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can some one please tell
audit procedures for going conern
and 10 million claim please ?Hi. I have confusion with one requirement in exam.
Will threats to auditors independence arise, if we provide non assurance service to SUBSIDIARY of audit client. Where subsidiary is not audited by our firmRe 10 million claim in q1, I said something like:
Analyse documents pertaining to the claim.
Confirm 10million is accurate estimate.
Discuss with management their reasoning for not including in financial statements.
Confirm details with Ocean protect company to confirm accuracy.
Discuss with mgmt ‘re potential need for expert valuation.
Confirm plans to ensure no further claims will be made against co.
If mgmt refuse to amend Financial statements, advise them of the implications to the audit report.With regard to question 2 and 4 where there were matters to consider, how detrimental is not stating Materiality as one of the factors to consider. I totally forgot to put that. And about the evidence that you expect to find for the file review, I simply put the evidence but not the audit work on that evidence. Would that be detrimental too?
Business risks I mentioned:
– political risk
– restrictions to beaches => not following their strategy
– new locations might not be investigated properly -> might end up in the same way
– management is incompetent in choosing locations
– extra costs are required, that will be borrowed and will add up to gearing. Potential breach of covenants => financing problems
– reputation loss due to regulations
– also stated smth about hurricane, which migh lead to loos of clients and extra expenses required.With regard to question 2 and 4 where there were matters to consider, how detrimental is not stating Materiality as one of the factors to consider. I totally forgot to put that. And about the evidence that you expect to find for the file review, I simply put the evidence but not the audit work on that evidence. Would that be detrimental too?
I think if you can state other matters other than materiality you would still pick up the marks as long as they’re valid matters.
For evidence I did the same, stayed pieces of evidence but not the audit work as procedure was not asked, only evidence! Hopefully that’s right! ?What did you put for your matters to consider. Somehow I can’t even remember what I put.
@sulemanhaider said:
Hi. I have confusion with one requirement in exam.
Will threats to auditors independence arise, if we provide non assurance service to SUBSIDIARY of audit client. Where subsidiary is not audited by our firmI think there should be as I remembered that the subsi is a material component of the Group.
For matters I put down materiality, was it material etc! Then the accounting standards to be adhered to for that area and what they have to do. Also if there was a risk of material misstatement.
I used the same 3 of those for all 3 parts of the Q for the matters to be considered and tried to add one or 2 more where I could to get as many marks as possible ?
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What was the group audit planning in Q1 please? Somehow I can’t remember this one at all…
Not holding much hope. Gutted, as if I was doing this paper at home, I would probably think it was one of the easier ones.
Can someone tell what was correct accounting treatment of Decommissioning Provision??
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Q1: a(i) Business Risk- 10marks
b(ii) Significant Romm- 10 marks
c i Audit procedure on 10m claim- 5 marks
c ii Additional information – 6 marksQ2: matter to consider and evidence expected to be found in file
a- decommission costs – 10 marks
b- depreciation – 7 marks
c- Trade receivables – 8 marksQ4: Ethical and professional matters a) Dingo b) Pointer c) 20 marks
Q5: a(i) Further Evidence to confirm sufficiency of audit evidence 7
a(ii) going concern audit procedures 7 marks
c) critically appraise the Audit report 6marks- Topics: 0
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@wasimktk12345 said:
Can someone tell what was correct accounting treatment of Decommissioning Provision??https://www.ifrsbox.com/decommissioning-provision-ifrs/
I didn’t get this right but I did say management shouldn’t have been coming up with estimate themselves as it’s very complex
Never saw this on past exam papers
On Q2 did anyone mention that they thought management were trying to manipulate profits by removing the use expert for the decommissioning provision, changing the accounting policy for depreciation and the increase in receivables? Also mentioned increase in professional scepticism.
Tough exam. Q1 was very large and there were loads of different points I think that were valid as business risk.
Food and drink if costs increase they will still have to pay for it if they want to maintain qulaity and if they lower quality then their reputation will suffer.
I wrote about FX rate fluctuations causing business risks.
Cashflow – they could be spending money prior to obligations being fulfilled especially as customers could refund up to a week prior to arrival date.
Will edit this post when I remember the scenario.
As compared to june this is the worst attempt in terms of time management. I do a lot know in Q1 but soend a lot of time in selecting specific matters. Ran out of time for my last question definitely going to fail.
Could anyone tell me what Q3 (DD) specifically and marks allocated? Many thanks.
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Can someone please let me know the requirements for deprec and trade receivables in Q2 ?
Thanks
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@spud said:
Oh Thanks!!! ??Yeah, what is NOCLAR??
?Non Compliance with Laws And Regulations. There is a technical article on the ACCA website & it was heavily tipped for this exam sitting
so glad i’m not the only one who thought the exam was time pressured..
I wasn’t expecting to put up 2 hours for q1 and when i was done i realized i’ve only an hour left to the remaining 3 question.Ended up doing q3 and q5 , though now i wish i should have chosen q4.
Hoping to pass, cannot study this paper again.
Was literally panicking, hows a person to complete 3 questions in 1 or 1.5 hour?
does handwriting matter? mine went down the drain in the last hour
Remember on the depreciation there was a change in accounting estimate in terms of IAS 8, the entity restated its opening balances retrospectively instead of prospectively as if it was a change in accounting policy. After taking materiality considerations into account PPE and Retained earnings were overstated if i can recall. Plus also disclosure considerations on the FS notes
Provision for Decommissioning remember the client had a correct application of the provision however there are matters they have to take into account i.e. was the future cost of decommissioning Present Valued using a risk adjusted discount factor and element of unwinding annual being Dr P/L and Cr: Liability. Furthermore was the decommissioning costs added to the cost of the asset and was the decommissioning component depreciated annually over the useful economic life of the asset
Time pressure was the biggest issue here on question 1 but if you compare the paper to the June one, I felt this was a bit better.
My strategy was I did question 1 and spend 1hr 15mins, then I quickly went to question 4 and 3 and I had 30 minutes left to do question 2 and I managed to do decommissioning and depreciation, receivables maybe 2 or 3 marks of work which was not too bad.
In June I did P5 and it was very time pressured such that when they said 15 minutes do go that’s when I started the last question and it had a long scenario. Everyone was complaining about the time pressure on Open tuition or anywhere else. I was shocked I passed it, so it goes on too say if you did well in the ones you wrote and everyone was time pressured they consider that.
Best of luck everyone x
Hi guys,
a quick question regarding q.1 on the 10m.
since the question (if I remembered correctly) required procures, at which point would you mention NOCLAR?.
Of course based on NOCLAR, as an auditor would have had the responsibility after following certain steps to proceed with reporting the noncompliance with regulations. Had the management of the HOTEL breached any of them at that time?.Best of luck to everybody
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