[navjot23]

Hey all just a short breakdown on what I wrote

1) there were a lot of risks which you could have mentioned . The ones I mentioned where
– shareholders want to be listed soon and that requires full compliance with the structure of the board which they don’t meet, not taking that seriously would have adverse effects and compliance risk also seen my clients as a bad thing – unable to win or retain contracts (high impact, high likelihood)
– management motivation – it mentioned that the directors were already unhappy with us (the consultanty firm) joining and proving advice to tt4u. Could also be seen a risk as they are hesitant to change
– risk that the survey was seen as a ad hoc rare exercise. Won’t be able to understand clients needs therefore difficult to win contracts and retain
– then all the risks to do with the survey
– risks of the confidentiality breach impact reputation and legal fees also another risk affecting winning new clients etc
-competitor analysis also wasn’t done so they aren’t able to see where they are in the market. Another risk you could talk about
-risk of falling behind they are a tech company and should be at the forefront of innovation risk of getting left behind

1) for the next part I used suitability feasibility and acceptability for both. I overall went for the government one due to the fact the company only have 75 staff doesn’t look like they have the resources for the internet home appliances sector Which would also need a lot of financial backing or maybe if they target one sector within the market it may be feasible. Both were risky but the government one overall I felt had less risk it was also more in line with the strategic position of the company providing similar services to a new market which is ‘market development ‘ also shareholders may prefer government service might be good for reputation. There was a lot to talk about for both projects in all.
1) the controls I mentioned things such as control environment setting tone from the top, then control activities such a segregation, passwords, authorisations, training, physical access, reporting on compliance and regaularly testing the controls in place, also carrying out a risk assessment regularly to make sure the controls are in place . And monitoring

2) reviewing the work of the investment appraisal obviously the work was done by a junior new member so can question all his creditentials coming from a new department, wasn’t reviewed by the FD either so another issue. Forecasting sales revenue went up 99.6% from Y1 to Y5 that’s a very optimistic assumption need to get the detail behind all those. The marketing costs flatlined after year 3 which didn’t make sense but also if you are launching a new cloud softaware surely you would incure a lot of marketing costs in the first year not the subsequent years didn’t make sense . The tax rate remains unchanged but surely that would change as profits would be made. The discount rate used would need to take into account risk but it was also under the assumption of the old loan they previously had. What if they need a new loan to finance this venture can’t use the old loan assumptions to work out the discount rate.

2) e marketing was A nice one. talked about the traditional push marketing approach and how everything is more pull marketing where the customer generates the initial interaction. Followed by the 6’is and applying them to the cloud computing option as much as possible

3) this is where it gets interesting I figured that the MOBEID approach was a transformational change as they kept mentioning in the paper but the factor to think about was also the speed of the change. Surely they couldn’t just do it overnight therefore I said the change would be a transformational change at an slow pace which is – evolutionary change (according to the model) and the advice I gave to the CEO was to use LEWINs model of – unfreeze: change and then refreeze. And giving step by step guidance on how to do that.

3) the ceo letter was pretty self explanatory

3) the information for the new board structure I mentioned needs to be a balance of NEDS and EDs but also the fact that committees would be useful to satisfy all stakeholder groups risk, nomination, audit, remuneration. Also mentioned how the board should be diverse from all backgrounds, genders, variety of skills . Also no mention of a directors induction which would be good, and a CPD done so everyone could keep up to date on skills

3) qualities of information given to the boardI talked about
Accurate info
Relevant
Reliable
User targeted
Timely
Forward looking
Highly summarised
Non routine info
Maybe incorporate environmental reporting
And maybe consider integrated reporting

This way all stakeholder groups can benefit. The Meiobid approach was all about the client and stakeholders being at the heart of everything that was done so giving them that kind of information (above) should keep them happy

Let me know what you guys think

[navjot23]

Hey everyone.

Just a breakdown of things that may have been worth mentioning which I wrote about in my answers

Q1) audit risks:
– Complex group structure
– Listed entity – management bias to manipulate results
– Potential Impairment of the Burger chain as they mentioned in the wording revenues had fallen
– operating segment disclosure
– disclosures for the joint venture
– the disposal of the burger chain is an event after the reporting period as they have not found a buyer at year end disclosure necessary?
– held for sale treatment for the burger chain
– the PPE capitalised $45m has intangibles in it which need to be sepreated and amortised
– within the PPE whatever related to the PPE items such as Fixtures and fittings, plant and machinery and the building should all have different depreciation terms and should be separated
– dont know if anyone noticed but there was a reconciling difference between The operating segment note which stated total assets were i think $450m but just below it “other information” stated that total assets were $475m there was a reconciling difference of $25m of assets. I talked about how the auditor doesnt audit the “other information” section and doesnt express and opinion but there is a risk that this is mistated and we must ask management to correct.
– government grant risk that the full amount has been recognised in the P&L but according to IAS standards should only recognise the income when the associated costs are alongside and as nothing has been spend the f/s are misstated. Also worth noticing that Profit after tax was $20m and the government grant was $20m so if we remove the grant profit after tax becomes $0?

Further information about the disposal i mentioned all the criteria needed for a held for sale such as actively marketed, sale highly probable, sell in currrent condition, fair value, sale in one year etc.

The ethical threats i mentioned self interest due to the fee the auditor may receive, intimiation as juniors may fail to challenge the senior auditor, self review , management responsibilities, as well as familiary as the audior may become too trusting of the staff if he joins them for a short while.

Q2) FYI for those uncertain about the shopping mall impairment treatment. If you have done P2 theres one page which mentions impairment reversals and an entity cannot recognise an impairment reversal greater that what they had originally impaired the inital asset at. The sale and leaseback was correctly recorded so it was just things to talk about such as has a sale occured and has the entity satisfied its performance obligations and if the transaction didnt meet the requirements of a sale then the treatment of the sale and leaseback would be different. As the building had a 50year life and the leaseback was only 10years the substantial rights to the asset move to entity buying the building (they have the remaning 40years of use on it) therefore it can be treated as a sale. All in all a qualified opinion would be issued with an “except for” wording and a “basis for qualifed opinion below it”

Q3) forensic audit acceptance was:
Advocacy
Confidentiality
Self review
Professional competence
Self interest

I could keep going on the other parts let me know if you want good luck to everyone.

[Author]

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