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

ED 540 requires an auditor to classify risk depending on whether high risk or low risk depending on materiality..... Then for low risk follow presious standard approach and for high risk a more rigourous approach is required.... and performance of the audit with high professional scepticism. i read this the night before the exam ? Hoping it scores me a few marks out of 8

But how I remember 5.7 m equity was not in subsidiary! Which 4 m investment just for 18% of company! Am I right or not?

Ethical issues self review threat may be use an independent partner review or separate team, management responsibility decline to accept engagement as risk cannot be reduced to an acceptable level, intimidation by client to reduce fee and timing of audit. For listed entity restricted to perfom othe services so may need to decline.I may right or wrong but hoping for a Pass, only paper remaining

@ramil said: But how I remember 5.7 m equity was not in subsidiary! Which 4 m investment just for 18% of company! Am I right or not?

Really okay, thats what I remember tho. Cause i thot what was that information for so i decided to use it cause it said it was revalued at 5.7 the net assets of the subsidiary. But we hold 4m at 18% which was too high dont know thats what I wrote

@pamelaissangya said: Ethical issues self review threat may be use an independent partner review or separate team, management responsibility decline to accept engagement as risk cannot be reduced to an acceptable level, intimidation by client to reduce fee and timing of audit. For listed entity restricted to perfom othe services so may need to decline.I may right or wrong but hoping for a Pass, only paper remaining

i agreed with u i just want a 50....... :( this is my last paper and i dont want to resit but i start revision already in case anythg happens.... >_< but i m not agreed on the new client, as it is not. i remember the firm had an audit partner with the group 7 years already and the rotation should be taken place but the new comer was ill, so ensure the quality of work the existing auditor can extend for one year to maintain the quality of work.

agreed with you again, and the ED 540 emphasizes the 3 components of high risk on estimation due to its complexity / management judgement / estimate uncertainty. In addition Ed 540 was initiated by the IFRS 9 Financial Instruments. this ED covers the extra communication to TCWG (E.g. Like any management bias existing) / extra documentation / and higher degree of Professional Scepticism. Hope we can get some points...... i feel this exam required too much.....TT

@walldlao said: 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 wrote same.

I believe the paper was fair , my issue not enough practise, I didnt read on ed 540 so was very unprepared to answer that question. Not sure if i did enough for question 1, however any one who was prepared for this exam should have pass. Cant blame ACCA for this paper.

Do you mean bonte was an associate?

I was certain ED540 was coming up and I even mentioned this in the AAA forum. Time management was ridiculous but I thought content was fair. Q1 asked for ROMM but it also told you it was a new client, yet the examiner tells you everything is included for a reason, a new client is an audit risk (detection risk) but not a ROMM and if credit is given for that as a risk I will be livid. I couldn’t find an awful lot wrong with the audit report but thought there were a couple of things right with it so answer included 6 points 4 con, 2 pro just hoping it was 2 marks per point Good luck to you all

Can't include detection risk for Romm. However could include the fact that it is a listed company.Hence IAS33 earning per share and IAS8 segment reportingfor disclosure of FS for a few more points. It was well predicted that the technical article was coming up. It happens for all advanced papers. Fingers crossed and let's hope pass rate improved on this occasion.

Here IAS 8&33 are irrelevant since it was listed 15 yrs ago.

impossible time management, worst paper ever

@fckadf1976 said: Here IAS 8&33 are irrelevant since it was listed 15 yrs ago.

Yes ignore the fact that it is a Listed Company. Throw away depreciation that existed donkey years ago aswell jajajajja

Agree entirely on time management. You are a good communicator or you will suffer.

RoMM Q - did anyone mention anything in regards to the intangible asset (broadcasting license) not being amortised based on it being renewed indefinitely? They should have amortised over the 5 years irrespective of whether it was renewed indefinitely as even in this case intangible assets should be reviewed annually for impairment? I think it was material to the FS also.

