AAAACCA AAA exam was – September 2021 Exam – Instant Poll and comments

Good

I think today's exam was easy. If we compare today's paper with previous 3 or 4 papers, it was the easiest one among them. I attempted almost 98% of the paper and missed a point or two about the reporting part which were relatively easy but I got confused a little bit. Let's hope for the best ?

Anyone remembers the questions ?

1. Audit risks Procedures for redundancy and benefit pension scheme Ethical and professions issue 2. Adequacy of going concern evidence Other procedures for going concern Auditor report If going concern assumptions are appropriate 3. Initial engagement audit ... Advertisement

We were waiting for almost 3 hours for the exam to start at the exam centre in Limassol (Cyprus). Exam started around 11:40 instead of 9:00. Does anyone know if there is a point to claim mitigating circumstances for that? 3 hours of not being able to leave the premises for a snack in case the exam would start, not to mention that on the docket they ask the students to come 1 hour before, basically 6 -7 hours with water and some coffee only, I was happy I did not faint until I reached my car at the end of the exam. For those that have exams in the next days: bring snacks with you amd not just water, I hope all will go well in the next days but just in case.

yes you should, once it happened with me that the exam was scheduled for 9 in the morning and it started 10 in night

What did you write for that 6mrk 1a?

We had same paper but 2a n 3a was hell I get stuck

What was the auditor's opinion and report in the going concern question?

Lola wrote:What did you write for that 6mrk 1a?

I wrote about the three strands within audit strategy - scope, timing and direction. Then i went to provide more detail in relation to each strand. I also mentioned that given it's a new client this may impact the nature and extend of testing for gathering audit evidence. I also had a point around internal control and understanding the client and its environment (e.g oil industry). Not sure how many points i will earn as most of my explanations are too generic and I did not really use any of the exhibits.

Same for me. I did not apply to much on the study. I found difficult the cash- flow part with comments and procedures (Q3). Do you remember what was on Q2? I know that was something with audit opinion and comunication to manag but I do not remember the rest. Good luck!

For Arjan 2(a) ,was the question splitted between analytical review 2a(i) and additional/further procedures to be carried out 2a(ii)?

I think the question was matters related to the government grant and also disposal of an asset? The second part was explain implication on audit opinion if no adjustment made

Yes this was question 2(b) but was question 2(a) splitted between analytical procedure and further audit procedures to be carried out?

Chris777 wrote:

Lola wrote:What did you write for that 6mrk 1a?

Brilliant, thanks I wrote along the same lines.

Sooryedeo wrote:Yes this was question 2(b) but was question 2(a) splitted between analytical procedure and further audit procedures to be carried out?

Yes i believe so. Never seen a question similar to that in all the practice questions i did. Just waffled a bit to try and score half the marks

Qs1 Audit risk (CGU, restructuring provision, employee benefits, employee redundency, inventory with analytics) Procedures and evidence related to above Qs2 Reporting (goodwill n others which i dont recall now) Qs3 Quality, Ethical n Professional issues in identifying matters to consider to accept, evidences in file and procedures for loan arrangement review. Cashflow forecast procedures n evidence plus how you challenge the assumptions. These are all what i can recall…. Qs1 was a bit tough n made me feel like i am sitting again. Qs 2 n 3 were easy marks to obtain and these balanced my exam and gave me a hope that i might pass. It was my first sitting plz wish me a pass. Awaiting inputs from others… Thanks

barbadoshk wrote:I think I said the grant was material and therefore the opinion would be modified, amongst accounting policy he’s etc and the treatment. The sale of the machine was not material but I waffled on about correct treatment etc ??

I came to same answer, grant material so qualified opinion, sale of machine not material so unmodified opinion. Yeah and explaining correct treatment should pickup most of the marks available i assume

