ACCA F8 2013年12月份试题及答案

关于ACCA知识点中，F8的必考部分。

分为理论部分和情景题部分两大块。

下面中公财经小编就给大家详细介绍一下关于F8的必考知识点;理论部分(1) 5 elements of internal control system内控体系的五大要素-control environment(控制环境)，control activities(控制行为)，risk assessment(风险评估)，control activities(控制的监督)与information system(信息系统)。

这五大要素需要会对其进行描述。

e.g.：Identify and briefly explain the FIVE components of an entity’s internal control. (5 marks)---2015年6月考题(2)limitations of Internal control systems内控体系的局限性(如：human errors in use of judgement, simple processing error, collusion between staff, control by-passed by management)(3) Methods for documenting internal control system记录内控体系的文档都有哪几种形式，以及各自的优缺点是什么-Narrative notes, flowchart, questionnaires (ICQ+ICEQ)Describe TWO methods for documenting the sales and despatch system; and for each explain an advantage and a disadvantage of using this method. (6 marks)---2013年12月份考题(4) Reasons for maintaining internal control system公司为什么需要建立及维护必要的内控体系(如：prevent misstatement in FS, safeguard assets, avoid breach laws and regulations, prevent fraud, increase working efficiency)情景题(1)Control Deficiency +Impact/Consequence +Recommendation or Identify and Explain Deficiency + Recommendation根据题目给出的情景，指出有什么控制缺陷，给公司造成的影响是什么，最后是给出解决问题的建议。

高顿C A a c c a .g a u n .c nFundamentals Level – Skills Module, Paper F8 (INT) Audit and Assurance (International)December 2012 Answers1(a)Inventory count arrangementsDeficienciesRecommendationsThe warehouse manager is planning to supervise theinventory count. Whilst he is familiar with the inventory, he has overall responsibility for the inventory and so is not independent. He may want to hide inefficiencies and any issues that arise so that his department is not criticised.An alternative supervisor who is not normally involved with the inventory, such as an internal audit manager, should supervise the inventory count. The warehouse manager and his team should not be involved in the count at all. There are ten teams of counters, each team having two members of staff. However, there is no clear division ofresponsibilities within the team. Therefore, both members of staff could count together rather than checking each other’s count; and errors in their count may not be identified. Each team should be informed that both members are required to count their assigned inventory separately.Therefore, one counts and the second member checks that the inventory has been counted correctly.The internal audit teams are undertaking inventory counts rather than reviewing the controls and performing sample test counts. Their role should be focused on confirming the accuracy of the inventory counting procedures.The internal audit counters should sample check thecounting undertaken by the ten teams to provide an extra control over the completeness and accuracy of the count.Once areas are counted, the teams are not flagging the aisles as completed. Therefore there is the risk that some areas of the warehouse could be double counted or missed out.All aisles should be flagged as completed, once the inventory has been counted. In addition, internal audit or the count supervisor should check at the end of the count that all 20aisles have been flagged as completed.Inventory not listed on the sheets is to be entered onto separate sheets, which are not sequentially numbered.Therefore the supervisor will be unable to ensure the completeness of all inventory sheets.Each team should be given a blank sheet for entering any inventory count which is not on their sheets. This blank sheet should be sequentially numbered, any unused sheets should be returned at the end of the count, and thesupervisor should check the sequence of all sheets at the end of the count.The sheets are completed in ink and are sequentially numbered, however, there is no indication that they are signed by the counting team. Therefore if any issues arise with the counting in an aisle, it will be difficult to follow up as the identity of the counting team will not be known.All inventory sheets should be signed by the relevant team upon completion of an aisle. When the sheets are returned,the supervisor should check that they have been signed.Damaged goods are not being stored in a central area, and instead the counter is just noting on the inventory sheets the level of damage. However, it will be difficult for the finance team to decide on an appropriate level of write down if they are not able to see the damaged goods. In addition, if these goods are left in the aisles, they could be inadvertently sold to customers or moved to another aisle.Damaged goods should be clearly flagged by the counting teams and at the end of the count appropriate machinery should be used to move all damaged windows to a central location. This will avoid the risk of selling these goods.A senior member of the finance team should then inspect these goods to assess the level of any write down or allowance.Lily Window Glass Co (Lily) undertakes continuousproduction and so there will be movements of goods during the count. Inventory records could be under/overstated if goods are missed or double counted due to movements in the warehouse.It is not practical to stop all inventory movements as the production needs to continue. However, any raw materials required for 31 December should be estimated and put to one side. These will not be included as raw materials and instead will be work-in-progress.The goods which are manufactured on 31 December should be stored to one side, and at the end of the count should be counted once and included within finished goods.Any goods received from suppliers should be stored in one location and counted once at the end and included as part of raw materials. Goods to be despatched to customers should be kept to a minimum for the day of the count.高顿财经A C C A a c c a .g a o d u n .c n(b)Procedures during the inventory count –Observe the counting teams of Lily to confirm whether the inventory count instructions are being followed correctly. –Select a sample and perform test counts from inventory sheets to warehouse aisle and from warehouse aisle to inventory sheets.–Confirm the procedures for identifying and segregating damaged goods are operating correctly.–Select a sample of damaged items as noted on the inventory sheets and inspect these windows to confirm whether the level of damage is correctly noted.–Observe the procedures for movements of inventory during the count, to confirm that no raw materials or finished goods have been omitted or counted twice.–Obtain a photocopy of the completed sequentially numbered inventory sheets for follow up testing on the final audit.–Identify and make a note of the last goods received notes (GRNs) and goods despatched notes (GDNs) for 31 December in order to perform cut-off procedures.–Observe the procedures carried out by the warehouse manager in assessing the level of work-in-progress and consider the reasonableness of any assumptions used.–Discuss with the warehouse manager how he has estimated the raw materials quantities. T o the extent that it is possible,re-perform the procedures adopted by the warehouse manager.–Identify and record any inventory held for third parties (if any) and confirm that it is excluded from the count.(c)Computer-assisted audit techniques (CAATS)(i)Audit procedures using CAATSThe audit team can use audit software to calculate inventory days for the year-to-date to compare against the prior year to identify whether inventory is turning over slower, as this may be an indication that it is overvalued.Audit software can be utilised to produce an aged inventory analysis to identify any slow moving goods, which may require write down or an allowance.Cast the inventory listing to confirm the completeness and accuracy of inventory.Audit software can be used to select a representative sample of items for testing to confirm net realisable value and/or cost.Audit software can be utilised to recalculate cost and net realisable value for a sample of inventory.CAAT s can be used to verify cut-off by testing whether the dates of the last GRNs and GDNs recorded relate to pre year end; and that any with a date of 1 January 2013 onwards have been excluded from the inventory records. CAAT s can be used to confirm whether any inventory adjustments noted during the count have been correctly updated into final inventory records.(ii)Advantages of using CAATS –CAAT s enable the audit team to test a large volume of inventory data accurately and quickly.–If CAAT s are utilised on the audit of Lily, then as long as they do not change their inventory systems, they can be cost effective after setup.–CAAT s can test program controls within the inventory system as well as general IT controls, such as passwords.–Allows the team to test the actual inventory system and records rather than printouts from the system which could be incorrect.–CAAT s reduce the level of human error in testing and hence provide a better quality of audit evidence.–CAAT s results can be compared with traditional audit testing; if these two sources agree, then overall audit confidence will increase.–The use of CAAT s frees up audit team members to focus on judgemental and high risk areas, rather than number crunching.(iii)Disadvantages of using CAATS–The cost of using CAAT s in this first year will be high as there will be significant set up costs, it will also be a time-consuming process which increases costs.DeficienciesRecommendationsThe warehouse manager is to assess the level ofwork-in-progress and raw materials. In the past, a specialist has undertaken this role. It is unlikely that the warehouse manager has the experience to assess the level of work-in-progress as this is something that the factory manager would be more familiar with.A specialist should be utilised to assess bothwork-in-progress and the quantities of raw materials.In addition, whilst the warehouse manager is familiar with the raw materials, if he makes a mistake in assessing the quantities then inventory could be materially misstated.With regards to the warehouse manager, he could estimate the raw materials and the specialist could check it. This would give an indication as to whether he is able toaccurately assess the quantities for subsequent inventory counts.高顿财经A C C A a c c a .g a o d u n .c n–As this is the first time that CAAT s will be used on Lily’s audit, then the team may require training on the specific CAAT s to be utilised.–If Lily’s inventory system is likely to change in the foreseeable future, then costly revisions may be required to the designed CAAT s.–The inventory system may not be compatible with the audit firm’s CAAT s, in which case bespoke CAAT s may be required, which will increase the audit costs.–If testing is performed over the live inventory system, then there is a risk that the data could be corrupted or lost.–If testing is performed using copy files rather than live data, then there is the risk that these files are not genuine copies of the actual files.–In order to perform CAAT s, there must be adequate systems documentation available. If this is not the case for Lily,then it will be more difficult to devise appropriate CAAT s due to a lack of understanding of the inventory system.2(a)Auditors’ rights –Right of access at all times to the company’s books, accounts and vouchers.–Right to require from an officer of the company such information or explanations as they think necessary for the performance of their duties as auditors.–Right to receive all communications relating to written resolutions.–Right to receive all notices of, and other communications relating to, any general meeting which a member of the company is entitled to receive.–Right to attend any general meeting of the company.–Right to be heard at any general meeting which an auditor attends on any part of the business of the meeting which concerns them as auditor.(b)Control activitiesSegregation of duties – assignment of roles/responsibilities to different people, thereby reducing the risk of fraud and error occurring.Information processing – computer controls including general IT controls, which cover a range of applications and support the overall IT environment and application controls which are manual or automated controls which operate on a cycle/business process level.Authorisation – approval of transactions by a suitably responsible official to ensure transactions are genuine. Physical controls – restricting access to physical assets such as cash, inventory and plant and equipment, thereby reducing the risk of theft.Performance reviews – comparison or review of the performance of the business by looking at areas such as budget v actual results.Arithmetical controls – controls which check the arithmetical accuracy of accounting records. Account reconciliations – comparison of an account balance with another source; often this source is from a third party, such as the bank, with differences being investigated.