[sarmadtahir1]

@arvind111 said:
Yeah that was a tricky part really – think you could have taken it many ways.

What did people write for audit risks

1. New client – detection risks
2. Opening balances – Rom
3. Translation risks
4. Use of other auditor for sub
5. Software amortisation or review for impairment at year end as nothing was said to be done for the purchased bits
6. Operating segments – separate disclosures
7. Transfer of assets between group – inter company eliminations so that balance not held in both companies???

Anything else

I dont recall it being a new client, I didn’t write any points related to that. Mine were

1- Intragroup Transactions – 20 subsidiaries and a lot of volume and about the software worth $1m transferred at $5.4m which was inappropriate.
2- Intangible Assets – A lot of intangible assets and not correct treatments
3- Goodwill Impairment
4- Revaluation by management rather than Expert.
5- Foreign Subsidiary – IAS 21 Closing Rate
6- Fluctuation – Derivates/Financial Instruments

[sarmadtahir1]

@arvind111 said:
What kinds of points did people write for Q1, part B –

Explain what professional scepticism was?
Corporate governance issue
Lack of accounting knowledge from management?

What I wrote was management was relying on industry norms rather than calculations. Moreover, they were just not agreeing to impair the intangibles even though a huge part of their assets consisted of them. Talked about goodwill impairment as well, along with the foreign subsidiary and maybe hedging is used with complex derivatives and financial instruments, which are difficult to understand.

[sarmadtahir1]

So, what i did was calculated the percentage by converting it with 4 Oska rate and it was 68/4 which was 17 and 20% of Group Assets. I also did something different, i calculated the average rate because of the fluctuations and calculated the assets that way as well. It was still significant.

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