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You can do your calculations on spreadsheets and reference it when writing your answers on the word processor
All the procedures you suggested are top-notch, but You should have to say the reason for the procedure you carried out because the reason for the procedure is to make an audit assertion like you review payment for the consideration to ascertain the occurrence of the transaction.
reperform the posting of the goodwill journals to test the control on the system
Recalculated the goodwill to confirm the accuracy of the goodwill figure
Inquire from management why Advertising expenses were capitalised to ascertain if it is reasonable
Business risk
Governance Risk -Discuss the resignation of newly acquired company managers and lack of banking experience in parent board
Control Risk- discuss significant subsidiary( with 55 branches and40m)Revenue which is material to the group i.e control over multiple stores making these sales
Compliance risk – Parent does not have the expertise to manage the bank, though the bank retained its experienced staff risk still exist
Reputational risk – stems from control risk Banking is a highly regulated business a highly published investigation on non-compliance could damage the reputation of group.
Transaction/Demand Risk: Recall of badly manufactured sold product could affect the brand and demand for the product in future
Financial risk – High gearing and borrowings profit is almost the same as interest payable. Risk of not meeting with interest and lack of availability to further credit due to high gearing.
Credit Risk: Loans to customers to buy their product, risk of default which will affect the company in 2 ways
Audit/ROMM
Subsidiary purchase partway through the fin yr -over or understatement of the value of an investment -Adjustment for intercompany sales, disclosure of subsidiary or wrongful classification.
Non Accrual for share-based payment could overstate profit and risk of material disclosure of directors pay
Capitalising advert .materialy overstate profit and loss and balance sheet by 5m
Management bias and incentive to overstate profit (refer to calculated analytical review in a spreadsheet
Loan and interest – could be an incentive to overstate revenue and profit to make the company appear profitable for successful loan application
Risk of Non-recognition of 3.25m interest could overstate profit material to profit and loss
Control risk -repeat what you said in business risk but add ratios -over /understate revenue
I think keeping the subsidiary will be a good strategic choice because margins were shrinking in the Audit business and the market is getting tighter. The company can spread their risk by continuing with the subsidiary profitably. Moreover, the nature of the management consultancy business is suitable to the Parent Company and will complement the audit business. The same competence is required to run the subsidiary. The management needs to reorganise, refocus the mgt consultancy and develop market share by creating a niche for it . This is could be achieved by targeting small and medium scale clients as that segment has the potential to grow
However, the price quoted for the mgt consultancy appears to be attractive given the significant reduction in profit. The undiscounted future profit from the projection is lower than the present valuation (25m). Also, from the projections, the revenue from yrs 2,3, and 4 will mostly be from new clients, this is quite ambitious and at variance, with the prevailing condition in the market because the big four with enormous resources have the market share and are investing in it. In light of this, achieving the projections is quite doubtful. Furthermore, the regulatory authorities according to the article are beginning to look at the ties of mgt consultancies and Audit firms, this could potentially be a significant business risk in future should new regulations bar Audit firm from holding an interest in Consultancy service Companies.
It is our opinion that the benefits listed above outweigh the drawbacks if the mgt consultancy can be reorganised and refocused market-wise. It is our view that it has the potential to develop a niche in the market by focusing on SMEs. It will be more profitable if that is achieved. The strategic choice and risk opportunities it offers are far greater than the immediate gains from its disposal.
No ANswer is right or wrong you just have to look at both sides and make a choice. You can read my suggested way of answering the question and still arrive at a different conclusion. It is just to show scepticism .So your answer can be right in its own way .
same here, I think people are reading too much into the exam questions. It appears not too difficult, but you can fail it easily by focusing on what was not required. A tricky exam no doubt. I think the time pressure really affected people. Most of the answers are in the exhibits if you settle down to read all of it, but if you do that, it is highly likely you will not finish the questions and would you have written and developed enough points to pass? So the only way I feel to balance things out is to pick a question, read the questions first, scan through the exhibits with a particular objective in mind to look for where it is substantially discussed. By the time you are doing the rest of the questions, you pretty much know where to find your answers so you just go directly to where issues relating to the questions were discussed. You might not get the overall picture, but you will most likely generate enough points to pass. Except you are super intelligent, you have practised over and over again and you want to score 99% . Then you have to read the whole thing first . Gathering the points is the easy part , but articulating and developing your ideas under time pressure is where the problem is
Yes if you can justify it .To be on the safe side, I think you will need to explain what having a significant interest is and relate it to the scenario..
