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

I did the same way though didnnt mention about adverse opinion. All were qualified except for

Did anyone used business risk related with the diargrams? The company was losing market share, can any one pick? In critical appraisal, MURGC was given correctly but it was not mentioned which notes to the financial statements give the details about it. Other Matter paragraph was actually a KAM however it was missing how the auditor addressed the matter. In Question one there were two ethical threats in requirement C, Self review and management Threat and two actions were that being a listed company no safeguards can reduce the management threat and hence its forbidden. Second action was company should politely decline the engagement. Related Party procedures were Send a confirmation letter to the company to confirm the amount of 135000 payable to the company. Agree the disclosure of Related party and transaction amount to the financial statement. Question 3 was estimates and procedures I cant remember the text of question if someone shares I will share my answers. Anyone who agrees with my treatments please mention here. You can also criticize lets see how much good we have done.

Wasnt the plan to change the buildings use to residential to happen in the following accounting year? ie nothing had happened yet, no expenditure had been incurred yet.

The exam went well, I attempted all questions..... Was just time pressured!!! What was Question 3iii about(Property Development)???

I was confused as well for 3iii.....

I guess majority has left part 3 of Q3, majority has authority, examiner will be lineint.

Yes, then the revaluation shouldn't have been recognised as it was based on its development value, not current value in use. No change in value until you derecognise the ppe and recognise the investment property. That's what I think! As a procedure I put obtain minutes of the meeting when change in use was authorized. (Besides checking costs, etc)

The part in question 3 about the fine which was appealed by the client for which the first payment was due on the first day after the year end- is events after the reporting period relevant here or just provisions?

@dennis98 said: The part in question 3 about the fine which was appealed by the client for which the first payment was due on the first day after the year end- is events after the reporting period relevant here or just provisions?

Only provision was relevant for fine of 1.3 million.

For the building I just said you cant revalue it as an investment property before the conversion happens. you can only revalue it in the current period based on its current use. I didnt consider the project at all or do any calculation with the figures as they were not relevant to the current period. For procedures i said - confirm that a gain has not been posted to the P/L as this would overstate profit. Is this wrong?

@dennis98 said: The part in question 3 about the fine which was appealed by the client for which the first payment was due on the first day after the year end- is events after the reporting period relevant here or just provisions?

You should have reviewed correspondence with the lawyers to confirm the amount of fine that would be payable.

@dennis98 said: For the building I just said you cant revalue it as an investment property before the conversion happens. you can only revalue it in the current period based on its current use. I didnt consider the project at all or do any calculation with the figures as they were not relevant to the current period. For procedures i said - confirm that a gain has not been posted to the P/L as this would overstate profit. Is this wrong?

Would you mind discussing part 1 and 2? I am interested in your views?

did do that

no worries. is it true to say for a groups question (question 1) there was almost nothing to say that was groups related ? except to confirm that Bronte is not an associate, to confirm that they have 18% but dont have significant influence

business risks- losing mkt share losing customers margin down revenue down ( multiplying the 10 month figures by 6/5) ebitda down big fine probable 20 million (25% of total assets) exec director gone to bronte for 3 months so skills loss guaranteeing bronte's loan which could cost them failure of bronte's technology development any more? are those correct?

@dennis98 said: no worries. is it true to say for a groups question (question 1) there was almost nothing to say that was groups related ? except to confirm that Bronte is not an associate, to confirm that they have 18% but dont have significant influence

I think they do have significant influence, as substance over form prevail: They don't have the 20% but they excercise significant influence. There is a member of the group assigned there for the whole purpose of development technology which benefits the group. I think they need to consider it an associate and use equity accounting. I should probably have suggested that the composition of the rest of the shareholding needed to be checked. If the remaining 82% were in the hands of one investor, then probably not much influence! But if it's spread over a large number of investors that 18% would definitely give them the significant influence.

Yeah i'd say youre right , i just said theres a risk that it should be treated as an associate but its not. didnt develop the point further as you did.

Any thoughts on the cash settled share based payment one?

@dennis98 said: Any thoughts on the cash settled share based payment one?

IFRS 2 Share based payment. I f*** up! As as left the exam I started to have a foggy memory or treating part of it as liability and part as equity. I really don't know! I think that was the hardest one!

@dennis98 said: business risks- losing mkt share losing customers margin down revenue down ( multiplying the 10 month figures by 6/5) ebitda down big fine probable 20 million (25% of total assets) exec director gone to bronte for 3 months so skills loss guaranteeing bronte's loan which could cost them failure of bronte's technology development any more? are those correct?

Absolutely correct

@danyjethwani said: 18 mark question left.. time was so less and requirements were so much

It worries me that there is the same response after every sitting of this paper. Your aim at every sitting is to write 100 marks worth of content. Too many AAA students see 6 pages of scenario and panic. You probably need to read less than half of it to get full marks.

@dennis98 said: Any thoughts on the cash settled share based payment one?

Should be valued at the fair value at the reporting date. Can you tell me what was the complete question requirement so that I can recall the answer?