Hi, I also took AAA UK version today. Here are the questions and my answers. Which audit risks have you picked? Q1:Gruber Ltd (a) Identify and evaluate the matters to be considered in respect of the initial audit engagement of Gruber Ltd New client - lack in knowledge of business, internal control - > increase detection risk By thorough audit planning, mitigate the detection risk. Opening balances may be misstated. Need to do more work. Comparative figures may be misstated. need to do more work. (b) Evaluate significant audit risks for audit planning 1. Management override - family business, senior management are members of the board. 2. Revenue recognition of contracts with customers 3 year support service is a separate performance obligation, to be recognised throughout 3 years 3. Aryele Ltd- Contract assets - overstatement of contract assets and accrued profit from the contract 4. Johnson contract - contract liabilities and loss from the contract - misstated 5. The production facility on lease - right-of-use asset 6. Valuation of investment property - Natakomi Building in Edinburgh 7. The disclosure of the planned acquisition 8. The Disclosure of Related Party (Martin Gruber) and transactions (the intangible asset - Martin's design) (c ) design principal audit procedures for the audit of valuation of investment property Legal documentation Bank statement Board minutes Expert valuation report Discuss with management about their assumptions Obtain written representation (d) Ethical issues raised and actions to be taken about the due diligence service for the potential buyer Willis Ltd Gruber Ltd's 60% shares is the target. 1. Conflict of interest and confidentiality 2. Self-interest and self-review threat Q2: (a) Arjan Ltd – final review and subsequent events (i) Comment on the inconsistency between management's response and the audit evidences. 1. Understatement of inventory 2. Overstatement of receivables (ii) further actions including further substantive procedures 1. Inventory (1) A copy of Inventory count register/report (2) A copy of sample count working papers (3) Meeting minutes between auditor assistant and management … (4) (cannot remember) 2. Receivables (1) A copy of breakdown of outstanding invoices (2) A copy of receivables confirmation. (3) Meeting minutes with the financial controller (4) (cannot remember) (b) Evaluate the uncorrected misstatements and comment on their individual impact on the audit opinion (i) grant Materiality: £5mil overstatement of grant income is material to total profit before tax. Accounting issue: Risk: Material but not pervasive Qualified opinion with an 'except for…' wording (ii) sale of machinery Materiality: £1mil overstatement is material to total profit before tax. Accounting issue: Risk: Material but not pervasive Qualified opinion with an 'except for…' wording Q3 a. Pre-acceptance considerations of the review engagement (10marks) Risk: the risk of giving an incorrect opinion. Ensure pre-conditions are in places. Limited assurance. It's management's responsibilities to produce the forecast statements. Auditor consideration: if we have sufficient resources, experience and skills Commercial: fee charge, if it is profitable Ethics: request independence confirmation. b. Review of the forecast statements of profit or loss and cash flows (15 marks) (i) evaluate the assumptions (6 marks) (ii) design the principal audit procedures in the audit of cash flows. (9 marks) Sales forecast Search market price online Inspect the fixed costs such as office building rents and employee salaries Inspect the loan agreements to confirm the interest rate Obtain WACC to recalculate the finance costs

bt27 wrote:I had: Q1: matters relating to planning audit (6m), audit risk planning (24m) procedures re investment property (8m) ethical issue (both companies audited by same firm but one buying another and wants firm to produce DD) (8m)

Hi, I posted the questions as above.

Many thanks!

I got the same questions ! How many audit risks did you manage to find? And what did you write in Reporting Part?

CorneliaLu wrote:Hi, I also took AAA UK version today. Here are the questions and my answers. Which audit risks have you picked?

Regarding Q2: (a) Arjan Ltd – final review and subsequent events (i) Comment on the inconsistency between management’s response and the audit evidences. 1. Understatement of inventory 2. Overstatement of receivables ---- For additional procedures I wrote things like using an expert to value the inventory and for receivables additional procedures such as review of the post year end bank statements to assess the recoverability. Would that be correct ?

sarahsalman26 wrote:I got the same questions ! How many audit risks did you manage to find?<br>And what did you write in Reporting Part?

I wrote 12 risks as I assume it's 2 marks per well explained risk. I also note down two control risks, one in respect of the error that changed an amount from 2m profit to a 800k loss and another one in respect of the the lease to external individuals as they have access to the warehouse where the machines are manufactured.

Which question did you get? - the one with the pension plan?

No

@thirthy - you MUST claim mitigating circumstances for yourself - see my advice here https://opentuition.com/topic/nightmare-exam-venue

i was not able to manage time.

@thirthy I can’t believe your exam was so late, especially after the disaster that was the last exam paper. How do you feel the exam actually went?

@Kim Smith thank you very much for your answer I will certainly claim for mitigating circumstances, in the meanwhile I have received an apology email from ACCA for the technical issues at the centre and stating that they will get in touch again next week. @emwitton the exam was much easier this time, Q1 was fair enough this time with sufficient information in the scenario to put together a few audit risks. Procedures were requested to audit an agreed increase in a defined benefit pension plan for existing and past beneficiaries (weird) including the work of an external expert that has competence, experience, independence and objectivity so you had to fish for specific details on pension plan to get some marks, as well as a restructuring provision that included training and relocation cost for personnel. Q2 on acceptance decision of auditing a large company in banking industry with many foreign subsidiaries (in 50 countries if I remember well), strict reporting requirements and intimidation threats by management (giving up on existing auditor due to disagreement on models used to value financial instruments, and to cut audit time and fees). They were also facing an investigation for NOCLAR and of course the auditor did not have experience in banking just a small team working with financial institutions. However despite the question being one red flag after another, your position with the auditor (as I read it) was as a person responsible for business development too, so pro arguments were expected as well I think, as well as what should be taken in consideration when quoting a fee for the audit. And finally reviewing some marketing material by a competitor for ethical issues. I guess this kind of question requires a bit of thinking through and in 40 minutes I just scrambled for marks taking into consideration that if you don't answer their specific requirement you don't get marks. Q3 was about evidence and audit opinion in a company with MURGC indicators, first reviewing the evidence on file, then recommending other evidence that should be obtained, and finally it stated tgat the auditor has satisfied himself that going concern is no longer an issue, except for a lack of confirmation regarding renewal of credit facilities that was adequately disclosed in the notes, so what would be the impact on the audit report in this situation. P.S. To the other students this is what remember from the exam questions and according to my own understanding of the requirements, I might not remember/might not have understood everything correctly Hopefully I will pass this time but who knows, 2 hours into the exam my energy dropped very significantly and I felt like giving up altogether, I was exhausted and honestly plain hungry having had breakfast around 8AM to be at the venue on time and now it was almost 2 PM due to ACCA's neverending tech issues. Luckily I managed to pick myself up and finished the exam.