This article outlines the approach which will be used to examine Advanced Audit and Assurance (AAA). The article should be read in conjunction with the relevant Study Guide and Syllabus and list of examinable documents.
The AAA exam is three-hours and 15 minutes and is divided into two sections. Please refer to the specimen exam and past content for examples of the format. All questions are compulsory.
Section A
This section will consist of one compulsory Case Study style question, for a total of 50 marks, broken down into several requirements. The question scenario will provide a range of detailed information in the form of “exhibits”, and could relate to a client company which may be a single company or a group scenario. The information will come from a variety of sources, and may include, for example, background information about a client, notes of meetings or phone calls held with management of the client company, extracts from financial statements, and extracts from audit working files.
While the question scenario will be set in the planning phase of an audit, requirements could cover a range of topics, for example relating to law and regulations, using evidence from other sources (eg internal auditors, component auditors or outsourced services) or ethics. The aim is to place candidates in a 'real world' situation where they would be faced with several different issues in relation to the client.
Ten professional skill marks will be available in Section A (with 40 technical marks available in the Section A question) and will be awarded based on the level of professionalism with which a candidate’s answer is presented. Information on professional skill marks can be found here.
Section B
Section B will contain two compulsory questions of 25 marks each. This is compiled of 20 technical marks with 5 marks related to the professional skill marks. Shorter scenarios will be provided as a basis for the Section B requirements. Candidates should ensure that they study the whole syllabus and practice as wide a range of past questions as possible in preparation for the exam using the practice platform.
One of the Section B questions will always be set in the completion stage of an audit, and could focus on topics including the final review of audit evidence, evaluation of matters and evidence to support the audit opinion, the audit of going concern and subsequent events, the auditor’s report, and reports to those charged with governance.
The other section B question could cover a range of topics – the only exclusion is that it will not be based on an audit completion scenario.
Audit planning and risk assessment will continue to be examined in every sitting, in Section A. Candidates should be aware that 'planning' covers a wide variety of topics, and does not just mean 'risk assessment'. For more clarity in this area it is essential to read the Syllabus and Study Guide in order to appreciate the breadth of the syllabus in relation to 'planning'. As explained above, planning questions will include wider issues, so candidates might be expected to deal with ethical matters which arise when planning an audit, or issues such as accepting a new audit client.
At each sitting, candidates should also be prepared to tackle requirements relating to obtaining audit evidence. Requirements are likely to focus on specific financial statement balances or transactions, for which candidates will be asked to design the relevant audit procedures. Candidates should ensure that when asked to ‘design’ procedures that they provide the source and purpose for each relevant procedure.
When asked to comment on the 'matters to consider' in the completion phase of an audit, candidates should be aware that one of the key matters to consider is whether the relevant accounting standard has been adhered to, as well as the materiality of the matter, and to consider and explain the audit evidence which should have been obtained in relation to the issue.
Auditor’s reports and reporting to those charged with governance are both important areas. Candidates must familiarise themselves with the most up to date requirements in relation to auditor reporting and have sufficient knowledge and understanding of this area to answer a variety of question types, including providing a critique of a suggested report, or determining the appropriate opinion and form of report to be issued. It is essential that candidates are confident answering questions on this topic as Syllabus section E will form one of the Section B questions every session.
Ethics and related professional issues are likely to feature in every session, either in Section A or Section B. It is important to appreciate that ethics is not just about independence but also covers ethical issues such as conflicts of interest and confidentiality, as well as fraud and error, and professional liability. Matters such as audit quality and professional scepticism are also important syllabus areas, and may feature in either area of the exam. Candidates should be prepared to evaluate whether an audit or other assurance engagement has been conducted suitably, including whether the auditor has applied an appropriate level of professional scepticism in a specific situation.
Other topics which may be examined in Section B include Section F of the syllabus which covers ‘other’ forms of assurance, including sustainability, forensic and due diligence engagements, assignments assessing prospective financial information. In respect of current issues, candidates should be ready to discuss a current issues topic in the context of the client scenario provided. As current issues can impact on any stage of an audit or assurance engagement, a current issues requirement could feature in either Section A or Section B of the exam. Candidates are reminded to read any new technical articles on the ACCA website, especially ones regarding new standards or important issues.
AAA is a challenging and mostly practical exam. Candidates must consider carefully whether they have the required competencies when deciding whether to take this option exam. The competencies necessary for a candidate to achieve a clear pass in AAA include:
Candidates would be ill-advised to choose AAA as an Options exam if they:
Candidates should ensure they are familiar with the wide range of materials available to help them with their studies. In addition to material provided by tuition providers, and ACCA's website, candidates are encouraged, as discussed above, to regularly read up on current issues.
Candidates are encouraged to practise past questions using the practice platform to ensure that that they have good knowledge of the syllabus, are familiar with question requirements and have strong exam technique. Using the practice platform will also enable students to familiarise themselves with the computer based style of exams.
The Student Accountant app will highlight newly published technical articles for AAA (as well as other exams) from time to time. Such articles should be considered essential reading, and will cover both exam approach and technical issues from the syllabus. These articles are available on the ACCA website and candidates are reminded to visit the site regularly to ensure they are aware of additional resources.
Candidates who have practised plenty of past exam questions, who have taken time to read around the syllabus, and who use sensible exam technique on the day of the exam are very likely to secure a pass. This exam should not be approached as a rote learning exercise, but as a chance to show the ability to think logically and practically, reach an opinion, and demonstrate the application of technical issues to a real-world scenario.
Written by a member of the AAA examining team