(c)Limitations of external auditsAn external audit has a number of limitations which reduce its usefulness:Sampling – it is not practical for an auditor to test 100% of transactions and so they have to apply sampling methodologies in selecting balances/transactions to test. Therefore, there could be an error in an item not selected for testing by the auditor.Subjectivity – financial statements include judgemental and subjective areas and therefore the auditor is required to use their judgement in assessing whether the financial statements are true and fair.Inherent limitations of internal control systems – an internal control system is operated by people and hence is liable to human error. In addition, there is the possibility of controls override by management and of collusion and fraud. It is impossible to remove all of these inherent limitations and as the auditor relies on the internal control systems, this can reduce the usefulness of the audit.Evidence is persuasive not conclusive – the opinion is based on audit evidence gathered; however, while this evidence can indicate possible issues affecting the audit opinion, evidence involves estimates and judgements and hence does not give a definite conclusion.Audit report format – the format of the opinion is determined by International Standards on Auditing. However, the terminology used is not usually understood by non-accountants. This means that users may not actually understand the audit opinion given.Historic information – the audit report is often issued some time after the year end, and so the financial information can be quite different to the current position. In the current marketplace where companies’ financial positions can change quite quickly, the audit opinion may no longer be relevant as it is out of date.高顿财经A C C A a c c a .g a o d u n .c n3(a)Understanding an entity Source of information Information expect to obtainPrior year audit fileIdentification of issues that arose in the prior year audit and how these were resolved. Also whether any points brought forward were noted for consideration for this year’s audit.Prior year financial statements Provides information in relation to the size of the entity as well as the key accounting policies and disclosure notes.Accounting systems notes Provides information on how each of the key accounting systems operates.Discussions with managementProvides information in relation to any important issues which have arisen or changes to the company during the year.Current year budgets and management Provides relevant financial information for the year to date. Will help accounts of Sunflower Stores Co (Sunflower)the auditor to identify whether Sunflower has changed materially since last year. In addition, this will be useful for preliminary analytical review and risk identification.Permanent audit file Provides information in relation to matters of continuing importance for the company and the audit team, such as statutory books information or important agreements.Sunflower’s websiteRecent press releases from the company may provide background on changes to the business during the year as this could lead to additional audit risks.Prior year report to management Provides information on the internal control deficiencies noted in the prior year; if these have not been rectified by management then they could arise in the current year audit as well.Financial statements of competitors This will provide information about Sunflower’s competitors, in relation to their financial results and their accounting policies. This will be important in assessing Sunflower’s performance in the year and also when undertaking the going concern review.(b)Audit risks and auditor responses Audit riskAuditor responseSunflower has spent $1·6m on refurbishing its 25 food supermarkets. This expenditure needs to be reviewed to assess whether it is of a capital nature and should beincluded within non-current assets or expensed as repairs.Review a breakdown of the costs and agree to invoices to assess the nature of the expenditure and, if capital, agree to inclusion within the asset register and, if repairs, agree to the income statement.During the year a small warehouse has been disposed of at a profit. The asset needs to have been correctly removed from property plant and equipment to ensure the non-current asset register is not overstated, and the profit on disposal should be included within the income statement.Review the non-current asset register to ensure that theasset has been removed. Also confirm the disposal proceeds as well as recalculating the profit on disposal.Consideration should be given as to whether the profit on disposal is significant enough to warrant separate disclosure within the income statement.Sunflower has borrowed $1·5m from the bank via afive year loan. This loan needs to be correctly split between current and non-current liabilities.In addition, Sunflower may have given the bank a charge over its assets as security for the loan. There is a risk that the disclosure of any security given is not complete.During the audit the team would need to confirm that the $1·5m loan finance was received. In addition, the split between current and non-current liabilities and the disclosures for this loan should be reviewed in detail to ensure compliance with relevant accounting standards.The loan agreement should be reviewed to ascertain whether any security has been given, and this bank should be circularised as part of the bank confirmation process.Sunflower will be undertaking a number of simultaneous inventory counts on 31 December including the warehouse and all 25 supermarkets. It is not practical for the auditor to attend all of these counts; hence it may not be possible to gain sufficient appropriate audit evidence over inventory counts.The team should select a sample of sites to visit. It is likely that the warehouse contains most goods and therefore should be selected. In relation to the 25 supermarkets, the team should visit those with material inventory balances and/or those with a history of inventory count issues.高顿财经A C C A a c c a .g a o d u n .c n(c)Internal audit department Prior to establishing an internal audit (IA) department, the finance director of Sunflower should consider the following:(i)The costs of establishing an IA department will be significant, therefore prior to committing to these costs and management time, a cost benefit analysis should be performed.(ii)The size and complexity of Sunflower should be considered. The larger, more complex and diverse a company is, then the greater the need for an IA department. At Sunflower there are 25 supermarkets and a head office and therefore it would seem that the company is diverse enough to gain benefit from an IA department.(iii)The role of any IA department should be considered. The finance director should consider what tasks he would envisageIA performing. He should consider whether he wishes them to undertake inventory counts at the stores, or whether he would want them to undertake such roles as internal controls reviews.(iv)Having identified the role of any IA department, the finance director should consider whether there are existing managersor employees who could perform these tasks, therefore reducing the need to establish a separate IA department.(v)The finance director should assess the current control environment and determine whether there are departments or stores with a history of control deficiencies. If this is the case, then it increases the need for an IA department.(vi)If the possibility of fraud is high, then the greater the need for an IA department to act as both a deterrent and also topossibly undertake fraud investigations. As Sunflower operates 25 food supermarkets, it will have a significant risk of fraud of both inventory and cash.4(a)Fundamental principlesIntegrity – to be straightforward and honest in all professional and business relationships.Objectivity – to not allow bias, conflict of interest or undue influence of others to override professional or business judgements.Professional Competence and Due Care – to maintain professional knowledge and skill at the level required to ensure that a client receives competent professional services, and to act diligently and in accordance with applicable technical and professional standards.Confidentiality – to respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not to disclose any such information to third parties without proper authority, nor use the information for personal advantage.Professional Behaviour – to comply with relevant laws and regulations and avoid any action that discredits the profession.Audit risk Auditor responseSunflower’s inventory valuation policy is selling price less average profit margin. Inventory should be valued at the lower of cost and net realisable value (NRV) and if this is not the case, then inventory could be under or overvalued.IAS 2 Inventories allows this as an inventory valuation method as long as it is a close approximation to cost. If this is not the case, then inventory could be under or overvalued.T esting should be undertaken to confirm cost and NRV of inventory and that on a line-by-line basis the goods are valued correctly.In addition, valuation testing should focus on comparing the cost of inventory to the selling price less margin to confirm whether this method is actually a close approximation tocost.The opening balances for each supermarket have been transferred into the head office’s accounting records at the beginning of the year. There is a risk that if this transfer has not been performed completely and accurately, the opening balances may not be correct.Discuss with management the process undertaken to transfer the data and the testing performed to confirm the transfer was complete and accurate.Computer-assisted audit techniques could be utilised by the team to sample test the transfer of data from each supermarket to head office to identify any errors.There has been an increased workload for the finance department, the financial controller has left and his replacement will only start in late December.This increases the inherent risk within Sunflower as errors may have been made within the accounting records by the overworked finance team members. The new financial controller may not be sufficiently experienced to produce the financial statements and resolve any audit issues.The team should remain alert throughout the audit for additional errors within the finance department.In addition, discuss with the finance director whether he will be able to provide the team with assistance for any audit issues the new financial controller is unable to resolve.高顿财经A C C A a c c a .g a o d u n .c n(b)Substantive procedures (i)Trade payables and accruals –Calculate the trade payable days for Rose Leisure Clubs Co (Rose) and compare to prior years, investigate any significant difference, in particular any decrease for this year.–Compare the total trade payables and list of accruals against prior year and investigate any significant differences.–Discuss with management the process they have undertaken to quantify the understatement of trade payables due to the cut-off error and consider the materiality of the error.–Discuss with management whether any correcting journal entry has been included for the understatement.–Select a sample of purchase invoices received between the period of 25 October and the year end and follow them through to inclusion within accruals or as part of the trade payables journal adjustment.–Review after date payments; if they relate to the current year, then follow through to the purchase ledger or accrual listing to ensure they are recorded in the correct period.–Obtain supplier statements and reconcile these to the purchase ledger balances, and investigate any reconciling items.–Select a sample of payable balances and perform a trade payables’ circularisation, follow up any non-replies and any reconciling items between the balance confirmed and the trade payables’ balance.–Select a sample of goods received notes before the year end and after the year end and follow through to inclusion in the correct period’s payables balance, to ensure correct cut-off.(ii)Receivables –For non-responses, with the client’s permission, the team should arrange to send a follow up circularisation.–If the receivable does not respond to the follow up, then with the client’s permission, the senior should telephone the customer and ask whether they are able to respond in writing to the circularisation request.–If there are still non-responses, then the senior should undertake alternative procedures to confirm receivables.–For responses with differences, the senior should identify any disputed amounts, and identify whether these relate to timing differences or whether there are possible errors in the records of Rose.–Any differences due to timing, such as cash in transit, should be agreed to post year-end cash receipts in the cash book.–The receivables ledger should be reviewed to identify any possible mispostings as this could be a reason for a response with a difference.–If any balances have been flagged as disputed by the receivable, then these should be discussed with management to identify whether a write down is necessary.(iii)Reorganisation–Review the board minutes where the decision to reorganise the business was taken, ascertain if this decision was made pre year end.