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It was a new client as the question said “was assigned to the audit “ – apart from this it wasn’t very clear.
Audit risks for Q1 were as follows ;
– Listed Entity – risk of management bias I.e reversal of provisions
– New client – risk if misstated opening balanced
– Reliance on component auditor – risk of reduced audit quality
– Intangible Assets – included research costs, overstating assets and profit.
– finance costs not in line with increase in borrowing
– PPE increased with no sign of capex or depreciation
– goodwill increased by 130, 30 being unaccounted for. Risk of overstatement
– decline in revenue and Increased competition could merit impairment.Ethical issues in Q1 – Integrated Report ;
Management responsibility + Self review threat. Mgt responsibility cannot be mitigated, decline request. Self review can be mitigated by use of different teams, howerver listed status would require to decline.
Q2 – Uncorrected Statements
Brief intro talking about how misstatements should be discussed with management and those charged with governance before modifying report.
Leases – Qualified – Not pervasive
Claims – Adverse – Material to both profit and assets.
Aggregate impact of leases and claims – Adverse opinion
Assets – Not material- UnmodofiedThis is all I remember. Please feel free to add on to this,
Q1 was unfairly long and time consuming with all the exhibits it might as well should have been q1 only for the whole paper. Was so rushed for my last question q2 didn’t even notice it was the audit opinion/report
I feel like most of you..spent 2 hours on question 1, so rushed through the other 2..
Did anyone else put component auditor and segmental reporting due to being listed as audit risks for Q1? I think I only put about 6 audit risks but calculated materiality on a couple of mentioned professional scepticism so hoping I’ll get a few extra marks here. Didn’t calculate any financial ratios or trends though!
I did the UK variant – what did others put for question 3 part b regarding the implications for the directors of Krupt’s actions on the going concern review? I believe this was a different question to the international paper.
Exam was very similar to the pilot paper on the website as you’d expect but my goodness it was longer….
Examiner must think it is a four hour exam with the amount of read time required.
I don’t understand, ACCA are looking for professional people giving professional answers but then you’re expected to respond well to that, it’s just incredible.
Where was the mark allocation for question 1. Was it just make it up as you go along.
Wow, wow, wow
@zubairhira said:
can anyone confirm me the Q1a Audit marks?And also if it was on ROMM.24 marks RoMM + Detection Risk I think it was audit risk.
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most exchange differences on retranslating a sub go to P or L, not OCI. But these harder accounting issues are not what fails people so are best not worrying about.
The moment you see a new sub acquired, that is overseas, even if story says same year end, they use IFRS and have same acc policies, and even with story saying ignore disclosure risks (I did not do the exam but am told it said that?), you have at least 4 audit risks (initial GW, impaired GW at y/e, forex retranslation, pre v post acqn reserves calc). That is 8 marks if well explained. Add on 6 for ratios, 3 for Prof Marks, and surely there are 4 standard goodwill tests on any company and you have 21 already having barely touched the scenario (if at all). No controls testing, and use of IA staff, must be worth at least 2 easy marks? That’s 23 and still haven’t read the story that everyone will always say is too long.
Pass the question on easy to get marks first. Read 3-4 paragraphs of scenario to find another 3-4 accounting areas for audit risks, then ditch Q1 completely, or alternatively tell yourself you are safe, stop Q1 after 97.5 mins, and job done.
But if you have fallen foul to overrunning due to a failure to do the above, worry not (well not too much). So many people will have done the same, and surely ACCA want a pass rate no worse than 30%? If you have written answers in a decent technique then even if you haven’t finished I am sure you will be safely through 🙂
This is my second attempt after failing with 48% last time. I find the time pressure really hard and trying to get what’s in my head into paper in a methodical articulate way seems to be my greatest challenge !
I spent far too long on question 1. Answered most of the other questions other than the integrated report question in section 1 which I’ve just remembered I missed completely !
Happy with the fraudulent and wrongful trading question. Not that confident that I answered with the detail required for the professional papers. Happy that I put some decent points about ethics and professionalism but got in a muddle when thinking about audit risk in question 1. Carried out some ratio calcs but the main issues all seemed to be relating to the goodwill issue/acquisition of lynx .
