*** ACCA Paper AAA December 2018 Exam was.. Instant Poll and comments ***

Qstn 1 (a) business risks (8)
(b) RoMM (18)
(c) principal audit procedures in respect of grant received from govt (6)
(d) matters to be considered whether to accept an audit engagement or limited assurance review (8)
(e) could a fraud be detected in previous years if audit or limited assurance review was done (6)

Qstn 2 (a) use analytical review to assess going concern issues (10)
(b) audit evidence expected to find when reviewing cashflow forecast in respect to GC issues (9)
(c) possible reasons why management may refuse to make disclosures regarding uncertainties in going concern and impact on audit report (6)

Qstn 3 (a) measures put in place regarding anti money laundering programme (4)
(b) indicators of money laundering from scenario (6)
(c) ethical and professional issues (15)

The questions were not so difficult but were time consuming.

Overall a do-able paper.

I personally struggled with Q1 (I took the U.K. variant so trying to allocate BR and ROMMS was difficult and I found it More challenging than usual to identify them.

Q2 and Q3 I found very nice and approachable and I would hope them and then remainder makes from Q1 hopefully will secure me a pass.

@burhansalah said:
I agree with you, the exam was fair but it was a matter of time management.

Yeah my biggest concern with doing AAA was the intense time pressure due to all writing. We did it though!

May I ask what people put for analytical review for GC? As it said evaluate using AR the GC so I put various points such as;
– major competitor
– new loan
– loss of 5 major competitors
Etc

Then linking with ratios, gearing, OPM% etc in combined points

@steven7 said:
How was the International Variance exam?

There was no difference at all to the U.K. paper. Only difference was mark allocations shown net/gross

Q1 UK: no mark allocation
Q1 INTL: as the above user posted the individual marks

Q2 no differences between the two

Q3: the U.K. had the AML policies AND indicators of Clean Ltd committing ML in one question for 10 marks whereas in the INTL it was split 4/6 marks

Only completed Q1 & Q2…
Really time pressure…
Is there any chance to pass?

@faruqacca said:
Only completed Q1 & Q2…
Really time pressure…
Is there any chance to pass?

More than a chance I think my friend. That’s 75 marks right there – I can’t say how you did but if you were able to score well on Q1 and were comfortable with Q2 in what it asked then I don’t see why not

As there was the audit procedure question for 9 marks in Q2 that gives you a mark for every adequate procedure etc

Best of luck!

@liam01 said:
In Q1, notes from the meeting said 30 centres where the management accounts said 20. Anybody else notice this?

I mentioned it as a point

@seamusshanley said:
Thought the lack of an audit report question very disappointing considering it’s a mandatory part of the syllabus. Really frustrated with that and no doubt will be difference between passing and failing for me

Yeah only marks for audit reports was around 3 marks of the 6 marker on Q2 – felt syllabus wasn’t tested thoroughly

Q1 ROMM – Revenue – Distinct perf obligation , Allocation of TP to PO and Over a period. High risk
Related part disclosure
IFRS 9 – loan
Govt grant – Not deferred
Control risk – Higher as internal audit not independent
Analytical procedues – Revenue Overstated – Operating costs Understated
Staff costs- Didn’t increase considering the acq of two new sites.

These were the risk of MM i was able to locate,

As far as Business risk
1- Health and safety breach – Going concern
2- Scuba diving – not relative experience –
3- Lack of cash – No sure if its a point though
4- Data Management system – Implemented parallel – Staff not trained errors in the system
5- Data management system – Does not record the Unemployed free times – Risk we are providing more hours for free

Q2:
Going concern – Lot of indicators – Falling profit margins , Inventory days and receivable days increasing payable days decreasing poor cash position, Fall in interest cover , Current ratios – breach of covenants lenders may request to repay

Cash flow procedures – Wrote few general like Op bal. to Bank over draft , Competence of person preparing etc and few specific to scenario

Q3-
MLCP
Train staff etc

Indicators were – Cash oriented business easy to place , More emphasis to sell to friends and receive commission (No profit motive) , Layering by transferring to Off shore account making it legitimate and clean

Ethics – Skipped first part due to time
IT system – Self interest and management role
Gift- Self interest immaterial and with intent to build relations.

Anyone with me on this? I was finding it difficult to analyse the data i.e no. of members , no of centres etc. Basically Q1 was bit difficult as i was not sure about the Advt contract and capital expenditure.

I didnt do any numbers from Q1 (Apart from maybe the level of materiality for RoMM) No sign from what i could see for ed540/the new technical article.

My Takeaways from The Q1
Business Risk
– The risks are more on the first few para, thus can put issues on the lack of control of too many branches, the health and safety requirements can affect operating license, two internal auditors – 1) understaffed for the no. of branch 2) report to FD thus indicates no considerations for other aspect of biz (operations, quality of service), NED from competitor can lead to disclosure of trade secrets etc (more out of the box thinking)

RoMM
-Too many marks allocated, so aside from the Accounting Standards (revenue, government grants), can touch on the Management AC provided (note that it was 20 branches, when case said 30,so incomplete amalgamation) , the staff cost, marketing cost, have all been stagnant contradicting to the case, thus ultimately can touch on the reliability on using the management accounts itself, new management system 1) transfer of data 2) learning curve thus more prone to misstatements, also FD has no one to check upon as IA report to him. In summary, more from the weakness from internal controls and the botched management account (should focus more on other aspects aside from IFRS issues as too much marks allocated – arnd 12 RoMM needed)

MTC
– consider the fact that they have already provided payroll system so this affects the acceptance of audit engagement (prohibited)
– any ethical threats , familiarity, self-review

Could Fraud Be Detected
– consider the objectives on audit? more to checking errors in FS and not detecting fraud
– since figures are given, maybe touch on whether during AP, we would have gotten something out of any trend analysis
-sales figure increased, therefore not much attention would be needed let alone to analyse the Shop and the Other One in full detail
-as for limited review, the checking would even be less extensive thus much less effective
– conclude that it wont detect fraud, then touch on what the company needed was a forensic investigation, and even that would arise from a suspicion from the management

(do comment if you want more analysis tq)

@nathan488 said:
Yeah I looked at the ED540 too, really confident to smash the question to not have it mentioned!

CF wise I treated it as PFI and did various procedures such as:
– Obtain draft loan agreement (as they’re currently negotiating it) and agree loan amount and interest rate
– recalculate finance cost
– inquire with management if the loan has been received yet as well as inspect PYE bank statements for evidence of the loan receipt and thus if it’s correct to include the loan in January XX as the forecast had done
– obtain sales forecast and most recent budgets to determine and assess if large 25% move in revenue looks normal
– again, inquire as to how they expect to turn a 1.Xm overdraft balance to 1.7m cash balance – seems unlikely
– I also said about assess competence of preparer since it would impact the data produced
– agree opening balances to PY signed financials
– recast and recalculate whole forecast for accuracy

Etc etc

I included them as well. How about the audit risk and Business risk?