[reazdusmahomed]

@jmmyjimmy said:
Regarding case 2, I have put pervasive as the misstatement represents 50% of pbt. Do you think it is a mistake?

There is a question on lease which state that the lease agreement do not permit the firm to purchase the asset. that implies it will never be in control on the equipment. As fat as i know it is an operating lease, but in the question it had been classified as finance?

anyone can clear this pls>?

[reazdusmahomed]

@lukman94 said:
It was a new client as the question said “was assigned to the audit “ – apart from this it wasn’t very clear.

Audit risks for Q1 were as follows ;
– Listed Entity – risk of management bias I.e reversal of provisions
– New client – risk if misstated opening balanced
– Reliance on component auditor – risk of reduced audit quality
– Intangible Assets – included research costs, overstating assets and profit.
– finance costs not in line with increase in borrowing
– PPE increased with no sign of capex or depreciation
– goodwill increased by 130, 30 being unaccounted for. Risk of overstatement
– decline in revenue and Increased competition could merit impairment.

Ethical issues in Q1 – Integrated Report ;

Management responsibility + Self review threat. Mgt responsibility cannot be mitigated, decline request. Self review can be mitigated by use of different teams, howerver listed status would require to decline.

Q2 – Uncorrected Statements

Brief intro talking about how misstatements should be discussed with management and those charged with governance before modifying report.

Leases – Qualified – Not pervasive
Claims – Adverse – Material to both profit and assets.
Aggregate impact of leases and claims – Adverse opinion
Assets – Not material- Unmodofied

This is all I remember. Please feel free to add on to this,

Q3 on forecasted profit n loss

Refer to latest sample from acca. It almost the same

[reazdusmahomed]

This is the first sitting of the new syllabus. The question was very long especially the q1 which contain about 5 exhibits. Those who had worked the sample pilot paper from ACCA wont have any issues because the reasoning are same. The q3 on forecasted pnl was almost a copy cut version from the pilot paper. But it was extremely time constraint….. expert are telling to plan your time well. Even through proper planning, time run out without being able to complete all questions. And also elimination of choice question had made the exam a little more harder. Anyone agree with me.

[reazdusmahomed]

@acca6578 said:
Just wondering how could the Farming company a cash cow? I know it’s has the highest Market Share, but both the market size as well as the gross profit margin is declining significantly over the years, how can the company be a cash cow when the market size as well as the gross profit margin is dropping so much over the years?? it should be a dog rather than a cash cow

I strongly agree with you. The farming company is ‘dog’ since its turnover growth has declined considerably as well as its gross profit and gross profit margin.

The decline is in line with the declining market sector turnover
Such operations should be divest as soonest as possible.

am i wrong?

[reazdusmahomed]

@sonyam11 said:
Those are the total variances but each of those can be broken down further into efficiency and price variances. Regarding the raw materials for example there was actually a 20k favourable variance (suggests procurement had negotiated a discount?) in the price they paid which means the usage variance was 50k. And on labour they used more hours than they should and they also paid more per hour (because of the overtime element)

Do we need really to calculate the variance in such details?

I have only support my answer in strenght & weaknesses with the variance figures in a very simple form.

As per examiner comments, we dont need to bother too much with figures in the scenario. We are tested in analysing and applying results in the scenario and not to calculate it.

Anyone clarify?

Thanks

[reazdusmahomed]

@mumbaikar said:
I wrote the same what about ashridge model which is which

Good!! I think it is the ideal answer.

[reazdusmahomed]

@suf23 said:
Q #2 wasn’t bad at all.

wrote that the farm was a ‘dog’ company and a value trap business, the insurance company a star company and the last tech company a cash cow company and ballast business.

Thought that the parent company was more of a portfolio manager

I have classified the insurance company as Cash Cow and the electronic tech as star because it yield higher growth in Turnover, market turnover, Gross profit and Gross profit margin!!!!

am i wrong?

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