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“It was ridiculous that they didn’t break down the marks. The sample paper would suggest 20 marks, but thagcould have been gained from analytical procedures alone. Far too much info to digest”
Presumably you are doing UK, where they have not broken down the marks for about several years. I am concerned if that was a surprise!
Fact is that whenever analytical comes up it tends to be worth about 6 marks of calcs, so if UK students practice using INT stream forms of the questions they will know that. Pick six calcs and leave the rest alone as there are no marks for going overboard.
Likewise risks. If you can see 20 risks, pick around 9-10 and ignore the rest. The key is to provide 18 marks of answer, not answer the entire scenario (where she provides too many risks so that everyone will find some, not to overload you).
As I said to one of my class, if you think you have too many risks be happy. Shows you know what you are doing. Just go with those you are most comfortable explaining and ditch the rest.
Has always been like this, and I don’t understand why so many students think they have to cover every available point (instead of 24 marks worth)…
Anyone question the validity of the Contingent consideration calculation being based on 18% interest rate discounted, when another point in the question mentioned company weighted average was 10%?
too long and time pressured only able to do 70%… I was writing more or thinking more don’t know what went wrong… maybe examiner put overloaded info.. 24 marks Q1a that was really bad.. at least breakdown into more requirements like Q2 n Q3…. Q1a) was just disaster never seen in past exams a question worth of 24 marks.
Question 1 was a bit evil. So much flicking back and forth between pages!
I answered every part to every question and stuck to my game plan, did not overrun anything, applied the best technique I could. Used the words ‘to verify’ a lot and the word because a fair bit to help remind myself to explain every point as much as possible.
Q2 I got Qualified ‘except for’ for opinion on the leases, adverse opinion on the claim because it was more than half of profit and affected more than one FS item (Assets, expenses and disclosers). Then the impairment was immaterial but I mentioned ISA 450 were you have to weight up the total misstatements except for trivial items.
Q3 I had fun plucking up loads of thing on part B’s scenario. The lack of qualification for the supervisor, the fact a cash settled scheme was treated as an equity one and the journal to reverse it, the poor planning to only arrange a meeting with the sick audit manager at the last minute, the fact that checking a expert website is not enough to be reassured of their competence, the fact the supervisor could use a lot more training and so on.
Q3 Part A was okay and similar enough to previous PFI questions.
Hoping I done enough to pass now. We shall see.
This is the first sitting of the new syllabus. The question was very long especially the q1 which contain about 5 exhibits. Those who had worked the sample pilot paper from ACCA wont have any issues because the reasoning are same. The q3 on forecasted pnl was almost a copy cut version from the pilot paper. But it was extremely time constraint….. expert are telling to plan your time well. Even through proper planning, time run out without being able to complete all questions. And also elimination of choice question had made the exam a little more harder. Anyone agree with me.
@lukman94 said:
It was a new client as the question said “was assigned to the audit “ – apart from this it wasn’t very clear.Audit risks for Q1 were as follows ;
– Listed Entity – risk of management bias I.e reversal of provisions
– New client – risk if misstated opening balanced
– Reliance on component auditor – risk of reduced audit quality
– Intangible Assets – included research costs, overstating assets and profit.
– finance costs not in line with increase in borrowing
– PPE increased with no sign of capex or depreciation
– goodwill increased by 130, 30 being unaccounted for. Risk of overstatement
– decline in revenue and Increased competition could merit impairment.Ethical issues in Q1 – Integrated Report ;
Management responsibility + Self review threat. Mgt responsibility cannot be mitigated, decline request. Self review can be mitigated by use of different teams, howerver listed status would require to decline.
Q2 – Uncorrected Statements
Brief intro talking about how misstatements should be discussed with management and those charged with governance before modifying report.
Leases – Qualified – Not pervasive
Claims – Adverse – Material to both profit and assets.