–Review the announcement to shareholders in late October, to confirm that this was announced before the year end. –Obtain a breakdown of the reorganisation provision and confirm that only direct expenditure from restructuring is included.–Review the expenditure to confirm that there are no retraining costs included. –Cast the breakdown of the reorganisation provision to ensure correctly calculated.–For the costs included within the provision, agree to supporting documentation to confirm validity of items included.–Obtain a written representation confirming management discussions in relation to the announcement of the reorganisation.–Review the adequacy of the disclosures of the reorganisation in the financial statements to ensure they are in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets .5(a)Written representationsWritten representations are necessary information that the auditor requires in connection with the audit of the entity’s financial statements. Accordingly, similar to responses to inquiries, written representations are audit evidence.The auditor needs to obtain written representations from management and, where appropriate, those charged with governance that they believe they have fulfilled their responsibility for the preparation of the financial statements and for the completeness of the information provided to the auditor.Written representations are needed to support other audit evidence relevant to the financial statements or specific assertions in the financial statements, if determined necessary by the auditor or required by other International Standards on Auditing.This may be necessary for judgemental areas where the auditor has to rely on management explanations.Written representations can be used to confirm that management have communicated to the auditor all deficiencies in internal controls of which management are aware.Written representations are normally in the form of a letter, written by the company’s management and addressed to the auditor. The letter is usually requested from management but can also be requested from the chief operating officer or chief financial officer. Throughout the fieldwork, the audit team will note any areas where representations may be required.高顿财经A C C A a c c a .g a o d u n .c n。

2013年12月大学英语六级真题试卷（一）(题后含答案及解析)题型有：1. Writing 2. Listening Comprehension 3. 4. Reading Comprehension 5. TranslationPart I Writing1．For this part, you are allowed 30 minutes to write an essay on happiness by referring to the saying “Happiness is not the absence of problems, but the ability to deal with them. “ You can cite examples to illustrate your point and then explain how you can develop your ability to deal with problems and be happy. You should write at least 150 words but no more than 200 words.正确答案：The Way to Happiness When it comes to the topic of happiness, everybody has his own interpretation. But an inspiring idea goes that happiness is not the absence of problems, but the ability to deal with them, which reveals the nature of happiness. Happiness will be achieved only when we show great courage to confront problems and develop the capacity to solve them. There is no denying that we will encounter many problems in our life, but that doesn’t mean we are deprived of happiness. Many people have set great examples for us to follow: Nelson Mandela was sentenced to 27 years in prison, but he was optimistic and finally became successful in fighting against racial segregation. Steve Jobs was abandoned by his biological parents and dropped out of university but still managed to change the world. In our lives, no one is definitely immune to problems, but we may achieve happiness through striving. Therefore, it is of great necessity to equip ourselves with the ability to cope with problems. To be more specific, we need to be cooperative, persistent and decisive, and have a positive attitude toward problems. Only when we are proficient in dealing with problems can we fully enjoy happiness and live a merry life.Part II Listening ComprehensionSection A听力原文：W: What a wonderful performance! Your rock band has never sounded better. M: Many thanks. I guess all those hours of practice in the past month are finally paying off. Q: What does the man mean?2．A．The rock band needs more hours of practice.B．The rock band is going to play here for a month.C．Their hard work has resulted in a big success.D．He appreciates the woman’s help with the band.正确答案：C解析：语义理解题。

高等学校英语应用能力考试(A级)(2013年12月)Part I Listening Comprehension (15minutes)Directions: This part is to test your listening ability. It consists of 3 sections.Section ADirections:This section is to test your ability to understand short dialogues. There are 5 recorded dialogues in it. After each dialogue, there is a recorded question. Both the dialoguesand questions will be spoken only once. When you hear a question, you should decideon the correct answer from the 4 choices marked A, B, C and D given in your testpaper. Then you should mark the corresponding letter on the Answer Sheet with asingle line through the center.Example:You will hear:You will read: A. New York City. B. An evening party.C. An air trip.D. The man’s job.From the dialogue we learn that the man is to take a flight to New York. Therefore, C.An air trip is the correct answer. You should mark C on the Answer Sheet with a singleline through the center. [A] [B] [C] [D]Now the test will begin.1. A. Have a holiday. B. Fly to Beijing.C. Travel on business with him.D. Prepare some documents.2. A. In a cinema. B. In a library.C. In a store..D. In a bank.3. A. He likes watching football games. B. He likes traveling with his friends.C. He prefers to go traveling alone.D. He prefers to stay at home with his family.4. A. He wants to get a ticket. B. He has finished a report.C. He cannot go to see the movie.D. He has already seen the movie.5. A. She was making a phone call. B. She was driving to the airport.C. She was working in her office.D. She was having a meeting.Section BDirection:This section is to test your ability to understand short conversations. There are 2 recorded conversations in it. After each conversation, there are some recordedquestions .Both the conversations and questions will be spoken two times. When youhear a question, you should decide on the correct answer from the 4 choices marked A,B, C and D given in your test paper. Then you should mark the corresponding letteron the Answer Sheet with a single line through the center.Conversation 16. A. He is a sportsman. B. He is a sports writer.C. He is a tour guide.D. He is a bus driver.7. A. Exciting. B. Dangerous.C. Unpleasant.D. Boring.Conversation 28. A. One year. B. Three years.C. Five years.D. Seven years.9. A. Because he expects a better salary. B. Because he is tired of his boss.C. Because he doesn’t like traveling.D. Because he likes to work in a big company.10. A. In three working days. B. Within two weeks.C. The next day.D. A month later.Section CDirections:This section is to test your ability to comprehend short passages. You will hear a recorded passage. After that you will hear five questions. Both the passage and thequestions will be read two times. When you hear a question .you should complete theanswer to it with a word or a short phrase (in no more than 3words). The questionsand incomplete answers are printed in your test paper. You should write your answerson the answer sheet correspondingly. Now listen to the passage11. Who is being introduced at the meeting?Mr. John Smith, the new __________________.12. How long did Mr. John Smith work in Chicago?For over_______________________________.13. What position did Mr. John Smith hold in his previous company?He worked as the _____________________________________.14. What kind of knowledge does John Smith have that is very important to the company?His knowledge of _____________________________________.15. What kind of business does the speaker’s company do?It is an ______________________________ business.Part II Structure (15 minutes)Directions:This part is to test your ability to construct grammatically correct sentences. It consists of 2 sections.Section ADirections:In this section, there are 10 incomplete sentences. You are required to complete each one by deciding on the most appropriate word or words from the 4 choices marked A,B, C and D. Then you should mark the corresponding letter on the Answer Sheet witha single line through the center.16. If Jack ________ the real situation, he would have made a different plan.A. knowsB. knewC. will knowD. had known17. In the last few years, our company ________ a great deal of attention to building up companyculture.A. paysB. would payC. is payingD. has been paying18. We take great pride in our campus, ________is one of the most beautiful university settings inthe country.A. whereB. whichC. whatD. when19. We will provide you with tips to help you keep your stress levels________ control.A. forB. onC. underD. with20. Sometimes ________ a business can feel like a tough decision to make, no matter how goodyour idea is.A. startingB. being startedC. startD. to be started21. They still have some problems ________in designing the new energy vehicles.A. overcomeB. overcomingC. to overcomeD. overcomes22. It was not until yesterday ________the business negotiation finally came to a successful end.A. whenB. thatC. sinceD. after23. The program _______to help students prepare for their first year at our college.A. is designedB. designedC. designsD. has designed24. As soon as we ________ your order, we will process it and deliver your package immediately.A. receiveB. had receivedC. receivedD. will receive25. No sooner ________ his job in a small company than he received an offer from a biginternational firm.A. he quitB. he had quitC. had he quitD. does he quit Section BDirections: There are 10 incomplete statements here. You should fill in each blank with the proper form of the word given in brackets. Write the word or words in thecorresponding space on the Answer Sheet.26. We make every effort to ensure that our transaction process is safe and that your (person)__________ information is secure.27. Sales in the first half of the year were (slow) __________than expected, but they are expectingstronger sales in the second half.28. It is not (surprise) __________ that this new style of handbag is mainly purchased by youngwomen.29. (obvious) __________, the company does not seem to care much about its customer services.30. Employers in a small (organize) __________are especially interested in individuals with goodcommunication skills.31. Most customers were satisfied with the way their complaints (handle) __________by thecompany last month.32. UK universities should focus on (provide) __________overseas students with Englishlanguage sills and British culture as well.33. A completely new idea (deal) __________ with air pollution in big cities attracted much publicattention.34. He is one of the most qualified engineers our company (employ) __________ in the last tenyears.35. If you successfully complete the training program, you will (interview) __________ by thecompany for the final decision.Part III Reading Comprehension (40 minutes)Directions: This part is to test your reading ability. There are 5 tasks for you to fulfill. You should read the reading materials carefully and do the tasks as you are instructed.Task 1Directions: After reading the following passage, you will find 5 questions or unfinished statements, numbered 36 to 40. For each question or statement there are 4 choicesmarked A, B, C and D. You should make the correct choice and mark thecorresponding letter on the Answer Sheet with a single line through the center.Finding a good work-at-home job is not easy. Although you see all the online advertising, there aren’t that many of them. Those that are available may require that you live in a certain area or spend at least some time in the office. Others man be only part-time jobs.Keep in mind that the skills needed for home employment are similar to those needed for working in an office. You’ll also need a home office with a high speed internet connection, phone, fax, computer, printer, and other basic office equipment.To get started, consider your job search as your job. Spend as many hours per week on your job search as you would spend working. If you’re looking for full-time work, you should be spending full-time hours seeking a job.Networking ( 人际联系)remains the top way to find a job and it does work. Develop contacts—friends, family, even the other job seekers—anyone who might have the information you need. You can take a direct approach and ask for job information or try a less formal approach and ask for information and advice. Contact everyone you know and tell them you want to work from home. You may be surprised by the people they know and the job information they can provide.36. According to the first paragraph, it is not easy to find good work-at-home jobs because__________.A. they are seldom advertised online or in newspapersB. they may require that you live in a certain placeC. you are always asked to work full-timeD. you need to have a college degree37. Compared with those needed for working in an office, the skills for working at homeare_________.A. much easierB. totally