*** ACCA Paper AAA December 2019 Exam was.. Instant Poll and comments ***

@aniam said:
Also for audit risks I did :

– new client
– assets held for sale/disc. operation
– development and research capex
– inventory – possible impairment due to flood
– share based payments
– listed client : possibility of earnings management/ additional disclosures
– FX (this one was a long shot…)
– revenue and operating expenses poss. misstatement
– possible impairment of investment due to drop in revenue
– possible provision for redundancies – it wasn’t clear if they will be announced in that year so just said if announced then provision should be booked

anyone had anything else?

Insurance claim receivable could have been recorded despite not covered in policy

Hello
All I always read comments after exams finish most people thinks n describe like me that exam was like that I was run out of time that question was hard this question I did not understand bla bla bla but when result comes out mostly who commented negativity how they pass I wonder ? It’s been my 4th attempt of P7 last time my exam went very well stil could not pass I think like all u guys but wonder when I see the review after result the negative things turn to positive n most of you pass the exam is that luck ? Or is that some people don’t openely tell how they actually attempted tha exam !!!!!

@aynat said:
But there is yet NO announcements have been made to employee, so the criteria are not met for such provision.

I considered this from both angles. Remember that the date was 1 July 20×5, and the year end was 30 Sept 20×5, so there was still time for the announcement which would require a provision if announcement made, or no provision if no announcement made. There was a risk that a provision would be created when it shouldn’t’ve been, or vice versa depending upon the position at 30 Sept.

Will patent (brand name) be considered for impairment?

Lets discuss a bit Ethic queries. Did you discuss in Q2 that the client is Listed and preparing documents and Taxes is inappropriate under the Code? Since no safeguards can reduce to an acceptable level?

And DD procedures I discussed as ” Kindly provide us with documents- and list of them”
Is it correctly? It looks like a procedures……, but in the form of question…

@sal2222 said:
3 marks for audit risk if it had materiality. Although this is limited to 4 marks for materiality. So I calculated you need about 8 risks so you may have only missed out on 4 marks hopefully.

I think I wrote to recognise contingent asset you need to be able to measure reliably and has to be virtually certain. If it’s probable it’s a disclosure. But am wondering if it still needed to be measured reliably.

Oh well. Might have picked up one or 2 marks

If audit risk is worth 20 marks and there is no requirement to do analytical calcs, my experience as a marker is that there will be 2 materiality calcs marks (for items that you believe are audit risks). I have seen this stretch to 3 on occasion, but would always presume 2 and therefore be aiming for 9x2m risks and 18m overall.

But … and this is important … 6 reasonably explained risks at an average of 1.5 marks, plus 2 materiality calcs, is 11/20 and a pass on that part. If the procedures part of Q1 asked for tests on IFRS5 and IFRS2, then there are two of your audit risks immediately (otherwise you would not be asked for procedures on them), so if you can find another 4 audit risks welcome to Safetyville, Population = you :).

@aynat said:
I did not catch that the date of Risk assessment is 01/07/2015. But i caught that there is NO word “announcement”, just “reminder was not made”. And I briefly discussed this point. But definitely you are right that they have time to make announcement.

There is no need to “catch” that information.

The entire AAA exam is set based on today’s date being 1 July 20X5 (a rule that came in from the Sep19 sitting), so you should have walked into the exam hall with info already “caught”!!!

@raoul7370 said:
If audit risk is worth 20 marks and there is no requirement to do analytical calcs, my experience as a marker is that there will be 2 materiality calcs marks (for items that you believe are audit risks). I have seen this stretch to 3 on occasion, but would always presume 2 and therefore be aiming for 9x2m risks and 18m overall.

But … and this is important … 6 reasonably explained risks at an average of 1.5 marks, plus 2 materiality calcs, is 11/20 and a pass on that part. If the procedures part of Q1 asked for tests on IFRS5 and IFRS2, then there are two of your audit risks immediately (otherwise you would not be asked for procedures on them), so if you can find another 4 audit risks welcome to Safetyville, Population = you :).

Great! Thank you! Can you please explain about DD request. The question was ” Within DD work, Auditor must assess target company (specifically Intangible Assets) Which enquirers will you send to the Target Company”s management?”

