[zaeemarif]

Hi all,

This is what I can recall.

Q1 – Hawk & Co audit firm/Component auditor Bill & Co/Flamingo Group
a) Audit risk (Goodwill, inventories consignment, Paradise brand, consolidate profit/loss pro-portion basis 6 months, RPT, opening balance adjustment, interco balance/transaction elimination, etc.) (16 marks)
b) Inventories audit procedures (5 marks)
c) Extract component auditor audit strategy (analytical procedures based on management work, audit partner 15 years in charge without rotation) (10 marks?)
Format/professional writing – 4 marks

Q2 – Quality control (where most of us screw up)
a) QC importance (audit partner subject to litigation, important to maintain good name of the profession, management & public reliance on audited result for decision making)
b) Materiality (firm-wide change from 10% PBT to 15% PBT) – seriously not sure what the question want, it’s an open ended type of question.
I just talk about materiality usually based on Total Assets/Revenue/PBT and what’s the range, if low risk can use higher range scope, higher range will increase detection risk due to lesser substantive work
c) Could not recall on this question

Q3 – College & WCC
a) Audit procedures for PFI (graduate within average 3 years, retain first year student, employment/further study within 12 months for graduated student)
b) Matters to consider & audit evidence
i – Built property to be rent out. Issue identified is wrongly record as IAS16 PPE, should be IAS40 Investment Properties since no intention to use. Depreciation not yet charge since not yet rent out as at year end. By right, should depreciate upon available for use.
ii – Fund receive for 3 activities. Must be IAS20 Government Grant. Allow to recognise revenue provided meet all conditions. Must ensure revenue match with cost.
c) I skip this question and only return to it for the last 5 minute. The only answer that I have is, the opinion should be negative worded “Nothing has come to our attention…”

Q4 – Ethical
a) Asp Co – Small company receiving significance financing for growth. Currently provide non-assurance service (bookkeeping, payroll, tax) but client request to also perform audit. Self interest threat due to fee. Self review threat due to non-assurance work to be audited by same firm. Should use different team and also assign 2nd reviewer. I also include money laundering element due to “significance financing” from unknown party. Need to inquire on the source of funding to avoid being associated with money laundering. Possibility of over depending on client audit fee due to client potential growth. (7 marks)

b) Viper Co – Previous auditor did not response to our query. Client file litigation towards ex-auditor due to modified report (obvious intimidation threat). Client may have integrity issue. We may report to professional body on the previous auditor due to non-cooperation. Should consider weight of risk vs fee to be earn if to accept this client. (7 marks)

c) Could not recall on this question (6 marks)

I’m a finalist and really hope all of us will pass. We are in the same boat for Q2. Sigh.

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