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Passed 1st attempt – 79%. Now ACCA exam qualified. Dont give up all – exam paper after exam paper is the best strategy. If possible, dont skip those chapters you dont enjoy learning too!
With respect to equipment and capital allowances, you can still have a gain on the equipment even if it qualified for capital allowances. It will be a wasting chattel with capital allowances. What you cant have is a capital loss. At least that is what I understood it to be. What I found strange is that it didnt give the cost the item was purchased for. I scanned the information numerous times. I was very usure about this one.
I ran out of time for the 8 mark question for the 16 month period. It was a change of accounting date and we had to use overlap profits to work out the amount due for that year to make it in line with a 12 month period. But I didnt complete it as I just did not have enough time. i foucsed on the other easier marks.
Gift of shares and related property – that was a nice one. So was the one before that with the sale of shares to sister Elberta which was just an undervaluation and did have investors relief of 10mill plus gift relief of partial amount and the rest CGT at 10%.
The question on the shares where it was transferred to son or daughter was related property so had to take into account husband and her. Hopefully I got that right.
In terms of the first big question, what did you guys do for the equipment re incorporation relief? Did you include it as part of a gain? I think the total gain was under 1 million so it qualified for BADR (ALL of it as goodwill and building did too). I am just not sure how I should have treated the equipment where on the main pool there was a nil balance??? The goodwill qualified as it was transferred to an unconnected company where ownership was less than 5%
Also the capital losses realised after Atearka purchased Hipak? I said it was allowable as they were not pre entry capital losses. However, the trading losses were.
Yeah we definitely had to use money markets which I am so annoyed about because that was an easy question. For whatever reason, the forward rates confused me. Receipt was due in 4 months yet quotes for forwards were only for three months and one year. So wasnt sure how to do that. I
First questions was the easiest I think – synergies were 1026.51mn I think and then allocated the synergy to both shareholders vi both offers. Gearing I wasn’t so sure off. Before acquisition it was 32% I think, with a cash offer it jumps to 40% and share offer down to 28%.
Think I got 32% gain for cash offer for Kennedy and 33% with share for share offer. Can’t recall what I got for swift’s shareholders. 800mn shares of swift and additional 300 or 400mnn created.
P/E ratio was 18:7 for swift and I think 12sonething for Kennedy. Total value of combined entity was 6597 or something like that
The hedging question was difficult and I prepared the most for this. I completely skipped currency swaps so had no idea what to do. Even so, the first question about the receipts in usd and the payments I think you had to use money markets e.g take the residual and borrow residual/interest for four months but I didn’t have time to do it unfortunately.
The last question was tough. I knew I got the answer wrong and I just didn’t know how to treat the additional tax payment with the remittances. I have done every past exam question but I just never came across this.
Practice questions as much as possible. This is the key. Use common sense in the exam (I didnt have to use one model for my answer when I passed, only common sense). Lastly, really understand they key words (analyse, explain, discuss, evaluate etc\) and make sure you know the different answer formats (email, extract from report etc) to gain all prof marks
Yes @antowhelan I wrote some parts of it could be rumour – source of information need to be identified. Interview Tim So. More clarification about the relatinship with Duncan I believe – leads to familiarity and self interest threats if deemed to be the case that he has investment in property develpment. Remove him from future involvment with that particular client. In the future, written declerations by employees that they do not have any business or close family relationships prior to audits.
Lack of documenting audits – business issues – lack of professional competence – auditors need to be able to back up their conclusions with evidence and documenting this leaves an audit trail that others can follow. Offer training and talk to anybody in Tim’s team to ensure they understand best practices and havent been negatibely influenced by him. Train them on why internal controls are important and why they must be followed. Speak with manager that made these accusations to the other manager, verify whether this is true.
Overriding management controls – taking resources from other departments. Means delays in other clients work – sets a bad tone and control environment. Implement a process whereby another layer of management has to authorise taking staff for audit engagements – segregatrion of duties ensures independence and adds another layer of control
In terms of qs 5 – also risk based. Risks facing the company, implications of competitor actions and suggestions how to counteract these threats.
Made two points about increasing competition and loss of key staff. Tacit knolwedge is lost especially when key staff leave – skills and experience lost too – may reduce quality of audit. In terms of competition, less bargaining power with their clients, cant set prices, reduces profit margins. Already admin and infrastructure costs are depressing margins. This will do this further
Competitor action is the big four moving to non audit work – think i worked out that non audit work accounts for 65% of their revenue or potentially more. Signficant implications – they may have mre bargaining power. Even if they dont, they will offer high level competition
Technological developments – could offer differentiation for competitors – clients are asking for identity on the part of auditors – this could be a way for clients to distinguish theirselves, differentiate and create a competitive advantage. Furthermore, could mean higher initial costs but lower cost base in the future as they exploit technology to reduce costs. Didnt offer how this could be
Lastly, the last slide I said invest in technology and realing theirselves strategically potentially. Ran out of time here so that is as far as i got
My points were terrible – made some very general comments about percentage of small office revenue vs larger offices which was 5% of total. Insignificant – better to focus on more core markets.
Talked about operating profits being lower than other offices but couldnt analyse further and expand on my answer. Went a little blank
I failed to talk about potential redundancy costs but did comment that current staff may become unsettled if their colleagues are made redundant etc
How did yo work out revenue per partner? They weren’t specific as to the total number of partners unless I missed that completely. I thought they just said offices with 5 partners or less without giving more detail
There was a question about audit strategy or something along those lines after the question about data analytics – i completely skipped that question cos i could not figure out what they were asking. Also incorporating the benefits of data analytics to an audit firm was tough for me – i used the blog exhibit and tried to expand on the points as much as i could. But overall very weak answers for me
Question 1 – was generic for me – They mentioned one of the Partners would be a chairman so i talked about the importance of splitting running the company and running the board. Talked about improvements in specialisation, lack of NEDS to assess strategy and direction etc, management autocratic style of management and how a balanced board will reduce power of one individual etc
I thought this question was about closing offices – that is having a more centralised structure with less offices . I dont remember reading anything about a sale. Must have missed that completely. Terrible paper for me
I passed – I was not expecting it. Still truly believe ACCA needs to be more realistic with timing for this exam. You are forced to rush throughout.
The first question was split into 1) step acquisition 2) cash flows from investing and financing activities and 3) defined benefit obligation/pension and the impact it will have on cash flows.
First part was fine, got a cash paid figure of $5 or 3mn, cant remeber by working backward from goodwill. Anyone else got the same figure?
The second part was a nightmare. Spent so much time on the first part was rushing the second part. Skipped the qs with the intention of coming back to it later but didnt have the time.
Last part was a simple expanation of the impact on defined benefit obl on cashflows.
2nd qs – 20 marks – relatively easy. Got slightly confused with the recognition – decided it was at a point in time (2yrs from then) so cant recognise anything until then. Borrowing costs can be capitalised for qualifying assets etc if certain conditions are met.
Ethics – simple – apply the 5 codes
3rd qs – OK-ish regurgitating intangibles knoweldge. First qs was generic – discussing why its hard to recognise intangibles – active markets, costs measurements, seperability etc Focused on FRS102 and intangibles.
Remember one was about assets held for sale so regurgitated under FRS discontinued ops are shown in more detail etc vs IFRS and continue to be depreciated
One of the eprfumes can be recognised on the acquisition, the other brand cant (Clara) – estimates must be made of useful life
Last qs was a load of crap – SME’s skiped this chapter in my revision. Managed to blag a little bit about integrated reporting and the rmeasurement component part.
All in all, way too little time for these papers. 3 hrs is just not enough.