@dennis98 said: no worries. is it true to say for a groups question (question 1) there was almost nothing to say that was groups related ? except to confirm that Bronte is not an associate, to confirm that they have 18% but dont have significant influence

Bronte was not an associate and was measured at cost, however as per IFRS9 it should be valued at FV at the reporting date. Any one has any disagreement please discuss?

@shilpamary said: Is it enough to just name the points to the question " why related parties are difficult to identify ?? Is there a requirement to explain ? I wrote bullet points I think it itself clearly conveys why

every examiner report for the past 20 years has bemoaned students not explaining their points. So yes, you have to explain everything.

For the ethics part i think they cant provide the non audit service as they are listed company, besidea design and implementation of the system is the presuming management responsibility Why the related party transactions are hard to discover? Becoz they are not self evident, always conceal by the employee and they are always not under arms length transaction, meaning lower price than at normal cause of business

I think it is better to read question carefully, the Material uncertainty is not adequately disclose, so it should not include in the KAM. The opinion needs to be qualified as there i s a material uncertainty with was inadequate disclosed or referenced so it is a material statement

@eneltonsatria said: I thought the paper was relatively easy. I self-studied for AAA. I spent about 2 months studying this paper and I bought second-hand notes from Carousell. I rewrote the entire textbook in bullet points (my technique to understand the concepts), used it to review nearer to my exams. I also printed ALL technical articles and read all of them briefly (wrote small notes). I also reviewed some of the exam papers and I paid more attention to the latest papers with the new syllabus (Sep 2018/Dec 2018 Q1 especially) (which is of significant help). [Below are my thoughts on the different questions. They may not be correct!!] Q1. Business Risk and RMM (30marks). This was very similar to Dec 2018. If you take a brief look at the answer key, you could actually use some of the points and structure there. There was a trick to the financial figures given I believe. The 20X9 figures are 10 months prior to the YE, thus when looking at SOPL items, you may need to be more careful. Ethical issues (6 marks). The audit committee wanted the old auditor to develop the new payroll system AND also help out with the audit for payroll -> obvious self-review threat. I stated that they can help with the development but the current auditor (given that they have the resources) should still complete the audit for payroll. Then, the low-fee could also pose another ethical threat. Related-party transaction (10ish marks). Why is it hard to identify such transactions? - Complex group structures - Poor disclosure - Poor internal system at identifying new related party transactions - Poor authorisation process for significant items There is a CPD article on this: https://www.accaglobal.com/an/en/member/discover/cpd-articles/audit-assurance/related-parties15.html Q2. (a) Critique the report. Some points i came out with: -Missing title, addressee, signature, date of auditors report -Order of opinion and basis for opinion -Opinion paragraph: did not state what opinion was given? -Material uncertainty for GC: shouldnt this be a KAM instead? Does failure to get loan financing cause a company to have GC problem? No alternatives of financing? What did auditors do to confirm this? These details are not explicit in the paragraph. -Missing KAM which is compulsory for listed company -Basis for opinion paragraph referred to responsibility of auditors paragraph, which is missing (b) Communicating with those charged with governance There is a technical article that explains about this. But for all 3 matters that are shown in the exam, I reasoned to communicate those matters to those charged with governmance. https://www.accaglobal.com/sg/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/auditors-reports-governance.html Q3. (a) If you read the technical article, this 8 marks could be easily gained. Link: https://www.accaglobal.com/sg/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/iaasb-ed.html (b) The remaining 17 marks. This is a useful technical article to guide you. https://www.accaglobal.com/sg/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/audit-of-estimates.html To answer RMM questions, there was also a technical article to guide you how marks are given. https://www.accaglobal.com/sg/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/exam-tech2.html Please let me know on your thoughts and whether you agree/disagree with my answers. Cheers!!

I think missing addressee and title ar e irrelevant point as the question already stated that the report is from extracts....

@wafiywary said: I had spent too much time on Q1 and left with 1 hour to do question 2 and 3. The questions were fair, some had been examined before but the requirements are just insane. Too much to write in just 3 hours. Hoping to get at least a pass this time

I totally agreed with u, i have a feeling their requirement just want to fail ppl lol

Q1. Was tricky i guess, business risks I included Foreign subsidiary hence exchange risk, lost customers 200k of them, reputation risk, penalty risk ongoing investigation, revenue per month drop relatively, i computed market share to market leader which showed improvement ?...... AUDIT RISKS included 1.investment propert to be accounted for under IAS 28 Investment property due to significant influence presence of seconded Exec director, loan financing..then income to be separately disclosed.... 2. Elimination of transactions on consolidation of the two subs 3. Subidiary valued at 5.7m but recognised at 4m in our books????!! Impairment review needed....... 4. Another point on 4m minus 3.06 i forgot contents..... 5. Provision for ongoing investigation could be material

And what I recall examiner requested for significant risks only, so there was alot of materiality to be computed from the scenario. Also client is a new audit client so detection risk. Which i think is also a significant risk