AAA*** ACCA Paper AAA December 2018 Exam was.. Instant Poll and comments ***

For qu.1 c - the matters was for forensic -fraud ?? Or due deligence ?

I expect a very very difficult exam on March! I did not have the chance to give it today unfortunately!!

For qu.1 c – the matters was for forensic -fraud ?? Or due diligence ? Sorry 1d

Q2. I started writing procedures for cashflow until I re read question it said Explain audit evidence you would expect to find in the working paper file so only managed 4 points and had to resort the points as evidence.sounds like a few here have written procedures I'm fairly sure it was evidence though??

Same here.. had finished writing procedures... and then realized the question was asking for evidence..

Cash flow question was about evaluation of audit evidence as I remember, quite tricky due to lack of numbers and information

I think Q2B is a mysnomer also as audit procedures uncover audit evidence and so you can essentially answer the question granted a different way. Ie: 1) obtain loan agreement and inspect amount and confirm interest rate - although a procedure also confirms SA audit evidence

Thinking about it again I’d say we should be okay? I was thinking of a very simple example: the question asked us what would we expect to see as part of our file review: Let’s take a simple example such as confirming the cash balance of a client Now, as a partner what EVIDENCE would you expect to see on the file? Well I’d like to see the assistant obtain a 3rd party bank confirmation and agree the amount back to the financial statements If I see the above procedure has been performed then I’m content that it is sufficient and appropriate evidence I think we wrote procedures since it asked what we would expect to see on file, and as part of that question you almost also have to state a procedure. Going back to the question on the cash flow forecast. The bank loan is included in January in the forecast, now what evidence during my review of it do I want to see? Well I want to see that the assistant has obtained the loan agreement, agreed and recalculated the cost of finance and ensure they’re happy that it’s been included in January. I’d also expect to see some evidence regarding confirming the receipt to bank statement So I think as long as your procedures essentially also explained audit evidence you should be fine Let me know if you guys agree with my thought process above please - in my mind if you were detailed in your procedures then you would’ve also explained the relevant audit evidence without realising (as I must’ve done for the loan confirm, my procedure I wrote was to obtain the agreement to confirm the above, however that also constitutes as audit evidence as I’m sayijg how I want to see the loan agreement)

Q1 - A BUSINESS RISKS There is a risk that the entity will not only incur fines and penalties but also the risk that their operating licence be revoked as a result of non-compliance with health and safety regulations The loss of the operating licence mean that the business is no longer a going concern. The entity is operating in a highly competitive environment not only is there a risk that they will lose their customers but also their employees. The firm should ensure that they pay employees industry standard salaries and up. If the firm loses its key staff "brain drain" its ability to operate decreases. The entity recently opened coastal sports facilities there is a risk that staff are not properly trained for water sports. The firm should ensure all staff are trained in first aid and hire life guards. Under the new scheme members children will be allowed free access to coaching which includes swimming. If a child is injured or drowns the negative publicity will impact the businesses customer base. Q1 - B RISK OF MATERIAL MISSTATEMENT IAS 16 Property, Plant and Equipment The 12 mil investment is material in relation to total assets. There is a risk the entity treated the investment as revenue expenditure instead of capital expenditure since the investment was an upgrade to facilities to make it more "modern". IAS 20 Goverment Grants The grant was material in relation to total assets. The recognition criteria was done correctly. The entity recognized the entire grant instead of deferring it. IAS 23 Borrowing Costs Loan is material in relation to total assets. Directors loan not material in relation to total assets. The standard states that directly attributable borrowing costs should be capitalised all other borrowing costs should be expensed. (The new coastal facility ) It does not appear like the entity capitalised borrowing costs. IAS 24 Related Party Disclosures The standard requires disclosure of related party transactions, relationships and balances. It does not appear like the entity made the required disclosure. New System The entity is using a new system there is a risk that data will be lost when tranferring the data from the old system. A backup of the the old data should have been created. There is a risk of errors since the system is new. The entity appears to have acknoleged this as they provided training for two months on the proper use of the system. Q1 - C GOVERMENT GRANT PROCEDURES >Copy of goverment grant to confirm the terms >Review cashbook and bank statements to confirm reciept of grant >Descussion with management on IAS 20 and the proper treatment of the grant >Confirm errors were corrected and deferred income recognised Q1 - D ACCEPTANCE Management integrity Accountant competence Q1 - E ABILITY TO DETECT FRAUD Fraud is the intentional use of deception in order to mislead the users of the financial. Intentional is the key word here which mean that the fraudster will do everything in their power to hide the fraud. There is a risk that a review engagement which manily uses analitcal procedure and inquiries will not pick up on the fraud. There is a risk that an audit will not pick up on the fraud even after performing extensive audit procedures.