differentC. almost the sameD. more challenging38. To find a good work-at-home job, you are advised to_________.A. create a website of your ownB. contact as many companies as you canC. Try your best to look for full- time employmentD. spend as much time as possible on your job search39. According to the passage, the best way to find a work-at-home job is_________.A. through networkingB. by personal visitsC. by online applicationD. through e-mailing40. The passage is mainly about __________.A. How to build a work-at-home officeB. How to look for a work-at-home jobC. the equipment needed for home workingD. the skills required for working from homeTask 2Directions: This task is the same as Task 1. The 5 questions or unfinished statements are numbered 41 to 45.Running your small business requires good staff. Once you find them, you don’t want to let them go elsewhere.During an employee’s time with a company, there are a number of forces that influence his or her behavior. I like to refer to them as “push”and “pull”. You’re either pushing an employee towards the door, or pulling them deeper into your organization.Suppose that you’ve made a good hire and you want to keep the employees, the trick is torecognize individual needs of employees and satisfy those needs, within reason, on order to keep pulling them away from the door. Even if you can’t pull them away from the door, at least don’t do things to push them out the door.Recognize that some employees will lose interest and need something fresh to keep their interest. If you can’t continually provide challenges, opportunities for promotion and other interesting and rewarding opportunities, then you’ll have some employees leave through no fault of your own,The important thing is to identify your key employees and make certain they are being treated well. Communicate with them on a regular basis to make certain that you understand what makes them behave in a particular way, and be aware of concerns they may have about job satisfaction.41. The author uses the word “push” (Para.2) to mean the force that _______.A. makes employees satisfied with their workB. drives employees to work more efficientlyC. causes employees to leave their companyD. keep employees to remain in their company42. To keep your employees, you are advised to _______.A. recognize and meet their needsB. identify and overcome their faultsC. offer them a salary as high as possibleD. provide them with a better working condition43. According to the passage, when is it possible for some employees to lose interest ?A. they have no rewarding opportunities.B. The company is located in a remote area.C. They make an mistakes in their workD. The company is not big enough for development44. How should you deal with your key employees according to the last paragraph?A. Make them behave well.B. Meet with them every day.C. Pay regular visits to their familyD. Make sure they are well-treated.45. The passage is mainly about __________.A. how to keep your employeesB. the importance of key employeesC. how to challenge your employeesD. the difference between “push” and “pull”Task 3Directions: Read the following passage. After reading it, you are required to complete the outline below it (No.46 to No.50). You should write your answers briefly (in notmore than three words) on the Answer Sheet correspondingly.Deutsche Bahn AGDeutsche Bahn (DB) AG was found in 1994. Today, it is one of the world’s leading passenger and logistics (物流) companies and operates in 130 countries.Every day about 290 000 employees provide passenger transportation and logistics services for customers around the world, as well as controlling and operating the relater transport networks in the rail, land, ocean, and air transport. In the 2010 financial year, DB AG posted revenues（总收入）of about 34.4 billion euros (欧元).The company’s railway activities in Germany——with about seven million passengers and 1 138 000 tons of goods transported every day——are its core business. Moreover, every day DB transports more then two million customers by bus. And every day DB AG operates over 26 000 train trips on its modern 33 000 kilometer long track network. DB’s main strategy, in addition to increasing its international activities, is to link together all modes of transport and building new travel and logistics chains worldwide.Task 4Directions:The following is a list of items related to museum visiting. After reading it, you are required to find the items equivalent to (与…等同) those given in Chinese in the tablebelow. Then you should put the corresponding letters in the brackets on the AnswerSheet, numbered 51 through 55.A—Admission information J—No AdmissionB—Adult admission K—Group tour entranceC—Student admission L—Audio guideD—Opening hours M—Family visitE—National museum N—Floor plans and galleriesF—Visitor route O—Multimedia guideG—Museum collection P—Group ticketH—Ticket desk Q—Information deskI—Please do not touchExamples: (B) 成人门票(N) 平面图和展馆Task 5Directions：Read the following passage. After reading it, you should give brief answers to the 5questions (No.56 to No.60) that follow. The answers (in not more than three words)should be written after the corresponding numbers on the Answer Sheet.Lost Property OfficeOpening hoursThe office is open every day from 08:00-19:00Contacting the lost property officeTelephone number: 0844 824 3115 (UK only).If you are calling from outside the UK, please call +44 (0) 20 8634 4130Phone lines are open every day 09:00-17:00E-mail: lhr. lostproperty@Where to find usWe are by the Heathrow Express ticket office near terminal (航站楼)3. Just follow the signs for “Lost Property” in the underground passageway.We also have an office in terminal 5 for any items lost here or on a British Airways flight operating from this terminal. Find us near domestic arrivals.Hold baggage (托运行李) enquiriesBaggage delivery is the responsibility of each airline. For inquiries relating to hold baggage please contact your airline directly.Items left on aircraft, in airline lounges(候机厅) or on airline busesIf anything is left on an aircraft, in an airline lounge or on an airline bus, please contact your airline. However, for Arik Air, Blue One, British Airways, SAS, Swissair, Tap Air Portugal and Virgin Atlantic Airways, please contact lost property above.56. What are the opening hours for the lost property office?From __________________________________every day.57. What is the telephone number of the lost property office for calling from outside the UK?______________________.58. Where can you find the lost property office near Terminal 3?By the Heathrow Express ___________________.59. How can you get to the lost property office near Terminal 3?By following the signs for “Lost Property” in ____________________.60. Whom should you contact if you left something on an airline bus?Your ______________.Part IV Translation -- English into Chinese (25 minutes)Directions: This part, numbered 61 through 65, is to test your ability to translate English into Chinese. After each of the sentences numbered 61 to 64, you will read four choices ofsuggested translation. You should choose the best translation and mark thecorresponding letter on your Answer Sheet. And for the paragraph numbered 65, writeyour translation in the corresponding space on the Translation/ Composition Sheet. 61. A careers adviser provides information, advice and guidance to help people make realisticchoices about their education, training and work.A.职业顾问向人们提供信息和咨询，并给予指导，帮助人们规划他们的教育培训和职业。

2013年12月大学英语六级考试真题（第1套）Section CDirections:There are 2 passages in this section. Each passage is followed by some questions or unfinished statements. For each of them there are four choices marked A), B), C) and D). You should decide on the best choice and mark the corresponding letter on Answer Sheet 2with a single line through the centre.Passage OneQuestions 56 to 60 are based on the following passage.Among the government’s most interesting reports is one that estimates what parents spend on their children. Not surprisingly, the costs are steep. For a middle-class, husband-and-wife family (average pretax income in 2009: $76,250), spending per child is about $12,000 a year. With inflation the family’s spending on a child will total $286,050 by age 17.The dry statistics ought to inform the ongoing deficit debate, because a budget is not just a catalog of programs and taxes. It reflects a society’s priorities and values. Our society does not—despite rhetoric(说辞) to the contrary—put much value on raising children. Present budget policies tax parents heavily to support the elderly. Meanwhile, tax breaks for children are modest. If deficit reduction aggravates these biases, more Americans may choose not to have children or to have fewer children. Down that path lies economic decline.Societies that cannot replace their populations discourage investment and innovation. They have stagnant (萧条的) or shrinking markets for goods and services. With older populations, theyresist change. To stabilize its population—discounting immigration—women must have an average of two children. That’s a fertility rate of 2.0.Many countries with struggling economies are well below that.Though having a child is a deeply personal decision, it’s shaped by culture, religion, economics, and government policy. “No one has a good answer” asto why fertility varies among countries, says sociologist Andrew Cherlin of The Johns Hopkins University. Eroding religious belief in Europe may partly explain lowered birthrates. In Japan young women may be rebelling against their mothers’ isolated lives of child rearing. General optimism and pessimism count. Hopefulness fueled Ameri ca’s baby boom. After the Soviet Union’s collapse, says Cherlin, “anxiety for the future” depressed birthrates in Russiaand Eastern Europe.In poor societies, people have children to improve their economic well-being by increasing the number of family workers and providing supports for parents in their old age. In wealthy societies, the logic often reverses. Government now supports the elderly, diminishing the need for children. By some studies, the safety nets for retirees have reduced fertility rates by 0.5 children in the United States and almost 1.0 in Western Europe, reports economist Robert Stein in the journal National Affairs. Similarly, some couples don’t have children because they don’t want to sacrifice their own lifestyles to the lime and expense of a family.Young Americans already face a bleak labor market that cannot instill (注入) confidence about having children. Piling on higher t axes won’t help, “If higher taxes make it more expensive to raise children,” says Nicholas Eberstadt of the American Enterprise Institute, “people will thinktwice about having another child.” Tha t seems like common sense, despite the multiple influences on becoming parents.注意：此部分试题请在答题卡2上作答。

2013英语专八真题参考答案解析(整理自网络)阅读理解11.the appearance of advertisement in newspaper.12.more people are involved in finding, discussing and distributing news13.planning the return to coffee-house news.14.optimistic and cautious15.the participator nature of news.阅读理解第二篇16. regret17. more resturants to choose from18. can be happy if they want19. its implications for life20. thoughtfulness阅读理解第三篇21. Geographic location22. the government’s determination23. denmark’s energy-saving success offers the world a useful model24. the country’s previous experience of oil shortage25. energy saving cannot go together with economic growth.阅读第四篇26. shops try all kinds of means to please customers27. over-friendly28. customers have got a sense of superiority29. keep asking for more discounts30. the practice of frugality is of great importance人文知识31. 澳大利亚的全称是：the commonwealth of Austrilia32. 加拿大以什么著称，除了什么以外（矿产、森林、肥沃的土地）。