Aggregate impact of leases and claims – Adverse opinion
Assets – Not material- UnmodofiedThis is all I remember. Please feel free to add on to this,
Q3 on forecasted profit n loss
Refer to latest sample from acca. It almost the same
@sokty said:
Q21. Lease: Qualified Opinion as it is material misstatement but not pervasive
2. Provision: also Qualified Opinion as it is highly material to SOPL but not pervasive. We can nor offet provision and contingent assets confirmed by insurance company, IAS37.
3. Impairment: not material, so opinion is not modified.
Regarding case 2, I have put pervasive as the misstatement represents 50% of pbt. Do you think it is a mistake?
@jmmyjimmy said:
Regarding case 2, I have put pervasive as the misstatement represents 50% of pbt. Do you think it is a mistake?I would say no. Did you give the fact that it effect Assets, expenses and disclosures as another justification for saying it was pervasive? So more than one FS item for example. I think we’re okay as long as we did give a solid argument. And it was adverse of course because it would be down to a disagreement.
Them not wanting to recognize a major, major court action worth 1.2 million against the company by canceling out the liability and pretending it never happened sounds very pervasive alone.
what a terrible paper – i sat the UK version where the breakdown of marks isnt provided for question 1 – i dont suppose anyone could help me out with the split at all please?
Thanks alot!
looks like i might of done this wrong… i put £1.2m wasnt material to the PBT because it represented 5% (thoughts the PBT was £22m… probably read that bit wrong) therefore would give a qualified opinion as its unlikely to be pervasive to all the financial statements ??? .. ops! going with everyones previous comments looks like ive done it wrong!
I know the audit risk part was 24 marks but I also did UK.
What did you put for question 3 part b regarding the implications to the directors of Krupt Ltd?
Sat the UK variant.
Q1 agree very lengthy but plenty to go at so not overly concerned I didnt get everything that you guys have validly flagged, I think 10 or so solid points will be decent enough.
Other elements of part 1, being procedures on acq goodwill (good q), the component auditor (so so for me) and ethical points (usual rush to stick to exam technique plan I set myself!)
Q2 I got the same as Billy – lease issue my tech was rusty but think other bits were ok.
Q3 part a was great and part b was fantastic as i’m a qualified insolvency practitioner and work doing pfi reviews and insolvency.
Paper overall was fair from difficulty perspective imo but time was ridiculous for volume of info in 1.
@jmmyjimmy said:
Regarding case 2, I have put pervasive as the misstatement represents 50% of pbt. Do you think it is a mistake?There is a question on lease which state that the lease agreement do not permit the firm to purchase the asset. that implies it will never be in control on the equipment. As fat as i know it is an operating lease, but in the question it had been classified as finance?
anyone can clear this pls>?
Short term leases where less than 12 months with no option to purchase can be exempt but treatment must be the same if all items in the same class, so in the question, they should have treated all 3 the same and expensed directly to SOPL
Q1
A) audit risks 24 mks
B) audit proc on goodwill 6 mks
C) Ethical and professional issues review of integrated reporting 10mks
D) critic of component audit strategy 6 mksQ2
A) Matters on
I) assets lease 7mks
Ii) provision an contingent asses 5mks
Iii) impairment 5mks
B)
Loan taken by an audit staff from and audit client
Payroll secondment by an audit staff
8mksQ3
A)
I) matter before acceptance of review of pfi 6 mks
Ii) procedure on pfi 9mks
B) audit planning and performance issues 10mksQuestionn 1 required a lot of planning before hand. obviously get the 5 marks for the ratios and the n you need 9 risks to give yu 24 marks. i only wrote 7-8 risks because of time but i still had more risks in the tank. I think it was where i did well because i chose my best and most obvious risks as per analytical procedure.
question 1 had a lot of easy marks .
1.evaluation of audit strategy 10 marks
2.audit risks 24 marks
3.goodwill procedures 6 marks
4. ethical and professional considerations on integrated reporting service engagement (equestion 3
legal claim 5 marks
impairment 5 marks
lease 7 marks (very hard for me )
review of audit planning and perfomance 8 marks (easy marks but time was limited)question 2
consideration before accepting review engagement. 6 marks
procedures for auditing forecast. 9 marks ( saved me som time as i race through)
ethical and professional considerations arising from loan to audit member and request for secondment 10 marks ?
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