Exam focus- June 2009 ACCA F8 (2)

I am tired with work and life, time to divert to write a posting for you. I really hope you did your own revision before following this guide. Bear in mind that this is not a full lecture as I can’t conduct a lecture through blog but at least I can give you a simple guide and show you the hidden part of the examination to help you pass your examination.

Last posting we talk about “Control Elements”. This as far as I am concern is a very important area for examination as understanding the control elements can help you answer many “types” of examination question involving internal control system.

How?

A favorite exam question; what is the “control objective” of “internal control” system. I am not surprise that lot of students still confuse with this area. So let look this part of the exam favorite.
An objective mean what you wanted to achieve; control objective mean what type of control you wanted to achieve. Well in common in order to implement control into a system we aimed to achieve the following:

Objective of having internal control system.

 The financial records are accurate and complete
 Fraud does not occur
 The company is efficiently managed
 Business in conducted in orderly and efficient
 Timely preparation of information for decision making purposes.

However if a student were to take the above as their answer, something is still lacking which I regards as the lacking of audit reasons. How to fill the gap and have an answer with substance? Well bring in the control elements as the element is indirectly your objective or purpose in implementing control.

For example a bank and cash system:- What is the objectives or purpose of having such control?
I will always standardized the answer by using the word reasonable assurance or ensure as a start.

For example: to obtain reasonable assurance or to ensure………………………………………………..

The Answer: - sample

The control objectives or purposes are
1. To obtain reasonable assurance that there are proper physical security measure in cash
handling system so that asset of the company is not lost due to lack of safeguarding
2. To obtain reasonable assurance that proper authorization procedure on cash or bank payment to avoid fraud
3. To obtain reasonable assurance that operation of bank and cash are efficient through proper supervisory
4. To obtain reasonable assurance that there is no arithmetical mistake to avoid inaccuracy in financial records

From the above I am using very simple illustrations to give answers to your examiner and the answer is surrounding two parts: the control elements and the general objectives to internal control. Understanding of control elements could actually help more in the internal control system questions.

You might want to practice further or probably refer back to the past year question for some practice you will find that the above topic is common in exam and the answer might not be so complicated.

In the next post we shall discuss further on internal control system and your foundation on control elements is important as that will be our base for further discussion for your 2009 examination.

Layman will be back to work and my dear buddy stay tune with layman