三Part I Writing (30 minutes)Directions:For this part you are allowed 30 minutes to write an essay commenting on the remark "The greatest use of life is to spend it for something that will outlast it." You can give examples to illustrate your point and then explain what you will do to make your life more meaningful. You should write at least 150 words but no more than 200 words.1. A) Dr. Smith's waiting room isn't tidy.B) Dr. Smith enjoys reading magazines.C) Dr. Smith has left a good impression on her.D) Dr. Smith may not be a good choice.2. A) The man will rent the apartment when it is available.B) The man made a bargain with the landlady over the rent.C) The man insists on having a look at the apartment first.D) The man is not fully satisfied with the apartment.3. A) Packing up to go abroad.B) Brushing up on her English.C) Drawing up a plan for her English course.D) Applying for a visa to the United States.4. A) He is anxious to find a cure for his high blood pressure.B) He doesn't think high blood pressure is a problem for him.C) He was not aware of his illness until diagnosed with it.D) He did not take the symptoms of his illness seriously.5. A) To investigate the causes of AIDS.B) To raise money for AIDS patients.C) To rally support for AIDS victims in Africa.D) To draw attention to the spread of AIDS in Asia.6. A) It has a very long history.B) It is a private institution.C) It was founded by Thomas Jefferson.D) It stresses the comprehensive study of nature.7. A) They can't fit into the machine.B) They have not been delivered yet.C) They were sent to the wrong address.D) They were found to be of the wrong type.8. A) The food served in the cafeteria usually lacks variety.B) The cafeteria sometimes provides rare food for the students.C) The students find the service in the cafeteria satisfactory.D) The cafeteria tries hard to cater to the students' needs. Questions 9 to 12 are based on the conversation you have just heard.9. A) He picked up some apples in his yard.B) He cut some branches off the apple tree.C) He quarreled with his neighbor over the fence.D) He cleaned up all the garbage in the woman's yard.10. A) Trim the apple trees in her yard.B) Pick up the apples that fell in her yard.C) Take the garbage to the curb for her.D) Remove the branches from her yard.11. A) File a lawsuit against the man.B) Ask the man for compensation.C) Have the man's apple tree cut down.D) Throw garbage into the man's yard.12. A) He was ready to make a concession.B) He was not prepared to go to court.C) He was not intimidated.D) He was a bit concerned.Questions 13 to 15 are based on the conversation you have just heard.13. A) Bad weather.B) Human error.C) Breakdown of the enginesD) Failure of the communications system.14. A) Two thousand feet.B) Twelve thousand feet.C) Twenty thousand feet.D) Twenty-two thousand feet.15. A) Accurate communication is of utmost importance.B) Pilots should be able to speak several foreign languages.C) Air controllers should keep a close watch on the weather.D) Cooperation between pilots and air controllers is essential.Passage OneQuestions 16 to 19 are based on the conversation you have just heard.16. A) His father caught a serious disease.B) His mother passed away.C) His mother left him to marry a rich businessman.D) His father took to drinking.17. A) He disliked being disciplined.B) He was expelled by the university.C) He couldn't pay his gambling debts.D) He enjoyed working for a magazine.18. A) His poems are heavily influenced by French writers.B) His stories are mainly set in the State of Virginia.C) His work is difficult to read.D) His language is not refined.19. A) He grieved to death over the loss of his wife.B) He committed suicide for unknown reasons.C) He was shot dead at the age of 40.D) He died of heavy drinking.Passage TwoQuestions 20 to 22 are based on the passage you have just heard.20. A) Women.B) Prisoners.C) Manual workers.D) School age children.21. A) He taught his students how to pronounce the letters first.B) He matched the letters with the sounds familiar to the learners.C) He showed the learners how to combine the letters into simple words.D) He divided the letters into groups according to the way they are written.22. A) It can help people to become literate within a short time.B) It was originally designed for teaching the English language.C) It enables the learners to master a language within three months.D) It is effective in teaching any alphabetical language to Brazilians.Passage ThreeQuestions 23 to 25 are based on the passage you have just heard.23. A) The crop's blooming period is delayed.B) The roots of crops are cut off.C) The topsoil is seriously damaged.D) The growth of weeds is accelerated.24. A) It's a new way of applying chemical fertilizer.B) It's an improved method of harvesting crops.C) It's a creative technique for saving labor.D) It's a farming process limiting the use of ploughs.25. A) In areas with few weeds and unwanted plants.B) In areas with a severe shortage of water.C) In areas lacking in chemical fertilizer.D) In areas dependent on imported food.Adults are getting smarter about how smart babies are. Not long ago. researchers learned that 4-day-old could understand (26)______ and subtraction. Now. British research psychologist Graham Schafer has discovered that infants can learn words for uncommon things long before they can speak. He found that 9-month-old infants could be taught, through repeated show-and-tell, to (27)______ the names of objects that were foreign to them, a result that (28)______ in some ways the received wisdom that, apart from learning to (29)______ things common to their daily lives, children don't begin to build vocabulary until well into their second year. "It's no (30)______ that children learn words, but the words they tend to know arc words linked to (31)______ situations in the home." explains Schafer. "This is the first demonstration that we can choose what words the children will learn and that they can respond to them with an unfamiliar voice (32)______ in an unfamiliar setting."Figuring out how humans acquire language may (33)______ why some children learn to read and write later than others. Schafer says, and could lead to better treatments for developmental problems. What's more, the study of language (34)______ offers direct insight into how humans learn. "Language is a test case for human cognitive development." says Schafer. But parents eager to teach their infants should take note: even without being taught new words, a control group (35)______ the other infants within a few months. "This is not about advancing development." he says. "It's just about what children can do at an earlier age than what educators have often thought."Questions 36 to 45 are based on the following passage.Cell phones provide instant access to people. They are creating a major (36)______ in the social experiences of both children and adolescents. In one recent US survey, about half the teens polled said that their cell phone had (37)______ their communication with friends. Almost all said thattheir cell phone was the way they stayed in touch with peers, one-third had used the cell phone to help a peer in need- and about 80% said the phone made them feel safer. Teenagers in Australia, (38)______, said that their mobile phones provided numerous benefits and were an (39)______ part of their lives; some were so (40)______ to their phones that the researchers considered it an addiction. In Japan, too, researchers are concerned about cell phone addiction. Researchers in one study in Tokyo found that more than half of junior high school students used their phones to exchange e-mails with schoolmates more than 10 times a day.Cell phones (41)______ social connections with peers across time and space. They allow young people to exchange moment-by-moment experiences in their daily lives with special partners and thus to have a more (42)______ sense of connection with friends. Cell phones also can (43)______ social tolerance because they reduce children's interactions with others who are different from them. In addition to connecting peers, cell phones connect children and parents. Researchers studying teenagers in Israel concluded that-in that (44)______ environment, mobile phones were regarded as "security objects" in parent-teen relationships-important because they provided the possibility of (45)______ and communication at all times.注意：此部分试题请在答题卡2 上作答。

12月ACCA F8考试复习重点指导Key definitions in F8 Part AThe objective of an audit of financial statements is to enable the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.An assurance engagement performed by a practitioner will consist of the following elements:(a) A three party relationship. The three parties are the intended user, the responsible party and the practitioner (each party is described in the Key terms box below).(b) A subject matter. This is the data to be evaluated that has been prepared by the responsible party. It can take many forms, including financial performance (eg historical financial information),non-financial performance (eg key performance indicators), processes (eg internal control) and behaviour (eg compliance with laws and regulations).(c) Suitable criteria. The subject matter is evaluated or measured against criteria in order to reach an opinion.(d) Evidence. Sufficient appropriate evidence needs to be gathered to support the required level of assurance.(e) An assurance report. A written report containing the practitioner's opinion is issued to the intended user, in the form appropriate to a reasonable assurance engagement or a limited assurance engagement.Principles of the UK Corporate Governance Code• Leadership- Every company should be headed by an effective board, which is collectively responsible for the long-term success of the company.- There should be a clear division of responsibilities at the head of the company between the running of the board and the executiveresponsibility for the running of the company's business. No one individual should have unfettered powers of decision.- The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role. As part of their role as members of a unitary board, non-executive directors should constructively challenge and help develop proposals on strategy.•Effectiveness- The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively.- There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board.- All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively.- All directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge.- The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties.- The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.- All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance.•Accountability- The board should present a balanced and understandable assessment of the company's position and prospects.- The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The board should maintain sound risk management and internal control systems.- The board should establish formal and transparent arrangements for considering how it should apply the corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company's auditor.•Remuneration- Levels of remuneration should be sufficient to attract, retain and motivate directors of the quality required to run the company successfully, but a company should avoid paying more than is necessary for this purpose.A significant proportion of executive directors' remuneration should be structured so as to link rewards to corporate and individual performance.- There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding their own remuneration.•Relations with shareholders- There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place.- The board should use the AGM to communicate with investors and to encourage their participation.ACCA CODE OF ETHICS AND CONDUCT• Integrity - being straightforward and honest in all professional and business relationships.• Objectivity - not allowing bias, conflicts of interest or undue influence of others to override professional or business judgements.• Professional Competence and Due Care - to maintain professional knowledge and skill at a level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques and act diligently and in accordance with applicable technical and professional standards.•Confidentiality –to respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose any such information to third parties withoutproper and specific authority, unless there is a legal or professional right or duty to disclose, nor use the information for the personal advantage of the professional accountant or third parties.•Professional Behaviour – to comply with relevant laws and regulations and avoid any action that discredits the profession.。

