How to Pass an Auditing Exam
So you have an auditing exam coming up? It can be a daunting experience, but with preparation and some tips to help you get through it doesn’t have to be an impassable obstacle.
The aim of an audit and assurance exam paper is to develop knowledge and understanding of the process of carrying out the assurance engagement and its application in the context of the professional regulatory framework. The exam, whether it be at a university or professional level is normally practical in application, with theoretical elements.
The exam strikes a balance of technical knowledge as well as a practical application of this knowledge. It aims to ensure that those who pass this exam understand the basics of an audit – they apply relevant knowledge, skills, and exercise professional judgment in analysing, evaluating, concluding and reporting on the assurance engagement and other audit and assurance issues in the context of best practice and current developments.
An audit and assurance exam builds on knowledge gained in financial accounting exams. The accounting standards examined in such exams form the basis of questions on how to apply auditing procedures in respect of those standards. You must not be afraid to bring your accounting knowledge into this exam as a common question is to provide journal adjustments or adjust the notes to the accounts in a given scenario.
It is quite common that students may not have been involved in, or had exposure to, a real audit, especially in a university exam setting. However, for university students or professionals not based in auditing, you shouldn’t be perturbed, this exam is like any other, and the basic principles must be understood. Therefore, application questions will continue to feature heavily in the exam as they demonstrate whether you have understood a topic or just learnt it off. Regurgitation of technical material alone will not result in exam success; however, practising past paper questions under time pressure will improve significantly your chances of passing the exam.
Points to note regarding the structure of an auditing exam:
- Questions may be in shorter factual form, it may be a single issue especially if based on a scenario or there could be two or three requirements including some knowledge of technical areas.
- Questions may require calculations (for example ratios), in the content of audit planning, calculation of materiality or audit completion.
- You will need to analyse the scenario to identify the appropriate points to make in their answers. Read the requirement carefully first, then brainstorm the scenario, the main body of the question, highlighting and noting down key issues. This will act as a checklist so that your answer covers all bases.
- Timing is key and it’s imperative that you allocate their reading and writing time and stick to this.
- It is particularly important that you understand the question, for example if you are required to ‘list’ then the answer should contain brief points, it should not stretch to pages of text. Many people write far too much and this is at the expense of gaining more mark in other questions.
- Regarding reading of the question, if the requirement asks to “explain” or “recommend” this is saying that there will be marks for finding and explaining an issue and marks for recommending a way to overcome that issue. Other variants are to “discuss” or “state”.
- If the requirement asks for a memo, briefing note or report, adopting the appropriate presentation is key, using To, From and Date.
- Why Candidates Fail an Auditing Exam
Clear signs of failure include: very brief answers to most, if not all questions. In other words, some of the basic knowledge is known, but there is little or no application of that knowledge to the scenario. Significant lack of understanding of audit procedures and the audit process is another reason.
It also appears that those that fail do not attempt any mock or past exam papers prior to the ‘real’ exam. Poor exam technique is identified as:
- Answering questions in a random sequence.
- Spending far too much time on the first questions, leaving little or no time for the final questions.
- Not writing in the required style (e.g. providing the answer in one long paragraph rather than splitting the answer up into individual points).
- Focusing on theory only with no attempt to apply to the scenario.
- In summary, most candidates appear to have the knowledge necessary to pass most audit exams. However, application of that knowledge to specific scenarios within the exam is not always clearly demonstrated, leading to a marginal or bad fail.
So how do you pass an Auditing Exam
By way of contrast, scripts showing a clear pass standard:
- Are usually well presented, and make appropriate use of paragraphs, sentences and table formats – See my previous post Exam success? It’s all in the presentation!
- Candidates use the appropriate reading and planning time at the beginning of the exam to plan answers.
- Candidates who clearly have very good knowledge of auditing, and are able to apply that knowledge to the question, clearly and succinctly.
- All questions are attempted, even though some sections may not be answered that well. A few marks could normally be obtained from a valid attempt; obviously, no marks are awarded if the question is not attempted at all.
- More Practical Tips
I would recommend recognising the key points to learn. Then keep practising past exam questions – repeat this as much as you possibly can in the weeks leading up to the exam. Repetition can be irritating and time consuming, but it is effective.
You must study the techniques for all the types of applied audit questions and grasp an understanding of theories like audit risk, internal controls, substantive testing and so on.
Take time to practise writing a minimum of five bullet points for each accounting standard to help drive home in your mind the key topics. Understanding the more complex ISA’s (eg “Subsequent Events”) and also initial audit concepts is important. Core standards on areas like audit risk, evidence, and audit reports must not be overlooked either.
On exam day, when writing your answers, keep re-reading the techniques and reiterate them inside your head and make sure you adhere to them when applying your answers to the question scenarios.
Any audit and assurance exam can be passed by a student who understands the underlying theory of auditing and can apply that theory to audit situations but knowledge itself is not sufficient to pass this exam. My advice, therefore, is to study the basics of auditing, read any available examiner’s reports on past exams, read relevant technical articles and then practise past papers under time pressure, applying audit knowledge to scenarios, as this is the key to being successful in this exam.