200535 – Auditing and Assurance Services

Autumn Session, 2011

Mid-term feedback
Marks breakdown

Question Max mark Average Minimum Maximum

1 /20 16 0 20
2 /22 9 0.5 20
3 /20 8 0 20
4 /14 2.5 0 14
5 /24 12.5 0 22.5

Total /100 47 15 84.5

Total /30 14 4.5 25

Current Mid-Semester Results compared to Prior semesters

Year Offering Avg/100 Avg/30 % Fail (< 50/100)

2011 Autumn 47/100 14/30 57%

2010 Spring 41/100 12/30 80%

2010 Autumn 34/100 10/30 85%

Mid-semester exam performance

The average for the mid-term exam was 14/30, with the Top mark being 25/30. The fail rate was 57% which is a huge
improvement relative to prior semesters.

Per question feedback from Markers

To assist with understanding, the marking panel have provided feedback for the written questions. Please read
carefully.

Question 2

Overall, very few good marks as students did not answer the question that was asked, but rather answered the question
they hoped was asked.

Q2 a)

Very poorly answered.

The majority of students confused the concept of ‘sufficient appropriate audit evidence’ with the key dimensions of
audit evidence, whilst many others simply listed (incorrectly) types of audit evidence.

Q2 b)

This question was very poorly done.

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Responses discussed audit strategy, control risk and the nature timing and extent of audit procedures ‘generally but did
not specify the implications for planned audit procedures in contexts of both high and control risk

Q2c)

Quite well handled.

This was an unsighted question in Week 7 and the majority of students could explain non-sampling risk and provide
an example.

Q2d)

This question was poorly handed.

With regards to the first part of the question, the majority of students mentioned ‘planning’ in some shape or form, a
lesser number mentioned supervision and very few mentioned review.

In relation to the second part of the question, few students could contrast the method of reducing non-sampling risk
with methods used to reduce sampling risk.

Q2e)

Well handled. Students correctly identified that audits could only provide reasonable assurance (rather than absolute
assurance) because of the inherent limitations of both the financial reporting and audit processes.

Question 3

This question was worth 20 marks. It posed 4 scenarios requiring 2 answers to each.

Students who adopted a “scatter gun” approach and listed all assertions did not gain full marks in parts b & c
particularly. Few students got full marks or close to them.

The first part of each scenario required an evaluation of whether the auditor had gained enough evidence. This was
worth only 4 marks in total and students typically achieved 2 – sometimes from knowledge but sometimes guesswork.

The second part required reasons and it was difficult for students to obtain a high mark because the second scenario
was perhaps a little obtuse requiring students to recognise the difficulty of consignment stock. If the question had
more specifically stated that stock was sent on consignment to retailers, it may have been just as good a test and
perhaps answered better.

Scenario 1 and 2 were answered better than 2 and 4.

Scenario 4 required students to read and understand the question very carefully. Vouching and tracing, and checking
ownership indicates all had been done but many students showed reluctance to say ‘Yes.’

Being worth 20 marks (and 16 being for reasons) this question was a tough test and certainly sorted the students out.

Question 4

This question required students to address three key aspects:

 professional issues,
 ethical issues, a
 offer suggestions about resolving the issues Michael has with George’s report.

In the main students failed to identify the professional and ethical issues inherent in the case facts, in many
cases merely restating the case facts. Many students answered by restating APES 100.4 and merely left their
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reference to this aspect at that point. Further, very few students applied any of these fundamental principles
of ethics such as Integrity, objectivity, competence and due care, and professional behaviour to the case
facts. Confidentiality was not a matter of concern.

A key issue was public interest yet not too many students spoke about this aspect. Another was the
assurance engagement itself. What were the terms of the engagement? Many students spoke in terms which
suggested they didn’t understand the difference between an assurance engagement and an audit
engagement, and there is a difference. Another issue is that Michael was only looking at one aspect. Did he
understand the scope of the assignment in its entirety? The case facts stated he was a ‘young CPA’ and that
he had built up a good knowledge of the company’s systems, but did George have more experience and a
more complete knowledge of the client. Did Georges report satisfy the terms of the engagement? Not many
students addressed this aspect. Remember it was not an audit engagement and so the requirements are
different

Drawing on the case facts, discussion of the threats to both Michael and George’s independence namely
familiarity, intimidation, objectivity, self interest and self review was required and again, the vast majority
of students failed to address this aspect.

As a result of failing to clearly identify the various issues, students were unable to coherently offer
suggestions for the resolution of the matter, but rather adopted motherhood type statements without
reference to the case facts.

Question 5

Overall this question was handled well, comparable to a similar unsighted question.

In relation to identifying the impact on the component of audit risk, a large number of students (i) listed all
components of audit risk, (ii) incorrectly identified the component of audit risk, and/or (iii) did not provide
any explanation.

With regard to identifying the relevant account balances and assertions, the majority of students listed
numerous account balances and (if not all) assertions. If more one answer was given, as indicated in the
question, students were penalised. Specifically the maximum score achievable was half marks while using
the ‘scatter-gun’ approach resulted in zero marks. In addition, a common mistake was to confuse a ‘balance
sheet’ and ‘income statement’ account balances and/or assertions.

Part A proved to be the easiest case study, whilst responses to Part C scored the lowest marks.

Procedures for Mid-term Paper review

Carefully review your paper with the mid-term solution and marking guide.

If you find a ‘genuine error’ greater than 5 marks, you are welcome to submit your paper for review. Your entire
paper will be reviewed, so your mark may actually go down.

Scan your exam paper and email to me along with a detailed explanation of the ‘genuine error’. You have until
Wednesday 18 May to do this. Requests for review will not be accepted after this time.

I will review your entire paper, including the error and reply via email. Any changes will be reflected in vUWS.

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Please remember that the paper was marked out of 100, and therefore changes of less then 2 marks convert to a
change of 0/30.

General feedback from tutors

All tutors have reported that the majority of students are not reading the material nor completing the homework.
If you are one of these students, and you performed poorly on the mid-term exam, I suggest you already have
feedback regarding your poor exam performance.

Regards,

Dr Kym Butcher

Unit Coordinator, 200535 Auditing and Assurance Services