Helena Jones from Sonar Education answers your questions about how to tackle this tough test of your knowledge and application.
What are the key skills required to pass the AA exam?
It is easy to forget in the heat of the exam that the pass mark is 50%, so you do not need to get 100% of the marks. Winning a prize or achieving high marks is a great bonus, but for most students the important thing is to pass the exam at the first attempt.
The exam is practical, based on scenarios, and all questions are compulsory. This means that there is nowhere to hide and a broad knowledge across the whole syllabus is essential.
Question scenarios will be unique, so rote learning will only get you so far. You will need to think on your feet and apply your knowledge to the specific task in hand, rather than a similar question you might have attempted in the past. Auditing is a practical skill, and the exam will test that.
Sonar Education’s suite of three mocks is designed for maximum syllabus coverage, and at the end of each exam you will be shown some metrics that allow you to see at a glance if you are weak in any of the main syllabus sections.
Why do we need accounting knowledge for AA?
Because auditors audit financial statements in the main, and those financial statements are put together from financial information. Knowledge of the accounting standards that determine how that financial information is gathered, recorded and organised, is therefore essential. Auditors express an opinion that the financial statements have been prepared in accordance with the applicable accounting framework, and that they are free from material misstatement.
Will I need to do any calculations in the AA exam?
You might be asked to calculate ratios and trends as part of using analytical procedures so don’t ditch the calculator. Syllabus area B4(c) specifies that you will need to compute key ratios as well as being able to interpret them.
What do assertions mean and why are they so important?
Basically these are explicit statements made by management when putting together the financial statements. For example: “This transaction is included in the revenue figure because a sale of goods to a customer did in fact take place.” If this assertion is true there will be an audit trail, or evidence, to demonstrate the occurrence of this transaction, and audit procedures will be designed with finding this evidence in mind.
How has technology affected the audit process?
Today’s students will find this hard to believe, but those of us of a certain age will remember accounts being recorded in dusty leather-bound ledgers (yes, really!). We still use the term ledger, but now it is more likely to be a computer file than a physical object. We can now work virtually paperless, and the trend for increasing technology, for auditors and accountants in general, is unlikely to slow down any time soon. Skills in reading and manipulating data are becoming as essential part of the auditor’s tool kit.
What do we need to know about what is going on in the audit profession?
Unlike in AAA, there is no specific syllabus area for current issues and developments, but it is still important to keep up-to-date. ACCA articles are useful, and you should of course read every issue of PQ magazine! For example, in the July 2020 issue there were two articles about recent happenings at Wirecard. Unfortunately, the audit profession is under the spotlight yet again, for all the wrong reasons, and it is high-profile news like this that prompts the regulatory authorities to take stock, and to take action. The reputation of auditors has not been good since the days of Enron, if not before this scandal, and the question arises again and again, ‘why didn’t the auditors spot that?’ You might like to try answering that question, and thinking to yourself what procedures you would have designed to reduce the risk. Who said auditing was dull?
What are the main changes going from AA to AAA?
For those students thinking of choosing this option at Strategic Professional level, the good news is that your AA knowledge is still relevant. The same ISAs and standards are examinable, plus a few more. The key difference is that you are now in a more senior role in a question scenario, so you will be an audit manager rather than an audit assistant, for example. As in real life, a more senior role requires more advanced skills.
• Helena Jones is a director at Sonar Education