What i wrote in my script with regards to: 1. Being a listed company (business risk) I still think management pressure will always be there, especially it is a market leader for the past many years. So i would say its still a valid point 2. License (RMM) I noted that the company is currently being checked by the regulator for modifying customer contracts illegally and overcharging customers. Therefore, i raised 2 key concerns: - possible impairment of license (intangible asset)? If their license are revoked, wouldnt there be a significant impact on their revenue and their ability to be going concern? - indefinite life. Is there a chance that the 5 years life would be reduced, and therefore the need to recognise higher amortisation cost? Do you guys think my answer would be considered a reasonable and valid argument? Thanks:)

@hits123 said: RoMM Q - did anyone mention anything in regards to the intangible asset (broadcasting license) not being amortised based on it being renewed indefinitely? They should have amortised over the 5 years irrespective of whether it was renewed indefinitely as even in this case intangible assets should be reviewed annually for impairment? I think it was material to the FS also.

Intangibles assets should be reviewed when there are indications of impairment not annually, says standard!!

Can anyone remember the property development one in q3? Had they got permission to develop the building as an investment property before the year end? If not then I assume they couldnt revalue it based on investment property values but only as a warehouse. ie highest and best use at that time.

I read your comments and I realize that this paper was more accounting than audit. Based on past year papers i believe it wasn’t fair. What do you think?

Annually.

Was the sub with the licence issue based in different country? It said different Juridification?

Any one remembers what were the three cases in Q2 b??

It feels like ACCA set papers to make students fail. The syllabus are so bulky and time very limited. Basically no major time allow to think to write.

@ryanrocke said: I think there's a risk that Bronte moved from an investment to an associate through the increased shareholding and it may not have been adjusted and then equity accounted for. I supported my claim by the fact that the parent appointed one of their directors to Bronte's board.

The appointment of director was temporary for 3 months only, what say? Does it give significant influence on the company?

@lefteris said: Q1 Biz risk (12m) Risk of Material Misstatement (18m) Ethical threat (6m) - advice on new payroll system, audit com ask for lower audit fees Related Party Transaction (10m) - Difficulties to identify, Audit procedures on Related Party txn Q2 Critically appraise audit report (10m) Report to TCG (15m) -PPE revaluation -Capitalisation of renovation -Audit partner rotation Q3 ED-540 (8m) Assess acct treatment and difficulty & Audit procedures (17m) -Cash Based SBP (6m) -Fine+IAS10 (6m) -Capitalization of cost regarding development (5m)

Please enlighten me what partner rotation has to do with issues reported to those charged with governance?? Would you report partner rotation to those charged with governance?? Shed some light please?

Required: (i) Evaluate the client’s accounting treatments and the difficulties which you might encounter when auditing each of the accounting estimates described above; and (ii) Design the audit procedures which should now be performed to gather sufficient and appropriate audit evidence. (ii) Regulatory penalties Awdry Co has been subject to a review by the national railways regulator following a complaint from a member of staff with safety concerns. The regulator identified breaches in safety regulations and issued a penalty notice on 30 September 20X8. Awdry Co has appealed against the initial penalty payable. Negotiations with the regulator are still ongoing and the amount payable has not yet been finalised. Awdry Co currently estimates that the total penalty payable as a result of the breach will be $1·3 million which it expects to repay in equal annual instalments over the next ten years with the first payment falling due on 1 March 20X9. The company’s draft statement of profit or loss for the current year recognises an expense of $1·3 million and the draft statement of financial position includes a liability for the same amount. Please share your answers what your wrote??

For the penalty, I explained FRS37. The risk is that the company's estimation may be too positive in the companys favour. Thus, provision could be understated and provision expense is lower than it should be. A reliable estimate should be obtained through a direct confirmation with the regulator or lawyer, to have a best estimate figure. Auditor can also check the reasonableness of management's estimate for this provision, and if it is reasonable, obtain a confirmation letter to claim their assumptions. How many marks do you think my answer can score? Out of 5 or 6 marks.

Also the auditor could check with the regulator if there is any other possible consequences, such as impairment of the existing license, and account for these adjustments appropriately.

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