Professional Level – Essentials Module, Paper P1Governance, Risk and Ethics December 2013 Answers 1(a)(i)Concepts of sustainabilityIn the context of the case, SOW meant sustainability in the environmental sense of the word. This means that resourcesshould not be taken from the environment or emissions should not be made into the environment, at a rate greater thancan be corrected, replenished or offset. In the case of the Hiaka pipeline, this means that its impact on the environmentshould not exceed the ability to replace used resources or clean up spills or emissions as they occur.The government of Exland used the term to mean the sustainability of its economy and the economic sustainability ofHEC itself which is such an influence on the national economy. The fact that Exland gets 90% of its oil from one singlesource (HEC) means that it is disproportionately dependent on the Hiaka pipeline. In all developed and developingeconomies, oil underpins economic growth and hence the wellbeing of citizens. This applies to jobs, health, educationand other essential aspects of Exland’s infrastructure. Without a regular and reliable source of oil from HEC, andassuming that Exland is unable to find other sources of oil at reasonable cost, the Exland economy would be badlydamaged with a number of unfortunate social consequences.(ii)Tensions between the conceptsThe balance between environmental conservation and economic development is a longstanding one, and one whichapplies to all parts of the world in which business activity takes place. A lot of business activity takes place at a net costto the environment and so the sustainability of one (environment or economy) may be achieved only at a net cost tothe other. Some believe that a lot of business activity can be made more environmentally sustainable but the economiccosts of this, possibly by accepting a lower rate of economic growth with its associated effects, are often unpopular.The economies of both Hiakaisland and also Exland are very dependent on the Hiaka pipeline. The thousands of jobson Hiakaisland depend on it, the economy of Exland is underpinned by the oil and the business transaction with Exlandis also an important source of foreign currency for the government of Wyland. These benefits all depend upon theeconomic arguments having ascendency over the claims of SOW.Reasons why many are unconvinced by the case for environmental sustainability include the issues of measurementand time perspective. Essentially, economic value can be measured whilst environmental value is more difficult.Economic consequences can be seen over the short term whilst environmental consequences may not be visible formany years.Some socio-political structures are thought to militate against longer-term perspectives such as the need toprovide short-term shareholder returns (as HEC’s shareholders have traditionally demanded) and the length of electoralcycles. In the case scenario, SOW would probably claim to have a longer-term perspective whilst the government ofExland and HEC will have shorter-term perspectives: Exland because its government needs to be re-elected every fouryears and HEC because it is a public company whose shares are traded on the Wyland stock exchange. The expectationsfor strong annual returns have, in the opinion of the market analyst, been unhelpful in allowing the company to workwith longer-term perspectives.The extraction of oil is ultimately unsustainable because it requires the exploitation of a non-renewable energy source.In other words, once it is gone, it is gone. The view of HEC’s board that it should be ‘as sustainable as is economicallypossible’ is unlikely to satisfy SOW and may be seen effectively as no commitment to environmental sustainability at all.Some countries have taken steps to reduce the net impact of business activity including investing in renewable energy(e.g. wind and water power) and both Wyland and Exland could reduce their dependence upon oil by diversifying theirenergy sources to help to increase environmental sustainability. A lack of dependence on a single energy source (e.g.oil) can also make the country more economically robust, thereby helping its long-term economic sustainability.[Tutorial note:Allow a range of expressions of these tensions.](b)Assessment of the risks and suitable risk strategiesRisk 1 (risk of terrorist attack). Probability is low, with a likelihood of an attack thought to be 10% at some point in the next ten years. The impact of such an event would be very high, however, as it would involve severe spillage and complete supply disruption. This would mean that oil would not be delivered to the port at Hiakatown and this would cause a loss of oil to supply to Exland.With any risk assessed as low probability but high impact, the usual strategy to adopt is to transfer or share the risk. At the same time, however, the company and the government of Wyland would be advised to take necessary measures to reduce the probability by instituting suitable security measures such as increased monitoring of the pipeline (perhaps by electronic surveillance or similar). An insurer may share the risk with HEC and, because of the strategic importance of the pipeline to the regional economy and to Exland, the Wyland government may contribute to this effort.Risk 2 (geological movement and/or earthquake) has an assessed ten-year probability of 5% which is probably considered quite low. The impact that such an event would have, though, would be potentially very high. As has happened elsewhere in the world, seismic activity can cause serious and often catastrophic failure of civil engineering installations. This can result in loss of life and, in the case of the Hiaka pipeline, ‘severe long-term supply disruption’. This would be damaging to the Hiakaisland economy and also to the Exland economy.The strategy for this is also to transfer or share. Given the relatively low probability (5% in ten years equates to 0·5% probability in any given year), it should be possible to get an insurer to share the risk for a suitable premium.Risk 3, the technical failure of a joint in the pipeline, was also assessed as having a low probability of occurring. At the same time, the impact of such a failure, presumably because of the technical design of the joints in the pipeline, is quite low. There is the potential for a disruption to supply but only by a few hours and with no leakage of oil.The strategy for this risk (being low probability and low impact) is probably to accept it. Given that the costs of reducing the risk (perhaps by replacing the joints with more robust ones) would exceed the value of the potential losses, there is no reasonable case for any other course of action. In addition, careful and ongoing maintenance of the pipeline may help to reduce this risk.Risk 4 is the risk of animal or natural damage to the pipeline. Because of its exposed northern situation, it is likely that much of the pipeline will be exposed to extremes of weather and it is seemingly possible for large animals also to have some effects on the pipeline over time. The ten-year probability for an event such as this was calculated at 60% and, indeed, the case mentions that one such event happened recently, thus demonstrating the vulnerability to this risk. Given the design and construction of the pipeline, however, the impact of any of these risks occurring is quite low, given as ‘causing superficial damage to pipeline but no disruption to supply’.The strategy for a risk assessed as high probability but low impact is to reduce it as far as possible. In the case of risk 4, this might mean, for example, reinforcing the pipeline at its most vulnerable points to extreme weather, erecting defences to deter animals where they are most present, or adopting similar risk reducing measures.Subjective risk assessmentSubjective risk assessment is distinguished from objective risk assessment by how the figures for probability and impact are arrived at. If these figures can be determined accurately and with reference to some certainty, it will be more objective than when an estimate is based more on a ‘best guess’ basis. Subjective assessments must be treated with more caution than estimates based on more objective data.In the case of Gerry Jupp’s estimates, the case does not say how his figures are arrived at, but it is likely, given that the pipeline is ten years old, that it may be based partly on past performance and partly on a ‘best guess’ about future events.The estimate of the probability of extreme weather events can be partly predicted based on past weather behaviour but estimation of the probability of terrorist events are likely to be much more subjective.The outcome of this is that data generated objectively is likely to be more reliable and useful than those based on more subjective probability or impact determinations.(c)Labour market conditionsThe price paid for any good or service (including labour) is related to the equilibrium point between supply and demand. An excess of supply or a reduction in demand will tend to suppress prices whilst a reduction in supply (say of a key skill in the labour market) or an increase in demand for those skills will tend to increase the market price.In the case of the levels of rewards for chief executives, supply into that market is influenced by the number of suitable people offering themselves for employment and the levels of skills offered by those people. At the same time, organisations buying in the market will seek to match applicants (suppliers) with their own skills requirements. Because there are mismatches between supply and demand, the price rises and falls over time and between countries and regions, just like any other good or service being traded.Because Hiakaisland is a remote location, it may be difficult to recruit to senior positions in the company. Given that highly qualified and suitably experienced people can potentially work anywhere, they may choose employment openings based partly on non-job related factors such as quality of life issues, climate, levels of infrastructure development, schools for children, etc. In that sense, Hiakaisland must compete with other locations, and HEC must compete with other employers to attract high quality people to work for it and accordingly must sometimes pay a market premium.Critical evaluation – arguments forThe first argument in favour of paying the ‘global’ market rate for Mr Hoo is that the company needs to have a highly skilled and capable person in charge of its operations and there is unlikely to be a supply of such labour locally prepared to work for a lower rate. As the supplier of a key export and a major employer in Wyland, the regional economy of Hiakaisland depends upon the company’s success whilst the people of neighbouring Exland depend upon it for 90% of their oil needs.The costs of recruiting an underqualified or inadequately experienced CEO may be much higher than the reward package paid.In highly skilled areas such as the market for chief executives, labour markets can be global, meaning that organisations may buy people from all over the world and sellers (applicants) may go anywhere in order to find suitable work. This results in a competitive situation for both applicants and employers, meaning that a global equilibrium price (level of reward) can seem high in some countries compared to local labour rates (as in Hiakaisland). If there is no suitable applicant prepared to work for a level of reward commensurate with local rates of pay, the company is compelled to pay the going ‘global’ rate whether it wants to or not, possibly including a local market premium.Critical evaluation – arguments againstWhere senior management is ‘parachuted in’ at such a high level of reward compared to local rates, it can make the chief executive in question appear to be grasping and greedy. This, in turn, can be bad for cohesion and loyalty in the workplace.It may also affect the motivation of employees and their willingness to co-operate with management initiatives at times. There is an argument that there should be a fixed multiple between the highest and lowest paid in any organisation. This enables the organisation to demonstrate its commitment to fairness, and to respect local sensibilities about rates of pay. By Mr Hooaccepting a fixed multiple, the company could strengthen its reputation locally and this might create a strategic advantage, especially where the local press and trade unions are concerned.Because living costs are significantly lower on Hiakaisland than in some of the large cities on the Wyland mainland, the ’real income’ on Hiakaisland of a global equilibrium CEO salary is likely to be disproportionately high. In order to enjoy a comfortable life on Hiakaisland, Mr Hoo does not need a salary equivalent to those living in other, more expensive, places.If rewards are not adjusted for local prices, this not only creates the unrest as reported in the case scenario, but also creates additional costs to the employer and hence poorer value for the shareholders.With the CEO having such a high salary compared to local rates, it may make it difficult for Mr Hoo to argue convincingly for cost restraint or in negotiations with employees or trade unions with regard to their rewards. With his own rewards perceived to be disproportionately high by local labour standards, Mr Hoo may be seen as being hypocritical by those he is in negotiations with and this may affect their willingness to negotiate in good faith or to accept his demands. The idea of a social contract is important in many organisations where all parties must believe themselves to have a ‘fair’ deal. This can be difficult when one person is seen to have a larger ‘slice’ compared to others and this, in turn, can affect cohesion and motivation.