments (G)

Exposure draft: Proposed revisions to the code to promote the role and mindset expected of professional accountants
The purpose of this article is to review and provide a summary of the key proposals contained within the Exposure Draft.

Auditing in a computer-based environment
The aim of this article is to help students improve their understanding of computer-assisted techniques by giving practical illustrations of computer-based controls and the way they may feature in exam questions. (Also D)

Specific aspects of auditing in a computer-based environment
This article provides guidance on various aspects of auditing in a computer-based accounting environment. (Also D)

Covers multiple areas

Data analytics and the auditor
This article provides some insight into the matters which need to be considered by auditors when using data analytics. AAA candidates are expected to have a broad understanding of what is meant by the term data analytics, how it may be used in the audit and how it can improve audit efficiency.

Professional scepticism
The article explains the importance of professional scepticism as an essential part of the auditor’s mindset, and considers the reasons why approaching an audit with an attitude of professional scepticism is becoming increasingly important.

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