I wrote several sentences, every of which was beginning from ” Kindly, provide us with the following…” and then I listed:
Licence Agreement with details,
opening balance figures,
calculation of amortization,
Confirmation letter regarding alternative use of that intangible assets.

I have never seen such requirements in Past Papers….

Thanks in Advance!

@aynat said:
Great! Thank you! Can you please explain about DD request. The question was ” Within DD work, Auditor must assess target company (specifically Intangible Assets) Which enquirers will you send to the Target Company”s management?”

I wrote several sentences, every of which was beginning from ” Kindly, provide us with the following…” and then I listed:
Licence Agreement with details,
opening balance figures,
calculation of amortization,
Confirmation letter regarding alternative use of that intangible assets.

I have never seen such requirements in Past Papers….

Thanks in Advance!

I struggled with this part. The requirement was what *specific questions* would you ask management in relation to the intangible assets. So it wasn’t asking what info you would need about them such agreement details etc. The intangibles were a license and a patent.

In relation to the licenses I said ask if there’s been any previous, current or suspected breaches of the licensing agreement to assess risk of fines or loss of license.

For the patent I said ask if they are aware of any developments in processes or emerging competition to assess risk of impairment.

Couldn’t think of anything else. In hindsight, I think other questions would be how does management ensure that licensing conditions are being adhered to, and how does it test the patent for impairment. Too late now!

@raoul7370 said:
Is the following close to correct everyone?

Q1

Business risks for 10 marks
Audit risks for 20 marks
Audit procedures on IFRS5 and IFRS2 for 10 marks
Reliance on internal audit for 6 marks
Prof Marks = 4 (for Briefing notes)

Q2

Matters to consider, and Impact on Audit Report for 3 separate scenarios (17 marks):
– PPE
– Hedging
– Legal Claim

anyone know the marks split on the above?

Ethics and Prof Issues for 8 marks

Q3

Intangible assets and the financing of those, additional info required from discussion with management = 14 marks

Ethics and Prof Issues for 11 marks

Q1: Yes, that was the mark allocation.

Q2: There wasn’t a split of marks for the 3 scenarios – they were worth 12 marks with no split between them given. The audit opinion was worth 5 marks and 8 marks for the ethics part.

Q3: The requirement for 14 marks (no split given) was:
i. What specific questions would you ask management in relation to the intangible assets.
ii. What additional information would you need to be available in respect of financing.

11 marks for professional & ethical considerations.

@dimention999 said:
Can anyone remember the requirement of Question 3 part (a)-1 & 2. Is there a procedure for intangible assets on Due diligence report in Part (a) -1 and Additional Information for financing arrangement?

As much I remember- regarding IA in Q3 (a) was ” What queries will you send to the target company management in order to evaluate IA”

@aynat said:
Do you have any source of this information? Thanks!!

Yes. Source is the ACCA examining team, who informed all tutors of this in early 2019.. So your tutor should have told you, and the past exam questions in your question bank should all have dates that say 20X4, 20X5 etc instead of real dates, and every question should tell you to assume today’s date is 1 July 20X5.

ACCA themselves will not update past Q+A on accaglobal so those questions will still have the original dates in them (which were real dates – i.e. a planning question in December 2016 paper would probably say the year end is 31 December 2016, and therefore 3-4 weeks in the future).

@ezehrobinson said:
ACCA published a marking guide wherein they allotted 3 marks to each audit risk identified and explained while 1 Mark goes for each materiality (sometimes capped)

the long established “guarantee” is that a business risk will score up to 1.5, and a ROMM or audit risk up to 2 (plus an additional +1 for materiality assessment, but capped at 2).

As we all know, the pass rate is not great, so it is no surprise that on some recent sittings business risks have been moving up to 2 marks each and ROMM or AR up to 3. And materiality up to 3 or 4.

In calculating how much to write, I play safe and assume 1.5 for BR, 2 for ROMM or AR, and 2 materiality calcs … but I would do 4 materiality calcs just in case (partly as a student might get the calc wrong, as many surprisingly manage to do).

One other aspect to bear in mind is what 3 marks per ROMM might actually mean. If I see R+D costs, I have 2 risks to mention … but the 3 marks might be set as a cap on risks to do with R+D, rather than 3 marks for each of my 2 risks.

The marking guide is fluid sitting to sitting, so it is best to play safe and not assume too much generosity.