Summary of Q3 - B Personal tax service to the director: - Concern over tax avoidance/evasion (due to many transfers in international properties etc) Actions - report if suspicion to HMRC and be sure not to alert or mention to client the report General tax services: - self review, management threat etc Actions - have independent partner review the tax work to ensure adequacy and other Remedies (can’t rememebr what else I put) Help to design sales website system: - general point on do we have the competence to help design a system? - management and self review threat - also mentioned hopefully for an extra mark that FRC ethical state prohibited to help provide advice over internal control for a listed client (this was unlisted but mentioned it’s not outright prohibited) - potential intimation threat if we say no Actions - okay if we have two separate teams, independent etc, if not then say no to request £30 voucher and office party: - mentioned how under code, it’s trivial and inconsequential however appearance over substance may mean still threat to objectivity - “to know the client” - however under informal setting perhaps familiarity threats could be established and since whole team went could be big impairments to objectivity (more likely to accept reasons if they befriended key management people in the audit) Actions: Report gift/party to risk management partner Have the risk management evaluate objectivity of team and if so significant then replace whole team If deemed immaterial effect then no further actions The above was from memory so probably missed some extra actions/points but I’d like to think the above would score 10+/15 (fingers crossed!)

I think I got quite right answers based on this conversation although I missed out 1 or 2 points, is just the matter whether I wrote long enough to explain the points to secure more marks...time is the biggest enemy, cant feel my hand while writing the answer.. so many things to write but so limited time...anyway hope I'll pass the paper..

What about the answer to the auditor’s report part of question two?

@linaelshafie said: What about the answer to the auditor’s report part of question two?

If left non disclosed (ie: not adequate disclosure of material uncertainty) - qualified except for or adverse opinion If they do provide adequate disclosure then unmodified opinion In both instances a material uncertainty relating to going concern would be included immediately after the basis for opinion paragraph Why directors wouldn’t want to disclose: - risk of loan being rejected - risk of suppliers shortening trade credit or fully stopping all credit since they know the company may not be able to pay the debt owed - potential major customers who see accounts may be put off using them

Can you pass this to the ACCA ..I mean you want to test our Knowledge about Accountancy whats that to do with time...??If you give 1 hour more what difference does it make to the testing of an individual..The exam was so time pressured

@jawadurrahman said: Can you pass this to the ACCA ..I mean you want to test our Knowledge about Accountancy whats that to do with time...??If you give 1 hour more what difference does it make to the testing of an individual..The exam was so time pressured

Sadly I and I imagine 99% others agree with this point. Especially in audit and professional papers. Audit is highly judgemental and subjective, imo it makes much more sense to let students taking it have longer to fully consider and make a high quality response not rush and have to do bad plans to finish the paper in time Equally, for P papers where you’re meant to be a professional giving advice it’s much harder to maintain that with 3 hours 15 to answer long questions such as these

me too so scared

Do you think it matters on one page I didn’t put the question number at the top? It followed from the question on the prior page. Realised at the end but then they called time!

I found timing a massive issue, I think I completed only 75%. What % did you guys manage? Good luck all.

I have same issue. Just Completed Q1 & 2 . That's it Time up. Though I I know 80% answers for Q3.. Just waiting to see the results...

Same to me..

I started with questions 2 and 3, and then left only 1 h 15 min for Q1. In Q1 skipped fraud Q, answered the rest.

Has anyone mentioned advertising campaign for a brand as a RMM?

@nataly1986 said: Has anyone mentioned advertising campaign for a brand as a RMM?

I did mention the possibility of recognising the endorsement deal of the celebrity as an intangible and Described how it may meet IAS 38 and thus could be misstating expenses and assets Did you also say something along those lines?

I said risk was it was capitalised as ias 38 said expense internally generated brand

@nathan488 said: I did mention the possibility of recognising the endorsement deal of the celebrity as an intangible and Described how it may meet IAS 38 and thus could be misstating expenses and assets Did you also say something along those lines?

I also referred to IAS 38 and suggested to capitalise but now worry that it's not correct accounting treatment.

@nataly1986 said: I also referred to IAS 38 and suggested to capitalise but now worry that it's not correct accounting treatment.

There’s certainly an argument about celebrity endorsements being expenses or capitalised so if you wrote the wrong treatment you’d still get 0.5 marks for Identifying the risk and 1 mark if materially calculated So minimum 0.5 marks, max potential 2-3 depending on accuracy Overall definitely some credit I think :)

same was raging

I barely managed to complete 100% by putting something against every requirement but the way I completed it is not satisfactory. I don't even remember what I wrote. Too Nervous now.

Regarding the celebrity, I had it both as a business risk and an audit risk. The business risk in case he is involved in a scandal and money is already paid upfront Audit risk - for in which period the expense is recorded

@hilton123 said: I had no idea how the marks were set out (UK Variant) and wrote loads for business risks! Is it capped at 8 marks or in the UK variant can they choose to give more marks if they are valid points

I was told by my tutor that they are “more flexible” towards the mark caps as they are with the INTL variant. So in your case there would be scope to perhaps score 12 marks on business risks I can’t confirm this what so ever but I do believe there is more flexibility :)