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@raoul7370 said:
In the Sep/Dec 2019 sample questions published by ACCA, both Q1 and Q2 begin with the sentence telling you today is 1 July 20X5. It is not in Q3 (but then there are no dates at all in Q3, so today’s date has no relevance to the answer).I imagine they have done the same for the December paper on all questions where there are dates in the story.
Regarding intangibles, you cannot internally generate a patent – you have to buy one. You can internally generate a new product or invention (Development Costs would be capitalised as the asset), and then apply to patent your idea (which, if granted, should help protect the future revenue stream and hence the value of the development cost asset).
I was hoping they would have published this but it looks like the sample questions for Sep/Dec are all September and no December questions at all!
Yes, disappointing that no questions from Dec have been published. Q1 did say “Today’s date is 01 July 20X5”. It was the first sentence of the question.
@aynat said:
Do you have any source of this information? Thanks!!I have a Kaplan exam kit, and it says it in the ‘paper specific information’ at the front of the book. It says the ‘current’ date will be 01/07/20×5.
@raoul7370 said:
Is the following close to correct everyone?Q1
Business risks for 10 marks
Audit risks for 20 marks
Audit procedures on IFRS5 and IFRS2 for 10 marks
Reliance on internal audit for 6 marks
Prof Marks = 4 (for Briefing notes)Q2
Matters to consider, and Impact on Audit Report for 3 separate scenarios (17 marks):
– PPE
– Hedging
– Legal Claimanyone know the marks split on the above?
Ethics and Prof Issues for 8 marks
Q3
Intangible assets and the financing of those, additional info required from discussion with management = 14 marks
Ethics and Prof Issues for 11 marks
Q1: Yes, that was the mark allocation.
Q2: There wasn’t a split of marks for the 3 scenarios – they were worth 12 marks with no split between them given. The audit opinion was worth 5 marks and 8 marks for the ethics part.
Q3: The requirement for 14 marks (no split given) was:
i. What specific questions would you ask management in relation to the intangible assets.
ii. What additional information would you need to be available in respect of financing.11 marks for professional & ethical considerations.
@aynat said:
Great! Thank you! Can you please explain about DD request. The question was ” Within DD work, Auditor must assess target company (specifically Intangible Assets) Which enquirers will you send to the Target Company”s management?”I wrote several sentences, every of which was beginning from ” Kindly, provide us with the following…” and then I listed:
Licence Agreement with details,
opening balance figures,
calculation of amortization,
Confirmation letter regarding alternative use of that intangible assets.I have never seen such requirements in Past Papers….
Thanks in Advance!
I struggled with this part. The requirement was what *specific questions* would you ask management in relation to the intangible assets. So it wasn’t asking what info you would need about them such agreement details etc. The intangibles were a license and a patent.
In relation to the licenses I said ask if there’s been any previous, current or suspected breaches of the licensing agreement to assess risk of fines or loss of license.
For the patent I said ask if they are aware of any developments in processes or emerging competition to assess risk of impairment.
Couldn’t think of anything else. In hindsight, I think other questions would be how does management ensure that licensing conditions are being adhered to, and how does it test the patent for impairment. Too late now!
@ezehrobinson said:
I thought the last sentence said they’re treating it like subsidiaryI didn’t see the flood issue. I believe it is because of time pressure
No, it said they were treating it as a branch and not a subsidiary.
The flood issue was one of the last pieces of information given in the question.
@aynat said:
But there is yet NO announcements have been made to employee, so the criteria are not met for such provision.I considered this from both angles. Remember that the date was 1 July 20×5, and the year end was 30 Sept 20×5, so there was still time for the announcement which would require a provision if announcement made, or no provision if no announcement made. There was a risk that a provision would be created when it shouldn’t’ve been, or vice versa depending upon the position at 30 Sept.
@lizzyzingel said:
Business Risks-dependence on local farmers,international trading risks,Brand power threats,legal case, Redundancy…???What did you make of the legal case? It was the company taking others to court. It’s usually the other way round, so it kinda threw me a bit.
@ezehrobinson said:
I struggled too on that question.How about the second part on Financing?
I thought that was easier.
* Equity Shares: get the detail to confirm the T&Cs of them to rule out any buy-back etc
* Loan secured on PPE: Get loan agreement to see what the conditions are and find out which assets it’s actually secured on.
* Venture Capital: Get the agreement to gauge what risks are involved.That was my general gist of them.
@kbourne said:
Yep i did. It was an audit risk but also the procedures in part c(i) related to that. Stated it was material and possibly overstated if fair value estimation not accurateYes, I did too under IFRS5 reporting as a discontinued operation.
@ezehrobinson said:
Mind sharing how you answered it?I struggled with the intangibles part. The requirement asked for ‘specific’ questions to ask management and there wasn’t much to glean from the info (unless I totally missed it), so I said inquire about any known or suspected breaches of the licensing regulations and for the patent – was there any new technological advances or processes that management was aware of that might affect the value of the patent.
@ezehrobinson said:
Many thanks for this
I wrote same thing as you.Here’s hoping that we get points for it!
