*** ACCA P7 June 2018 Exam was.. Instant Poll and comments ***

@vorkath said:
Not necessarily.. business risk concerns the company as a whole.. as for RMM anything that may cause the FS to be materially misstated is fine

So i wrote for each division its fine ya?

@mumbaikar said:
So i wrote for each division its fine ya?

Yes, in fact there is a business risk in each of the division.. as long ask it is a business risk you should get the mark

Q1
Business risk:

Liquidity: 0.3m in cash with acquisition planned and already 0.7 gearing
Gearing: 70% liability, potential high interest cost and covenants
Continuity of funding on Residential: Government reducing funding on grants, it’s 25% of their Revenue, any going concern risk?
Exposure to Property market: On their commercial undevelopped land held at FVTPL, in case of market crash (2008), very large SOPL charge and risque of insolvency
Reputational: Disposal of the sub with redundancies, negative media coverage and strike with costs

Audit risks:

Grants: Are they recognised in line with IAS20? Risk they are deferring when not allowed
Land: Investment property, requirement to FVTPL, incorrect 10K gain when it should be 1m loss, risk the rest of portfolio is misstated
Disposal of rail: Risk that the disposal of asset is incorrectly recorded, very material figure. Disclosure risk: Should be showing as Discontinued operation
Disposal of agriculture: Risk provision is overstated as training costs not allowed. Same risk as above, shoud show as discontinued operations. Risk of litigation if any redudancy deemed unfair dismissal

Audit of restructuring provision:
*Recalculate employer calculations, agree to employee salary per GTN
*Obtain letter from ER to EEs, verify date
*Obtain copy of media coverage for audit file
*Ensure in line with employment law and taxation law for any taxable/non taxable lump sum

Anyone with theirs? I feel like I could have missed loads

I done the UK variant. Can anyone tell me what the mark scheme was for Q1?

@thomasperry123 said:
I done the UK variant. Can anyone tell me what the mark scheme was for Q1?

a) Business risk 8 marks
b) RMM 12 marks
c) procedures 5 marks
d) ethical issue 6 marks

@bhonegger said:
Q1
Business risk:

Liquidity: 0.3m in cash with acquisition planned and already 0.7 gearing
Gearing: 70% liability, potential high interest cost and covenants
Continuity of funding on Residential: Government reducing funding on grants, it’s 25% of their Revenue, any going concern risk?
Exposure to Property market: On their commercial undevelopped land held at FVTPL, in case of market crash (2008), very large SOPL charge and risque of insolvency
Reputational: Disposal of the sub with redundancies, negative media coverage and strike with costs

Audit risks:

Grants: Are they recognised in line with IAS20? Risk they are deferring when not allowed
Land: Investment property, requirement to FVTPL, incorrect 10K gain when it should be 1m loss, risk the rest of portfolio is misstated
Disposal of rail: Risk that the disposal of asset is incorrectly recorded, very material figure. Disclosure risk: Should be showing as Discontinued operation
Disposal of agriculture: Risk provision is overstated as training costs not allowed. Same risk as above, shoud show as discontinued operations. Risk of litigation if any redudancy deemed unfair dismissal

Audit of restructuring provision:
*Recalculate employer calculations, agree to employee salary per GTN
*Obtain letter from ER to EEs, verify date
*Obtain copy of media coverage for audit file
*Ensure in line with employment law and taxation law for any taxable/non taxable lump sum

Anyone with theirs? I feel like I could have missed loads

Another point you could add for the provision is the sale agreement. In order to recognise a restructuring provision which relates to the sale of an operation, there must be a binding sale agreement. I explained that there must be evidence to support the claim that it is highly likely to sign the sale agreement. For the procedures: Review any correspondence between co. and potential buyer for evidence that he will sign the agreement

@lesbella said:
I remember if correct that there is sale of division . But the restructuring provision no announcement made right. And the restructuring is likely signed on august 2018 with is 1 month after year end .

Correct me if i am wrong

Question said that it is likely signed on June 2018 which is in the current year. As for the announcement I think that’s a valid point which I missed

@lesbella said:
For the sale of boxer rail which have asset. The asset should have perform impairment review as there is indicator of poor sale. And asset held for sale. Fair value is subjective and complex right. One buyer for the sale is too simplistic right. Should get market value to identify correct valuation. .

Not sure is this stand for the sale of railway

I did not include those in my RoMM but your points seem justified and well explained.

And yes I remember writing something about IFRS15.. I wasnt sure of the exact requirements but I said that the construction contract should be recognised based on its stage of completion. Since work will only begin August 2018 he should not recognise profits. Need confirmation on this though

Spent almost half of the exam on question 1. Less than 15 minutes left on the last question.

Story of my life. Started last question with 15 minutes left.?

seems many were in such situation…time presure of this exam unreal

12 marks for the criticism of the audit report

The exam time pressure on this paper is incredibly difficult to manage. This is my second sitting and yet again I felt I spent too long on Q1. I sat the Irish variant and am interested to see that candidates that sat the UK variant seem to have a breakdown of the marking structure for Q1. This wasn’t apparent on the Irish variant and if this was the case then it is hugely unfair that the ACCA would include the detailed marking structure on one variant of the paper over another. It leaves too much scope for the candidate to spend too much time on specific areas of question 1 when there are more marks awarded for other requirements. I felt a lot of the other questions and their sub parts are too long. It seems to me that each question was loaded with additional requirements. In reading a question of two sentences you’d be asked to perform 3 matters in some cases I.e. identify, comment and explain in addition to detailing Audit procerdures or evidence you might find. The question requirements should be shorter and more precise. It’s difficult enough to balance time pressures on 4 questions without multiple layers to the requirements. All in all I felt it was a very difficulty paper and I’ve no doubt I’ll be back again in September for another attempt. Feeling deflated and dejected by P7.