If it was a finance director ,then the case will be straight forward .The head accountant will advice and provide options in my view .
Strategic operating / finance decisions are taken at the board level .and the head accountant does not have his name attached to any representation in the company’s annual account neither will his name appear in it. So, it appears to be a hard sell to see why the transactions of his wife should be disclosed .But again it’s the functions one will have to look at, does the head of account participate in making decisions,if he does ,then he is and the transaction will have to be disclosed .
Members of management team are always in the Annual Account . I think if you justify your claims and state why you think he is a member of the management team .It will be given .
Yes if you can justify it .To be on the safe side, I think you will need to explain what having a significant interest is and relate it to the scenario..
If it was a finance director ,then the case will be straight forward .The head accountant will advice and provide options in my view .
Strategic operating / finance decisions are taken at the board level .and the head accountant does not have his name attached to any representation in the company’s annual account neithe will his name appear in it.
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Members of management team are always in the Annual Account .But I think if you justify your claims and state why you think he is a member of the management team .It will be given .dont think that’s what was needed in that question . The question is really about the role of an accountant in an IT environment .It was twisted so you can advise.
In my view
Intro Business is usually driven by self interest and application of ethics in certain real life situations can be murky/unclear. However, ethics should always guide actions to limit exposure.
The threat appears credible given the specificity and details .It should be taken seriously.
The organisation operates in the context of laws and regulations that guides third party data and breaches .
Where there is a breach, the potential consequences could lead to significant fines and reputational damage that could threaten the future of the business.
The organisation has an obligation to its client and other stakeholders like the actual owners of the data/public as well as the regulatory authorities
Can the organisation obtain a reasonable assurance that proves beyond doubt that there was no breach of its system to obtain the information as the It director alluded to ?
It is understandable that TT4U might want to retain the business and not inform the client since they are not sure their network was broken into to steal the data
It is our view that the potential negative outcome ,should it come to light that the hacker contacted them initially outweighs the benefit of retaining the client
Putting the above issues in perspective ,we would advise that TT4U act with integrity by informing the client with or without evidence that the breach was not from their system . TT4U should then work out a mutual response to the threat with the client.
Apologies for my punctuation or unclear Englush
Wrote something along these lines
The exam was bloody .There was blood all over my question paper and answer sheet .I will just be preparing for June .You see questions like these and even the things you know will fly out of your head
Can somebody tell me the benefit to the employees and information directors will need.
These questions did not make sense to me given the Information in the exhibits
For the options i used suitability feasibility and Acceptability
Concluded by advising they take on the two options since there will be no significant alteration to the business model according to the information in exhibit 2 and same resources and competence can be used to deliver the two objectives .It opens a new market and product development and its a related diversification It also spreads the risks of the business as well
For the change question
Xteristics required I said a visionary leader
Select a change team from each department train them according to the objectives of moibeds also taking into consideration lapses in the feedback
Inform and educate the staff and make them understand reason for change
Delegate responsibilities , monitor controls in the It systems
mentioned that it’s a high strategic change that requires lots of coordination so business process reengineering should be implemented using POPIT .
I was just all over the place . At the end of the day still felt empty
How else can one prepare for a question like these . Read my eyes out and solve past questions,yet I did not feel like it moved any niddle in the hall .
I think those questions dont really test you , they just demoralise you in the hall and in my view it’s designed to ensure you fail.But I will not give up the challenge if i dont succede i will try again
I just found this site, I wish I did earlier. In explaining the Code of corporate governance, I put the references at the end of the brief paraphrased paragraphs of each provision of the code, but I led the paragraphs mentioning the UK code. I found online you could reference like that as long as the paraphrased paragraph is from the same source. Just learning now how wrong I was. I checked with write check, I had 4% similarity. They were headers and similar words you can’t avoid like 2 executive directors, the chairman and the CEO, as well as the definition of corporate governance which was referenced and quoted, each less than 1%, but aggregated to 4%. I am so scared right now as I do not want any trouble. I wished I had found this site earlier so. My mentor did not even flag it for me. It is so painful after all the hard work of taking the time to learn how to paraphrase and perfecting it. I am terrified. Thank you so much for this site, it is very good. I was happy going into my last exam but ve now lost motivation. I just hope I will not be referred for discipline.