(d)(i)Hiaka EnergyAddress line 1Address line 2Address line 3Date Minister of IndustryAddress line 1Address line 2Address line 3Dear Minister,Thank you for your recent letter on the subject of internal controls at Hiaka Energy Company (HEC) following the Gojo incident. You may be aware that I have just recently taken over as the chief executive officer (CEO) of HEC. In this letterI would like to explain the plans I have for introducing more stringent internal controls and how I believe that a formalinternal audit function in the company should help to address issues like that which arose in Gojo in the future.T urning first to the difficulties in the recent past, you will be aware of the rough and dramatic terrain over which the Hiaka pipeline has been constructed. At 1,000 km long, this was a very substantial civil engineering project and required a great deal of technical expertise in its construction. It passes through hundreds of kilometres of a remote area in which accessing the pipeline is difficult. This can mean that a visual monitoring of the pipeline and its surroundings, perhaps for threats like rock slides, can be difficult.Despite this challenge, the company does implement maintenance encampments at strategic positions along the length of the pipeline. In taking over from the previous CEO, I have regrettably learned that conditions on these bases are not as comfortable for workers as I would like and as the workers deserve. One of the consequences is that work in these locations is not seen as attractive, morale is sometimes low and it is difficult to recruit people for this work. This can result in a lack of motivation and perhaps less attention to technical detail than is required in providing the highest levels of internal control.Recent years have also witnessed some poor industrial relations between workers and management. You will be aware of the importance of a high level of trust in an organisation and I suspect these problems may have had an effect on the effectiveness of our internal controls. This is not to excuse a lack of attention to internal controls, but it may go some way to explain why things have deteriorated to the extent that they have.In order to provide the levels of maintenance required along the length of the pipeline, HEC has relied for some time on foreign labour acquired from beyond the borders of Wyland. A number of languages are spoken by these people, and it is sometimes difficult to convey detailed technical messages to people when they are uncertain in the language of Wyland. Clear and unambiguous information is necessary in the effective implementation of internal controls and this has not always been possible in the past because of these language problems.(ii)In addressing these problems, however, I am pleased to convey to you that I have recently gained the support of the board to establish a full internal audit function at HEC reporting directly to the board of directors. I see a number of benefits from this once it is established and operating effectively. I hope this will reassure the Wyland government and our other stakeholders.Internal audit functions, such as the one envisaged for HEC, have traditionally had four general roles: to address and assure the quality and effectiveness of internal control systems, of risk management, of technical and legal compliance issues and also of the value for money returned to our shareholders and others. I personally see these roles as interconnected and believe that a great deal of benefit will result in the future.With regard to the effectiveness of internal controls, HEC faces a unique challenge with the physical size and geographical spread of its operations. With such a complex operation and so many stakeholders in the successful delivery of energy from Hiakaisland, internal audit will provide an effective control over these operations. The same applies to the risks which HEC faces. Our new risk manager, Gerry Jupp, has already begun the task of registering andassessing the risks, but internal audit will systematise this and ensure that these are subjected to regular and thoroughinternal audit. This will provide assurance that there are no omissions and that each risk is assessed and recorded asrequired by the internal audit procedures.As an energy company working under Wyland law, HEC is subject to both national regulations and technical rules. Ournew internal audit function will provide assurance that each requirement is taken into account and that the levels ofcompliance are monitored and corrected as necessary. This also applies to the contractual terms of our supply agreementwith the government of Exland. Finally, our new internal audit department will help the company to achieve value formoney. This is not only important for the shareholders but we are aware that sound financial management is a key partof corporate governance and that we also want to achieve value for our customers and employees. Ensuring thatprocurements and other asset purchases are best value, for example, will help us to achieve this. Had such an effectiveinternal audit function been in place at the time of its construction, the pipeline could have been constructed withinbudget and on time rather than being late and over budget as was actually the case.I hope I have been able to address some of your concerns about HEC and that the company continues to enjoy goodrelations with the Wyland government.With all best wishes,Yours sincerely,Gavin HooChief executive2(a)Distinguish between rules and principlesRules and principles are the two general approaches taken to the regulation of corporate governance practice. The United States and Sarbanes-Oxley is the only major example of a rules-based approach, with most countries preferring to regulate governance behaviour through the observation of general principles.In a rules-based approach such as Sarbanes-Oxley (‘Sarbox’ or ‘Sox’), the legal enforceability of the Act requires total compliance in all details. This places a substantial compliance cost upon affected companies and creates a large number of compliance advice consultancies to help companies ensure compliance. It is the judiciary rather than investors which monitors and punishes transgression and this means that there is no theoretical distinction drawn between major or minor compliance failures. This is sometimes seen, therefore, to be clumsy or un-nuanced as a means of enforcement.In a principles-based jurisdiction, listed companies are required by the stock exchange (rather than the law) to meet certain standards of compliance. These standards are usually expressed in a corporate governance code. Companies are required, by the stock exchange’s listing rules, to comply in detail with all provisions in the code but may, if unable to do so, report to the shareholders the ways in which compliance is not fully achieved, the reasons for the lack of compliance and when the company expects to be back in full compliance. The shareholders may then assess the transgression and take appropriate action themselves. Such action can be in the form of direct complaints to management or investor relations, or reducing their holdings of those shares, thereby reducing company value. In other words, the market rather than the state enforces and regulates compliance and this is thought by some to be a more efficient enforcement mechanism.Disadvantages of Sarbanes-Oxley and rules-based approachesThe first disadvantage is that costs are incurred in ensuring and demonstrating compliance. It can be convincingly argued that a substantial proportion of this cost adds very little value to shareholders, especially in small companies, and resources are diverted to demonstrating minor areas of compliance which could be used more effectively elsewhere (such as in company operations). Because compliance on the ‘big’ issues is accorded equal weight in law to compliance with ‘small’ issues, costs are disproportionately incurred in demonstrating compliance in some non-critical areas.Second, compliance is seen to be an inflexible ‘box ticking’ exercise and this can sometimes mean that companies lose perspective of what are the most important aspects of governance and what can sometimes be a less important provision to comply with. Disproportionate amounts of management time can be used in ensuring compliance in an area which may be less important to shareholders, but which is nevertheless an important ‘box’ to have ticked.Third, infringements and transgressions are punished by the state through its judiciary and not by those most directly affected by such transgressions: the shareholders. Those in favour of principles-based approaches argue that there is a greater economic efficiency in having governance monitored by those with the strongest stake in gains and losses (the shareholders), rather than the (in comparison) inefficient and undiscerning agents of the state. In many cases, agents of the state are unable to distinguish between major and minor infringements, merely noticing that a ‘box’ is ‘unticked’ and pursuing punishment asa result.(b)AgencyIn the context of corporate governance, agency refers to the relationship between the principal and an agent. The principal appoints an agent to act on his or her behalf in order to maximise the outcome sought by the principal. In the case of a business organisation with a separation of ownership and control, this relationship comprises shareholders (principals) and directors (agents). As agents, directors’ responsibilities should be primarily concerned with maximising the long-term returns to shareholders and providing timely, accurate and truthful information to shareholders in terms of reporting. The production of reports on internal controls is an important part of this reporting.Benefits of ‘maintaining a system of internal control over financial reporting’First, the system is important for ensuring that information can be accessed as necessary for management decision-making purposes, for reporting, or as part of an audit trail. Information needs to be reliable whenever it is used, either for internal management purposes or for shareholders, and a robust system to produce reporting information is necessary for that. This includes the benefit of the timely delivery of reports.Second, the case describes the importance of accurate ‘evidential matter’ in the preparation of reports. This may be important in providing an audit trail and to demonstrate that the systems and reporting are compliant with GAAP or other relevant systems of accounting rules (such as IFRS). These make it more likely that the reports will be truthful and reliable, both of which are important information qualities for shareholders. The evidential matter is likely to be able to demonstrate that the contents of the external report have been arrived at by using outputs from measurement systems compliant with relevant standards and this will satisfy external auditors, and, in turn, shareholders.Third, the report on internal control (IC) is capable of providing assurance to investors that the company is being well run and that it has effective internal controls capable of supporting a strategy which can maximise the long-term returns needed.As agents of the shareholders’ interests, directors must demonstrate they are responsible stewards of shareholder value. A report on the adequacy of internal controls in place in the company is a convincing way of achieving this.Fourth, because code compliance is mandatory in a rules-based jurisdiction (Sarbanes-Oxley in the case scenario), the maintenance of an effective system of internal control allows management to clearly demonstrate its compliance with the effective laws governing corporate governance. Because there are legal and reputational penalties for any compliance failures (even small ones), the clear and unambiguous signalling of compliance is important to shareholders and the availability of legal sanctions for non-compliance provides greater deterrents and provides greater assurance about the effectiveness of internal controls to shareholders.(c)Arguments for the exemptionFirst, smaller companies generally exist in less complicated environments than larger companies (i.e. with fewer potential risks and less dynamic risks) and are consequently less exposed than larger companies to some losses. Size confers political visibility and a wider range of stakeholder claims upon the organisation. Furthermore, there is less risk to society and to investors from individual smaller company losses. Whereas a large company with inadequate internal controls and/or poor IC reporting may cause thousands of job losses, large losses to share portfolios and individual investors, there is likely to be less overall risk to society and to general investors if a small company slightly misreports the adequacy of its internal controls. It is also likely that small companies do not have widely distributed share ownership, in many cases having the owners being managers. This may mean that shareholders may not need or want the full levels of disclosure of such monitoring compared to larger companies with more distributed share ownership and a greater ‘distance’ between ownership and management.Second, there are also likely to be disproportionate costs (compared to output volumes) of putting systems in place for gathering the necessary ‘evidential matter’. Even when infrastructure is installed, management time is required to prepare evidence of compliance. The preparation and publication of the s.404 report itself can also be disproportionately expensive for a small company because of the fixed costs of report preparation which apply regardless of the variable costs of volumes actually produced.The third reason for exempting smaller companies is that the fixed costs of the infrastructure systems which need to be put into place are disproportionately high for a small company. For a larger company which can allocate the overheads of this investment over a high number of outputs, such costs are manageable or even negligible. For a smaller company with fewer outputs, fixed cost allocation per unit may be seen as unfairly high, especially when cash flow is already very tight and the scope for investment in systems for compliance are very limited.Fourth, the costs of compliance could be a barrier to growth for smaller companies and a disincentive to entrepreneurship.Many believe that any regulation seen as unnecessarily bureaucratic or which does not enjoy the broad support of those affected by it can discourage value creation. This might mean, for example, that affected companies do not grow as quickly as they might, that they may make lower profits and thereby create fewer jobs.3(a)Roles of a nominations committeeNominations committees have five general roles, all of which are concerned with the recommendation of appointments to the board of directors. The first role is to establish the appropriate balance between executive and non-executive directors (NEDs).In some countries, this is influenced by regulation. In the UK, the UK corporate governance code specifies that a half of the whole board should be NEDs. The second role is to ensure that the board contains the requisite skills, knowledge and experience to effectively lead the company and provide leadership. Any identified gaps in these requirements should be filled by new appointments. Third, the nominations committee is concerned with the continuity of required skills, the retention of directors and succession planning. Fourth, it is responsible for determining the most desirable board size given the skill needs, cost constraints and strategies of the company. Finally, the committee is likely to be concerned with issues of diversity and to ensure that the company’s board is adequately representative of the society in which it operates.How to approach the task at HWLIn appointing new directors to the board of HWL, the challenge is finding directors who share the values of the charity and who are also prepared to serve at a market discount. The pressure from Marian Ngogo is to find competent people who match both of these criteria and this is likely to be a substantial challenge.At HWL, the nominations committee could help in several ways with this.。