What did you write for your opinion on the audit report? I ruled out disclaimer because it wasn’t about being unable to get enough evidence, and so that left qualified or adverse because it was about the financial statements, and concluded that the opinion should be qualified except for… rather than adverse.
@ezehrobinson said:
Can anyone remember the ethics question for question 2?I think that was about the discovery that the firm had done some work for the client, plus the audit senior suggesting that the firm could word the presentation of the sugary drinks issue in the annual report to say it in a positive way, and then suggesting that the tech dept could do the narrative for the annual report.
I think I took from it all that there was threats re self review, self interest, advocacy, assuming management responsibilities and a quality control issue at the firm since the audit team didn’t know about the other work.
@kbourne said:
Anyone able to advise what they did with the Exhibit that was a graphical representation of preliminary analytical procedures? All I was able muster up was that the jump up in revenues and profits was abnormally large in 20X4 and that additional substantive procedures should be performed?Didn’t do much with it asides note that revenue and profit growth were going in opposite directions.
haha! dunno about that! Quite a few marks across the paper that I couldn’t answer.
Q1 my IHT liability was £54,800, and overall available funds left for the expansion around £213k.
With the error corrections, the car was only allowed 8% capital allowances due to it’s CO2 emissions, the AIA claimed on the other amount was added back in full. So this gave me a total of £47,202 to be added back with £18880 of that being overlap profits for the first 3 months.
I advised Nate to sell the shares across current year and next year so that each disposal would be fully covered by the A.E.
In Q3, there was a subtle different for Freya making the sale of the painting, and Birta making it. For Freya, it didn’t matter – she got £34k regardless. But… Freya is a connected person to Birta, and as the painting was sold at a loss, this meant that the loss could only be relieved against any future gains from transactions with Freya. Whereas, if she had sold it to the unconnected person herself, that restriction wouldn’t’ve applied.
Can’t remember much else.
The admin review (which will cost you £52) is not a re-marking service. It just makes sure that proper process was followed in the marking of your paper. You’ll get a breakdown of what you scored for each question and confirmation your marks were added up correctly. The only way your mark will be changed is if there was an error in adding them up… which of course means that your mark could go down as well as up in the event of that.
ACCA does have a policy of scrutinising scripts that fail by a mark or two just to be sure that the overall mark is correct.
It’s ultimately up to you, but I think you’d probably be wasting £52.
If you’ve already passed P3, then trying for a pass in P1 in June is a good idea because if you don’t, then you’ll basically forfeit your P3 pass as you need to have passed both P1 & P3 by June to qualify for exemption from the new Strategic Business Leader exam format.
If you haven’t yet passed P3 then you’d need to sit, and pass, both P1 & P3 in June to qualify for the exemption.
There’d be no point at all in sitting just one of them in June if you haven’t already passed the other.
here’s mine:
Q1 a: I did this on a point by point basis just showing what the similarity was and what the difference was between the two roles on the basis of who owned each organisation and who they were accountable to.
b) I’m sure was, “explain was CRS is, and why might the ethical stance be different between a PSO and Plc”. I just approached this with an explanation of what it is, and then used Gray, Owens & Adams to illustrate that a PSO is all about value for money and benefit to society, so, at extremes, it would be at the opposite end of the spectrum from a Plc which is all about maximising shareholder wealth. Then developed this idea a little more with how it’s probable that each would be more towards the middle than at extremes.
Ci) That was just text book stuff really in that it was about being seen to be doing something in terms of giving something back to the community an organisation operates in by doing things like sponsoring local activities and bunging money to charities. I went on to suggest that strategic CSR would be more beneficial due it being aligned with the objectives of an organisation rather than just randomly giving money to charities and whatnot.
Cii) I thought this was quite straightforward. This was just about raising awareness in the department and trying to get staff to buy into it I suggested running workshops on it to get staff input on what the dept could do, develop some KPI’s and report on them on the intranet, encourage suggestions for improvement.
D: Draft a letter to the Gov, so you head up the letter with the “to” address (I addressed mine to the Minster for Education), the “from” address, date, salutation etc – as you would when producing a letter. Then a couple of introductory sentences along the lines of: “I am writing to you today to highlight some of the findings of the recent audit on DE which are of concern to me and I feel should be brought to your attention and shall address these separately”.
Personally, I don’t think draft a “letter” was suitable for the content you had to put in it. The requirement was more suited to a report, memo or briefing. But anyway…
Di: Transaction Costs. Can’t remember my wording on this, but it was about how the new production of reports would be an extra cost of doing something that wasn’t previously done, and that the new contracts for teachers will result in higher staff turnover and so new costs for recruitment – advertising and training. Also probable recruitment of admin staff to cover the work that teachers on the new contracts aren’t doing anymore (full time permanent teachers used to do that for ‘free’). Some other things that I can’t remember now.
Dii: Stakeholder claims. Personally I think there was a ridiculous amount of writing to do here for 6 marks. The “explain what a stakeholder claim is” was easy enough. But to then “critically assess the claims of the teachers & the Government” as well – all for a total of 6 marks? Nope. So I explained what a stakeholder claim is and left it at that.
