*** ACCA P7 June 2017 Exam was.. Instant Poll and comments ***

the intangible asset is recognised when acquiring a sub. IAS 38 rules of not capitalising do not apply then i think

Hi, can somebody confirm the mark allocation in question 1 for the international paper for the different elements, as i did the uk paper so no split is provided? Thanks

Question 1a) Audit Risk 19 marks, 1b) Audit procedure of brand. 5 marks, 1c) Ethics and Prof issues 7 marks.
Professional Marks 4 marks

Really? I disagree. Audit risk is a fundamental area in P7. The core of P7! Those type of questions have come up before. Ethics also. Plus professional issues.

I do believe that the paper was fair, I’ve seen tougher questions lately and this one really went relatively easy on the students.

Q1 was about audit risk in acquisition of 3 subsidiaries during the year. I find business risks harder because they relate INDIRECTLY to the financial statements and I was hoping to see business risk in this attempt, since we had risk of material misstatement in the March 2017 attempt. Anyway, the question asked about audit risk for a group which acquired 3 subsidiaries during the year.
Part a) One was Lilac and was a significant competent. Was present overseas but had same currency, so no translation risk. Adopted IFRS for the 1st time and had an internally generated brand name called ‘Green Gadgets’ valued at $10m by the management of Lilac themselves. As per IAS-38. internally generated brand names can not be capitalized but I believe from a group’s perspective, it was purchased with acquisition of the subsidiary so its fine to recognize it.
In 2nd subsidiary, shareholding was 58% but representation on Board was only 40% since the group was allowed only 2 directors out of 5. So for me, not enough voting rights, therefore this subsidiary was not to be consolidated.
Third was a Software company. The only threat I could think of was Research and Development costs the subsidiary was said to be focused on.Rest related to part c.
Part b) This part asked for audit procedures required for Brand Name in Lilac to be communicated to the component auditor
Part c) This focused on ethical and professional matters since 3rd subsidiary wanted advice on merger and acquisition planning and selecting appropriate targets. There was also a support letter given by Cactus group for the acquisition to the subsidiary and the engagement partner of the component auditor required Going Concern working papers from group auditor but honestly, i don’t believe that there was any going concern issue because the support letter was not in result of some operational or financial difficulty of the subsidiary.

Q2 was about quality control and ethical matters where we were performing a post-issuance quality control review.
Part a dealt with a scenario where test of controls were not performed at final audit and audit procedures ‘limited’ as a result, placing greater reliance on internal control. There was no record for meeting with audit committee to discuss the audit findings and the amendments were discussed orally with the Finance Director over the phone who then made the adjustments. Audit report was signed prior to receiving Chairman’s Statement for review. There was a matter discussed in Emphasis of Matter para regarding a significant contingent liability, regarding which sufficient audit evidence was present in the file. I believe the treatment was correct, wonder what we were supposed to say about this?
Part b was about ethical dilemma concerning 3 audit assistant. One sold training service to the client as all the assistants were encouraged by the audit manager to do so, with a cash reward promised in return. 2nd assistant had helped the Finance Director in designing inventory count controls with audit manager’s approval and 3rd was re-engaged in the audit of the client, despite of the fact that she had just returned from a forensic audit assignment carried at the same client and the assistant worked closely with the internal audit team for 4 months

Just a quick question.

What examination procedures for performance information in Q3(c)?

@ameera85 said:
What procedures did you answer for the performance indicators?

Check nurse personnel files, obtain floor plan to identify rooms, check from billing ledger the average occupancy, check patient files/case files to identify revisits within 28 days

Dont remember the rest

P7 June 2012 Qs1 (ditto copy)

Can someone verify. In question 3 part b, I differentiated saying performance audit is substantial audit whereas the other is limited assurance. One gives positive assurance and the other negative. Etc?

Time was key issue here.Too many things to write about and explain. Q2 had very straightforward lack of procedures as well as ethical issues but needed to be explained well. I think Q1 had some overlapping since both Q 1 b) and c) answers were already supposed to be mentioned in q1a) since Lilac brand recognition and first time measurement is relevant audit risk and also in Snow component auditors competency may be questionable.Q4 should have all evidences listed and explained how to test it, I did this question first and it took a lot of my time even if it had only 20 points, so bad time management.Q5 review contract , check if any subsequent Anex or Acceptance confirmation from customer done, if not risk and rewards stay at seller so no revenue recognition.Only if contract had some preagreed penalties for customer for not accepting goods on time, those penalties could be charged.this is material but not pervasive,so except for paragraph,and prior to that communication to those charged with governance since listed entity has such body.All in all ,question is how marks are granted, even if I tried all 4 question,and did not skip to try and get any points ,still I may fail like past time for just below 50.this my second attempt, so I am skeptical , even if with reading your answers I see I have replied similarly.Goodluck to all

@omensa said:
I don’t think KAM was worth mentioning here. If the issue has formed a basis for qualification, it will be discussed in Basis for Qualified Opinion para, not in KAM

Same goes for EoM. Any matter discussed in EoM does not become part of KAM

Hmm, yes definitely. You are right saying that the qualification of the matters will need to be explained in the Basis of opinion paragraph. My point here is that the client is LISTED, you can check under ISA 701 if not mistaken, it has become a requirement to include KAM paragraph, whether or not there is a matter that is significant to the audit. If yes, you communicate, the audit might be modified, but the matter included in the KAM is not discussed in respect of the modified opinion.

Sections don’t matter, total from all sections should be equal 50 marks or above is considered passed.