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Hi all – I think this was a very fair paper. Good questions with plenty of marks available!
Couple of points which I am hoping people who did the same questions can confirm/challenge
Q1, part B –
I described what professional scepticism was, and then explained the cooperate governance issue with the CFO and Audit commitee being weak. I also mentioned something on the politcal un-rest and how this could be an area of concern, and also something on the client lacking accounting knowledge (abit vague)
What did others write here as after the corporate governance stuff, I didn’t really see too much?
Q4, part A
I explained that this may be a Noclar issue as there had been a theft in the year and the cfo was saying to not report to authorities/regulatory body and therefore matter should be discussed with those charged with governance?
Other points
Intimidation
Potentially get legal advice
Discuss intimidation threats with audit committee
Odd that we discovered issue via board minutes and were not told about it – may be other problems@accastudent54321 said:
I took it that it might have been 4 and 4 but I did struggle with the risk part of this question – I didn’t know what to really say. I mentioned that it was up to the component auditor to form an audit opinion on the FS of the sub but that we would need to assess when we consolidate *mind went blank at this*Yep – I assumed it was 4 & 4, because you probably got 2 marks for explaining what a significant component was, and then another 2 for going through the workings on the Sub.
In the top paragraph it said that the auditors were appointed in Sept 17, mid way through the year they were auditing, which just opened the flood gates for many easy detection risks.
Yeah that was a tricky part really – think you could have taken it many ways.
What did people write for audit risks
1. New client – detection risks
2. Opening balances – Rom
3. Translation risks
4. Use of other auditor for sub
5. Software amortisation or review for impairment at year end as nothing was said to be done for the purchased bits
6. Operating segments – separate disclosures
7. Transfer of assets between group – inter company eliminations so that balance not held in both companies???Anything else
What kinds of points did people write for Q1, part B –
Explain what professional scepticism was?
Corporate governance issue
Lack of accounting knowledge from management?Wasn’t really disclosed, but they gave 8 marks for part C in total, therefore it’s likley it was worth 4 marks.
Did you calculate the currency to dollars and then say if it was above or below 15% threshold or not, ie significant component
Q1 – Audit Risks
Q2 – quality control review – very weird style and challenging
Q3 – matters and evidence with KPIs – govt grants and investment property were the standards
Q4 – Ethics – released on sept/Dec paper
Q5 – released on sept Dec paperInteresting exam today. Very time pressured in my opinion, and one that I did not quite finish as I would have liked to.
I did Q1 first, and this was very good in my opinion, lots of Audit risks available on the brand name that was not being amortised, online sales, detection risks, related party disclosures, intercompany transactions, inventory valuation, good will impairments and good will recognition, I even mentioned something on currency translation risks as the group was a world wide brand and therefore assumed sales must also be worldwide. The next part asked for some procudriews on inventory valuation and to finish by evaluating elements of what the composite auditor was proposing to do. Not bad – but it was for 10 marks and was probably the hardest part of the question.
I then did Q3 on the procedures for the performance information and the matters and evidence, and again, I think this was a very good question, with lots of pretty easy marks available. The standards in use were IAS 16 PPE and IAS 20 on grants – anyone else agree with that here who did the question?
The problems however started with Q2, which was complelty different to any quality control review seen. The review had been done, and we had to comment on the findings in an odd way which in the time we had, I just found difficult to really get. The first part, for 6 marks on the benefits and findings of cold reviews, was decent and I think I scored well on that, but overall, from 25 marks available, I think I probably got 7/8 marks which was disappointing.
I then did Q4 on the ethics, and this was not as easy as I first assumed. The question was broken into 3 chunks and there were some obvious ethical issues. Definitely tricky but hopefully a pass overall.
Overall, I am hopefully a good show in Q1 & Q3 will pull me through and make up for the poor show in Q2, but based on what I have read, everyone found Q2 hard so that’s reassuring. Lol…
Q4 – anybody do this? Within the second section, did you talk about professional appointments and how the new auditor needs to speak to the previous auditor before accepting the new engagement?
Q3 – who else did this? The matters and evidence was relatively easy I thought but keen to know what standards people talked about? I mentioned IAS 16 for the newly built building and the firms failure to recognise depreciation, and then the last but was on grants IAS 20 I thought…..agree….
Q1 audit risks I covered e-commerce online sales risks, inventory valuation, impairment on brand, goodwill recognition, related party disclosures, potential consolidation errors on intercompany balances, detection risks, and I also mentioned something on currency translation risks as the text said the group was known worldwide and therefore sales must also have been worldwide….
Q2 was odd and completely different to what has been seen before. Easyish 6 marks on the benefits of quality control reviews at the start but I honestly think I got like 7/8 marks in total here as it was so odd.
Q1 & Q3 were easier and lots of good marks available I thought.
I also did Q4 which was not as easy I thought but hopefully a pass here too.