*** P7 June 2016 Exam was.. Instant Poll and comments ***

What topics came in the exam this sitting?

It was unexpected paper. No PFI or due diligence report..
Q1A. analytical procedures 5 marks
B. Group audit risk 18 marks
C. Ethics (tax advice & self interest threat.)
Q2. A. Quality control and ethics 13 marks
B. Audit procedure on contract income
C. Review of audit working paper 5 marks
Q3. Forensic Audit i don’t remember because i did not attempt
Q4. A. Difference between reasonable and limit assurance 4 marks
B. Advantages of audit over review 8 marks
C. Ethics (internal control) 8 marks
Q5. New disclosure requirement 8 marks
B. Wrong Accounting and report implications 12 marks.

2b n 2c was so complicated .I did not attempt.i rushed on easier part ..forensic n audit of fs versus limited assurance.

Q3 )
A )what requirment need before attempting the engagment
Fee, deadline , integrity of cleint , finaial postion , staff and resourses, who will use my report, amount of evedence , negative report
B) forensic pros needed
C) what is the role of the witness

Q5)
A) disclouseors new artical
B) cases of director loan and a discounting operation after the reporting date are both are not discloused provably and need the audit report opinion

audit risk include :
-good will for impairment
-bad debts as sales increase was 14% where as recievables increased by 32.8% so need to write off
-disposal 5% gain should be recognized in equity , could be due to manipulate for loan.
-IAS 1 profit attributable not presented
-NCI calculation for 7months . risk that 12 months profits atrributted
-Deferred Tax Asset only be recognized when future profits are demonstrated…

Q1 a- analytical procedure as a evidence (ISA-500)
-inludes ratio analysis and trend analysis
– Inconsistency can be identified through analytical procedures between the info provided such as notes and F/S

Q1 c- reference could be made for business development but could be failure and auditor could be liable.
-tax position as a self review so need to remove partner for this audit

Q5.b
Director personal loan as a financial asset and related party transaction..
restructuring no need for provision this year just disclosures if not provided modified report.

I have to say I felt very similar its almost like you just have to say no stop now and move on even when you have more to say.

this was P7 .reply if you answer the i answered……

Hello. Certainly time pressured, I actually managed to do question 1 in 95 minutes, but somehow completely lost my rhythm and had to rush.

Q1a – things I discussed: are additions capex or revex, should interest have been capitalised under ias23, first time consolidating with Nci so risk of mistake, risk of including 12 months of Nci results, no allocation of profit between group and Nci income in income statement, deferred tax asset realisation, new computer system is control risk, deterioration in ratios suggests going concern issue, lack of expert on the audit committee may represent lack of competence so financial statement level risk, should a provision be recognised for the tax case, the use of poor quality tax planners suggests incompetence of management or maybe a fraud risk factor (I decided this wasn’t an external service organisation so I didn’t mention it but now not sure!!!), gain on sale should not be included in p+l as it is an equity transaction, goodwill should probably be impaired due to ratio deterioration

I didn’t mention a load of things, e.g risk that inventory overstated, didn’t talk much about ratios, didn’t mention the product warranty provision, a whole heap of stuff!! Didn’t mention anything about receivables either! A bit annoyed but what can you do.

1b I did UK and I’m sure the question asked to discuss the importance of analytical procedures during planning but it looks above that some people gave examples of procedures… Hoping that was the Int question….. I said something like there are clear relationships between many accounts and balances that the auditor would expect to see, it’s quite clear using analytical procedures if this relationship has broken down so can look there for fraud or errors. Do at planning stage so lots of time to adjust nature timing and extent of audit procedures to match risk etc etc.

1c the tax planning work would be a management and advocacy threat, fairly serious given the fact HMRC were involved. Putting auditor on the board would be self interest and potential intimidation threat.

I messed up 2b, I had 5 mins at the end so just read the first line and winged in. I wrote something about the work in progress being overvalued as it was a specific piece of work for that contract so unlikely to get cost value for it so revalue at NRV… I know the question was going down the line of revrec but I didn’t actually see anything to write about, I saw there had been some cash received but the question said “no other entries have been made” so I sort of ignored it.

Did anyone else think it a little unfair that there was a current issue style question in there on a very obscure area of the syllabus (so obscure that it isn’t referred to in the revision materials for Kaplan)? Also I know we are meant to know the whole syllabus but given that literally none of the previous papers or any of the practice questions available included anything about current issues or exposure drafts I found this a bit mean. Thought rest of paper was ok though, interested to know others thoughts

@sanjacs said:
It was very time pressured… you had to be absolutely disciplined with your timing. Luckily, I had a digital watch, so calculated my timing down to the precise minutes. Finished (well, my idea of finish) most of it. Hopefully, I’ve done enough.

At least you had a watch ! Was surprised to find a plastic bag on my desk when i went into the exam. Anyone with a mobile phone or smartwatch was expected to put these in a clear plastic bag and keep them under their desks! Now i wasnt stupid enough to take an iwatch to the exam…but i was still surprised when the invigilator tore the label off of my bottle of water and also took the wrapper off of my packet of mints!!