P a p e r F 8 ( I N T )ALL FIVE questions are compulsory and MUST be attempted1Minty Cola Co (Minty) manufactures fizzy drinks such as cola and lemonade as well as other soft drinks and its year end is 31 December 2013. You are the audit manager of Parsley & Co and are currently planning the audit of Minty.You attended the planning meeting with the engagement partner and finance director last week and recorded the minutes from the meeting shown below. You are reviewing these as part of the process of preparing the audit strategy.Minutes of planning meeting for MintyMinty’s trading results have been strong this year and the company is forecasting revenue of $85 million, which is an increase from the previous year. The company has invested significantly in the cola and fizzy drinks production process at the factory. This resulted in expenditure of $5 million on updating, repairing and replacing a significant amount of the machinery used in the production process.As the level of production has increased, the company has expanded the number of warehouses it uses to store inventory. It now utilises 15 warehouses; some are owned by Minty and some are rented from third parties. There will be inventory counts taking place at all 15 of these sites at the year end.A new accounting general ledger has been introduced at the beginning of the year, with the old and new systemsbeing run in parallel for a period of two months.As a result of the increase in revenue, Minty has recently recruited a new credit controller to chase outstanding receivables. The finance director thinks it is not necessary to continue to maintain an allowance for receivables and so has released the opening allowance of $1·5 million.In addition, Minty has incurred expenditure of $4·5 million on developing a new brand of fizzy soft drinks. The company started this process in January 2013 and is close to launching their new product into the market place.The finance director stated that there was a problem in November in the mixing of raw materials within the production process which resulted in a large batch of cola products tasting different. A number of these products were sold;however, due to complaints by customers about the flavour, no further sales of these goods have been made. No adjustment has been made to the valuation of the damaged inventory, which will still be held at cost of $1 million at the year end.As in previous years, the management of Minty is due to be paid a significant annual bonus based on the value of year-end total assets.Required:(a)Explain audit risk and the components of audit risk.(5 marks)(b)Using the minutes provided, identify and describe SIX audit risks, and explain the auditor’s response to eachrisk, in planning the audit of Minty Cola Co. (12 marks)(c)Identify the main areas, other than audit risks, that should be included within the audit strategy documentfor Minty Cola Co; and for each area provide an example relevant to the audit. (4 marks)(d)Describe substantive procedures the audit team should perform to obtain sufficient and appropriate auditevidence in relation to the following three matters:(i)The treatment of the $5 million expenditure incurred on improving the factory production process;(ii)The release of the $1·5 million allowance for receivables; and(iii)The damaged inventory.Note: The total marks will be split equally between each part.(9 marks)(30 marks)22(a)(i)Define a ‘test of control’ and provide an example of a test of control in relation to the audit of wages and salaries; and(ii)Define a ‘substantive procedure’ and provide an example of a substantive procedure in relation to the audit of wages and salaries.Note: The total marks will be split equally between each part.(4 marks)(b)ISA 500 Audit Evidence requires auditors to obtain sufficient and appropriate audit evidence. Appropriateness isa measure of the quality of audit evidence; that is, its relevance and its reliability.Required:Identify and explain THREE factors which influence the reliability of audit evidence.(3 marks)(c)Auditors are required to perform an overall review of the financial statements before they provide their auditopinion.Required:Explain THR EE procedures an auditor should perform in conducting their overall review of the financial statements.(3 marks)(10 marks)3[P.T.O.3You are a member of the recently formed internal audit department of Oregano Co (Oregano). The company manufactures tinned fruit and vegetables which are supplied to large and small food retailers. Management and those charged with governance of Oregano have concerns about the effectiveness of their sales and despatch system and have asked internal audit to document and review the system.Sales and despatch systemSales orders are mainly placed through Oregano’s website but some are made via telephone. Online orders are automatically checked against inventory records for availability; telephone orders, however, are checked manually by order clerks after the call. A follow-up call is usually made to customers if there is insufficient inventory. When taking telephone orders, clerks note down the details on plain paper and afterwards they complete a three part pre-printed order form. These order forms are not sequentially numbered and are sent manually to both despatch and the accounts department.As the company is expanding, customers are able to place online orders which will exceed their agreed credit limit by 10%. Online orders are automatically forwarded to the despatch and accounts department.A daily pick list is printed by the despatch department and this is used by the warehouse team to despatch goods.The goods are accompanied by a despatch note and all customers are required to sign a copy of this. On return, the signed despatch notes are given to the warehouse team to file.The sales quantities are entered from the despatch notes and the authorised sales prices are generated by the invoicing system. If a discount has been given, this has to be manually entered by the sales clerk onto the invoice.Due to the expansion of the company, and as there is a large number of sale invoices, extra accounts staff have been asked to help out temporarily with producing the sales invoices. Normally it is only two sales clerks who produce the sales invoices.Required:(a)Describe TWO methods for documenting the sales and despatch system; and for each explain an advantageand a disadvantage of using this method.(6 marks)(b)List TWO control objectives of Oregano Co’s sales and despatch system.(2 marks)(c)Identify and explain SIX deficiencies in Oregano Co’s sales and despatch system and provide arecommendation to address each of these deficiencies.(12 marks)(20 marks)44Salt & Pepper & Co (Salt & Pepper) is a firm of Chartered Certified Accountants which has seen its revenue decline steadily over the past few years. The firm is looking to increase its revenue and client base and so has developed a new advertising strategy where it has guaranteed that its audits will minimise disruption to companies as they will not last longer than two weeks. In addition, Salt & Pepper has offered all new audit clients a free accounts preparation service for the first year of the engagement, as it is believed that time spent on the audit will be reduced if the firm has produced the financial statements.The firm is seeking to reduce audit costs and has therefore decided not to update the engagement letters of existing clients, on the basis that these letters do not tend to change much on a yearly basis. One of Salt & Pepper’s existing clients has proposed that this year’s audit fee should be based on a percentage of their final pre-tax profit. The partners are excited about this option as they believe it will increase the overall audit fee.Salt & Pepper has recently obtained a new audit client, Cinnamon Brothers Co (Cinnamon), whose year end is31 December. Cinnamon requires their audit to be completed by the end of February; however, this is a very busytime for Salt & Pepper and so it is intended to use more junior staff as they are available. Additionally, in order to save time and cost, Salt & Pepper have not contacted Cinnamon’s previous auditors.Required:(a)Describe the steps that Salt & Pepper should take in relation to Cinnamon:(i)Prior to accepting the audit; and(5 marks)(ii)To confirm whether the preconditions for the audit are in place.(3 marks)(b)State FOUR matters that should be included within an audit engagement letter. (2 marks)(c)(i)Identify and explain FIVE ethical risks which arise from the above actions of Salt & Pepper & Co; and(ii)For each ethical risk explain the steps which Salt & Pepper & Co should adopt to reduce the risks arising.Note: The total marks will be split equally between each part.(10 marks)(20 marks)5[P.T.O.5(a)ISA 510 Initial Audit Engagements – Opening Balances requires auditors to undertake additional audit procedures for confirming opening balances for new audit engagements. In addition, the ISA gives guidance on audit report implications if auditors are unable to confirm opening balances or if they contain misstatements.Required:(i)Describe procedures the auditor should undertake to confirm opening balances for a new auditengagement; and(ii)Explain the impact on the audit report if the auditor is unable to confirm the opening balances, or if the opening balances contain misstatements.Note: The total marks will be split equally between each part.(4 marks) You are an audit manager in Brown & Co and you are nearing completion of the audit of Paprika & Co (Paprika). The audit senior has produced extracts below from the draft audit report for Paprika.Auditor’s responsibility(1)Our responsibility is to express an opinion on all pages of the financial statements based on our audit. Weconducted our audit in accordance with most of the International Standards on Auditing.(2)Those standards require that we comply with ethical requirements and plan and perform the audit to obtainmaximum assurance as to whether the financial statements are free from all misstatements whether caused by fraud or error.(3)We have a responsibility to prevent and detect fraud and error and to prepare the financial statements inaccordance with International Financial Reporting Standards.(4)An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the availability and experience of audit team members. We considered internal controls relevant to the entity; and express an opinion on the effectiveness of these internal controls.(5)We did not evaluate the overall presentation of the financial statements, as this is management’s responsibility.We considered the reasonableness of any new accounting estimates made by management. We did not review the appropriateness of accounting policies as these are the same as last year. In order to confirm raw material inventory quantities, we relied on the work undertaken by an independent expert.The extracts are numbered to help you refer to them in your answer.Required:(b)Describe the factors to consider and steps Brown & Co should take, prior to placing reliance on the work ofthe independent expert, in order to confirm raw material quantities.(4 marks)(c)For the above audit report extracts, identify and explain SIX elements of this report which requireamendment.Note: Redrafted audit report extracts are not required.(12 marks)(20 marks)End of Question Paper6。