Diii) This was just pointing out that whilst the DE head was advocating the new contracts, it was adversely affecting the quality of educational standards and that the package was pretty much a bribe to introduce the contracts and they were more happy to extend it due to the substantial amount to be gained for themselves. The ethical stuff about it was that they were doing press releases in support of it, yet not advertising the bonus structure in place. So this brought about a few ethical issues. The DE head was just acting in self interest – substantial bonuses, and at the same time possibly worried about job security as the direction was coming from people above who could get rid of them easily enough, so perhaps intimidated at the outset, but got used to the extra money, having no regard to the society their position is supposed to be to the benefit of.
My answer is along the lines of all of that for Q1. Possibly as rough a structure as you’re going to get!
@rogman228 said:
Did anybody else realize that Q4 was about Brexit?I had a little giggle in the exam because it came across as this to me.
The UK was called LaLand. Which the suggests the examiners wanted to call it LaLaLand because their decision to leave the European Union (or customs union as it was called in the question) was crazy LOL.
Their expansion to neighboring countries was like all the UK sports chain that also open up shops in Ireland which is the UK’s neighbor.
I reimagined the case being about being about a company like JD Sports who have shops in Ireland and the UK and who face risks to their Irish and UK operations because of the weakening pound (which was also hinted at in the case) and all the wicked changes Brexit will bring.
Yes, I got the Brexit thing as well. And, Q3… which I didn’t do, was sailing very close to the wind with the Smiler rollercoaster accident at Alton Towers not so long ago.
@jxlimzixuan said:
Q2(a), For me i think the tricky part is the action & behavior as a leader in internal audit department and as an accountant for ethical issue is roughly the same. I scare my points will be duplicated.Q2(b) this is the worst sub question, it’s worth 9 marks but the fact is that ethical issue is not that much. I can only found 2 strong facts (he’s under pressure & not independence), but i have tried to split it out to 4 points although the ideas are roughly the same.
And one of my safeguard for ethical issue is break up with her girlfriend (since she is project manager), hopefully this can make the marker laugh and give me some extra marks hahahaQ2(c) AAA model is the easiest one in this Q2 since it is straightforward
I struggled as well to evaluate the ethical threats in b). The only obvious one was Familiarity – he’s leading up the audit and she’s his girlfriend, which is a secret. So the safeguard there would’ve been to divulge that before the audit began.
I dropped in possible Intimidation since the girlfriend is putting him under pressure, but it doesn’t say what sort of pressure, so she might be threatening to break up with him.
Self Interest was another, since if she loses her job because of his audit report, then it could be financially costly for him if they have joint financial responsibilities so in his interests for her not to lose her job.
Confidentiality was the other one I mentioned. It seemed that he’d told her about the result before submitting his report. So it would a breach of confidentiality to be discussing the findings with the project manager being audited before submission to the board.
So asides from the obvious familiarity threat, the rest were just me reading between the lines of it and coming up with others.
The AAA part was an absolute gift though.
Q4 was all about risk: Appetite for risk, need for risk management and the role of a risk committee inc why it would be beneficial to be made up of NEDs.
Q3. Had a focus on risk coupled with systems of internal controls.
So if you did those two option questions, then 50% of your paper would’ve been risk orientated.
Q1 & Q2 weren’t about risk.
I shouldn’t think it matters. It’s up to you to select the paper variant when you register for your exams, so providing you can do your chosen variant in whichever country then I don’t see why it would be a problem.
Might be best contacting ACCA directly just to clarify though.
You need 50 marks in total to pass. It doesn’t matter which questions you get them from.
Q5.
My argument was that actual contract with the buyer would have to be scrutinised to ascertain at which point the seller’s obligation had been completed under IFRS 15, and therefore revenue recorded.
The director was saying that the obligation was fulfilled on delivery… but it seemed that the contract said that the consignment had to be inspected by the customer first, which suggested to me that the revenue had been recorded before it should have been and if so then an emphasis of matter para should go in the report if not resolved.
Q4.
Inventories: I wrote about it being a significant risk because the calculation of it was complex, especially since WIP was involved – which is a risk in itself due to the subjective nature of the calculation. Mentioned IAS 2 and for audit evidence needing basically all documentation that went into the calculation – payroll, production schedules and I can’t remember the rest now.
Impairment: I wrote about it being correct to have the impairment review as per IAS36 since there was the indicator that the outlets may not be worth their carrying amount anymore and the $9m impairment recognised should be apportioned in full against goodwill to start with, then the remainder to the outlets on the proportional basis of which outlets’ sales have dropped the most. I’m right about the goodwill first, but I’m not sure about the rest of it. For evidence I wrote about verifying the drop in sales by outlet and documentation on the methology of calculating the impairment.
Warranties: I wrote about IAS37 allowing provisions for warranties for returned goods although it wasn’t particularly material to the financial statements. For evidence I think I said stuff about documentation on the basis that the provision is made and the value of actual returns to compare against the provision.
That’s the gist of my answer at least. How did you approach it?