Q1, pilot paper…not very accurate but still a discussion.

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    ayman85: youl offten find one disclosed in the notes
    ayman85: this is 6 marks
    mohammedalee: yes
    sumreenkanwal: umm..its in the auditor’s interest to get a written representation on a mtter with insufficient audit evidence…as it will save them from litigation or something if anything goes wrong
    in future
    mohammedalee: 3 valid points
    mohammedalee: with discussion
    mohammedalee: or may be 4, if too generous on p7 paper lol
    ayman85: ya
    mohammedalee: but auditors cant just go out and ask representation on everything and save their times!
    ayman85: i would think that “Explain” is 2 marks per explination
    ayman85: no?
    sumreenkanwal: yes…thata right.
    mohammedalee: and there arent much things out there abt which u cant even find a single evidence,
    ayman85: what you guys are saying is correct
    ayman85: when i went through the lsbf notes
    ayman85: i read somewhere that
    ayman85: when auditing subs
    mohammedalee: yes, 3 points= with explanation
    ayman85: its common practice to obtain a comfort letter from the parent’s board confirming intention to keep the sub alive
    mohammedalee: i dont get it
    mohammedalee: sub alive means?
    mohammedalee: in the group?
    mohammedalee: keep in the group?
    ayman85: to give it a financial injection when it needs one
    ayman85: for example if the sub was having going concern issues, the parrent would cover its back
    mohammedalee: parental role of p3?
    ayman85: give it moneys etc
    mohammedalee: i get it
    mohammedalee: parental developer
    ayman85: i wouldnt mix it with that
    ayman85: bcoz that relates to strategy
    mohammedalee: im nt mixing
    mohammedalee: im making sure what i understood is correct
    mohammedalee: anywho, lets move
    ayman85: just confirming that you will give you child food when he/she is hungry
    mohammedalee: haha lol
    omer321: which qs
    mohammedalee: DONE
    ayman85: not let it starve to death
    mohammedalee: question 1 pilot paper
    mohammedalee: that would be awesome though
    mohammedalee: :’)
    ayman85: D?
    mohammedalee: part d now
    mohammedalee: ye
    mohammedalee: yes
    ayman85: i have no idea about part d?
    mohammedalee: its overlapping with part b
    mohammedalee: lot of it
    mohammedalee: like the things we discussed regarding increase of scope and all
    omer321: can anybody upload the file
    omer321: the paper i mean
    mohammedalee: http://www.accaglobal.com/content/dam/acca/global/pdf/p7int_2006_dec_pilot_q_and_a.pdf
    mohammedalee: here it is
    ayman85: is it not somthing to do with the group structure?
    mohammedalee: part d is generalised
    mohammedalee: nop
    ayman85: what do they mean by horizontal group?
    mohammedalee: it just means how new subsidiaries affect audit scope
    mohammedalee: that D shaped group i guess
    mohammedalee: parent has a sub
    mohammedalee: sub has a sub
    mohammedalee: and that stuff
    ayman85: that wouldnt be a D shape
    mohammedalee: and parent has direct interest in subsub
    mohammedalee: nw its a D
    ayman85: because it says non-consolidated entities under common control
    omer321: on part D
    mohammedalee: isnt that abt effective holding percentages?
    sumreenkanwal: how is D horizontal then?
    ayman85: when parent has a direct and indirect holding in the sub sub
    mohammedalee: iguys, focus on horizontal group
    sumreenkanwal: then it wud mean… just to have an interest..
    mohammedalee: dont read the brackets!
    sumreenkanwal: like investements
    mohammedalee: he is trying to confuse us
    mohammedalee: i swear
    ayman85: yeahhh
    ayman85: lol
    ayman85: im confused
    omer321: what is common control
    ayman85: i think he means investments
    mohammedalee: im nt
    mohammedalee: nop
    mohammedalee: group means group
    mohammedalee: investments dont come under groups
    ayman85: oks
    mohammedalee: group fs= consoldatied fs
    mohammedalee: that is what i knw
    mohammedalee: i might be wrong
    delusion: no ur right
    ayman85: so whats the answer?
    omer321: common control like some joint venture
    mohammedalee: nop
    delusion: yes jv or jointly controlled asset operations
    mohammedalee: or yop may be
    ayman85: but those are not consolidated right
    mohammedalee: lets focus on scope thing
    ayman85: ok
    ayman85: yes
    delusion: no
    delusion: equity accounting
    ayman85: yeah
    delusion: as per revised standard
    ayman85: yeah
    mohammedalee: we might have to see if they are going to be consolidated vs equity accounted
    omer321: material matters to be considered of the sub
    ayman85: so u treat them almost similarly to an associate
    mohammedalee: or there might be a company shifting from equity accounting to consoldiation in the midst of year
    ayman85: yeah
    mohammedalee: im nt sure hw its relating to planning
    sumreenkanwal: hey guys..i ve got a definition of horizontal audit..shud i share
    sumreenkanwal: its a general one
    mohammedalee: yes sure
    sumreenkanwal: not from teh study text
    ayman85: yes
    omer321: go on
    sumreenkanwal: A horizontal audit assesses the same process across different groups or departments, while a vertical audit assesses all the activities in a given department. Horizontal audits may
    be appropriate for such things as employee training and internal controls.
    mohammedalee: leaves me more confused
    mohammedalee: lol
    sumreenkanwal: one more
    sumreenkanwal: An evaluation of one process or activity across several groups or departments within an enterprise. A horizontal audit is appropriate for processes and activities that are similar
    across a number of functional groups in a company, in order to assess the effectiveness of the common approach.

    mohammedalee: no non nooooooo
    ayman85: i think i will read up on this
    sumreenkanwal: yeah
    ayman85: neither of us really know
    ayman85: theres is no point
    ayman85: lol
    mohammedalee: its telling abt single company and its deprarmtnes
    mohammedalee: departments
    omer321: horizontal groups
    mohammedalee: its nt telling anywhere abt other entities
    mohammedalee: so fails the purpose
    ayman85: i think this refers to associates
    mohammedalee: nop
    ayman85: but thats my guess
    sumreenkanwal: so..it may be suditing with similar approach..a ll the subs of a group
    mohammedalee: this what? sory?
    ayman85: haha
    ayman85: guys i need to eat dinner
    mohammedalee: i need to find the dinner!

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