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

Risk Of Material Misstatements
1) IAS 38 indefinite life
2) IAS 36 impairment of Product
3) IAS #7 penality against hazards
4)Goodwill impairment and derecognition of goodwill against Product withdraw sales
5) No indication of Investment in Associate
6) Listed Company inherent risk
7)Loan treatment
8) Analytical Procedure as specified in question

I have restart my ACCA after a gap and it was my second attempt of P7. I found this paper difficult as compare to the Dec 2016 in which i was failed by 1 mark

Q1 was easy:

Risk of MM:

– Forex exchange risk (company operates in 100 countries)
– Subsideries and associates (complex group structure)
– Continous research (risk of capitalization
– PPE was increased (Risk of overstatement)
– PPE (useful life estimation can be wrong)
– Good will (not immpaired)
– Brand (risk of understatement)
– Development (Risk of overstatement, they may not be qualify for capitilization)
– Finance cost (no change)
– Tax rate (Same tax in both year with different profit)
– Revenue (overstate because it was not consistent with OPM)
– Loan (no interest was charged, disclosure missing etc)

b) additional information:
– additional information elated brand impairment test
– useful life of PPE change, more information about estimates
– finance and Tax not change, more information
– details about loan taken from bank, interest rate and other term etc
– impairment test of all brands, why not impairing?
– information about revenue growth
– information about GW whether impairment test has conduct or not
– previous year FS to verify the impairment test of brands and are they content etc.

I dont know if these are right or wrong by LSBF lecturer said to ask for information regarding to everything.

C) Subsidiary audit procedure and impairment audit procedure. I think it was easy. I have written about 10 audit test in each.. lolz

Q2 was a tricky question

A) we was auditing group and subsidiary, the sub has made mistake but it was corrected. I did not found any professional issue here so i have written about self review threat as we will not check it again because we have done its audit
B) new subsidiary, audit partner rely on local audit working paper. I have written about lack of quality control. Assets were material, risk of FV not calculated, wrong Good will etc
C) audit manager rely on audit firm and did not perform audit. Later there was going concern issue. So, i have written about quality control. Fine the manager, lack of training, he dont know his duty etc

in the end i have written that can rely on audit firm work but still need to perform sample work on their work etc

Q4) I found it easy but did read correctly that first two companies were listed so my actions is not going to get any marks I think as i said we can provide services by putting safeguard there. Third company was fine as it was no public but still need to have safeguard etc.

Q5) It was going concern.

a) not enough audit evidence was collected and out firm mostly rely on client’s generate evidence
b) i have suggested some audit procedures and conclude that company is not going concern
c) client mentioned materiality uncertainty. So i said i will still mention this issue in KAM and give adverse opinion. I know my answer was wrong. I think emphasis paragraph would be better option/

It said there was a material uncertainty that was adequately disclosed in the notes..therefore I think we were supposed to say we shall add a ‘material uncertainty relating to G.C’ paragraph immediately after the basis of opinion paragraph.

Can anyone tell me whether q5 was based on a listed company?

@majedjam said:
Q1 was fair
Q2 was terrible especially part c had no idea what was going on lol. although part a and b their were easy points on quality control such as: auditing standards not being properly applied, not reported to cwg internal control deficiencies etc.
Q4: Had run out of time but wrote some points on threats and whether its prohibited or not
Q5: Was similar to December exam. however,was not sure on part a what was exactly required. anyone any ideas?
Last part i also mentioned material uncertainty para to be added as management disclosed in the notes.

Q5 in December 16 was on KAM nd in this session there was nothing related to KAM bcz if material uncertainty adequately disclosed then auditor should include a separate para M.U regarding GC.

Is it Q5 Mar,2017 similar to the Q5 in Dec,2013? What is KAM?

For 1st company
I put
Advocacy threat – promoting client interest re bank loan
Self interest – % increase in audit fee if complete before a certain date
Self -review – review of internal control
Possibly intimidation – significant client – dismissal from office issues

2nd
Self interest
Self review for valuation (but immaterial, still acceptable)
Misunderstanding the role of engagement quality reviewer ??

3rd can’t rmb details
Self interest
Self review

I put IAS10 for planned acquisitions too
Audit procedure include
Review the disclosure
Review the legal document – consideration of 130m, date
Review board minutes for approval the acquisition
Discuss with management on the expected revenue earned, if it can replace the existing products
Obtain the DD report and review the consideration to be paid is reasonable or not

worried but shall keep my fingers crossed. felt like i messed up q2 and q4 was not done as well as i hoped. hope i did enough to secure a pass.

Was there advocacy threat in q4 because it did not mention that the auditor is accompanying the client to the bank. It is fair to prepare an audit report for the purpose of a loan if this is required by the bank? isn’t it?

The other thing i have noticed with the ethics part of the paper is that there was a separate engagement team to advise the client on a bid for an accounting software. This was a non-assurance service but how would this be unethical or unprofessional? is the examiner trying to have an answer about this engagement team should not form part of the audit team in future audits, then may be yes. Client was not listed.

Paper was quite tricky in general. Difficult to play the game in 3.15 hours i guess.

anybody know the q3(c),how to answer,i was confused.

They were so many misstatements in question 1, i think i got carried away and ending up braising for time at the end.

additionaal procedure
Review the new legislation and the min requirement
– confirm with HR the no of employee below min wage
Discuss with management and HR for the possibility for salary increment
Recal the salary
Obtain the lease agreement and review tems (any max lease amount?)
Discuss/ written representationwith lessor for expected lease costs

Forgot other issues…anyone write same as me ?