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

Hello,

Concerning Q2. part a was actually a financing agreement and must be accounted according to the substance of the transaction. must restate asset.
part b. concerning investment property, the asset can’t be recognise as investment property because it was vacant. it must be transferred to PPE.

Part c. concerning impairement. we cannot accept a reversal of impairement in the profit and loss. it must be treated as a revaluation increase.

@mukayani said:
Generaly to me the exam seems ok and was a bit heavy on technical accounting standards. Q1 seemed ok though it ate most of my time. Eish quite a lot of risks in there considering the 24 marks – i included among mgt pressure on results(bias), operating segment,gvt grant recognition criteria, need for provisions as it seems the group might not meet the requirements,intangibles understatement, ppe overstatement, depr and amortisation over/ understatement, failure to disclose held for sale assets correctly in both P&L& and B/S cant remember others.

Q2 was just technical and neede knowledge of IAS. Had 1hr left and – sale and lease back thought the client was wrong and was no need to derecognise the assets and there was need to record a lease liability on money received on sale, write off profit/ loss on disposal.

Q3 Only managed to answer the first bit and boom time was gone.

Feel sad as i forgot the calculator and had to use mental – lost 3 materiality marks.

the loss of materiality marks is indeed unfortunate!

Regarding your comments above re having to know accounting rules for Q2, I suggest you read my post above as this simply isn’t true. You can pass M+E questions knowing absolutely zero accounting rules.

2 Questions please:

– can anyone confirm the dates in the exam paper said “assume today is 1 July 20X5”? At start of each question, or in requirement?

– did anyone sit the UK paper, and if so were the marks in Q1 split up between requirements?

@achilleasp said:
could you argue that 50% is a subsidiary instead of joint venture? it didnt mentioned anywhere ‘ joint ventures’ but just the 2 companies formed a new 1. could you argue it was subsidiary if Group had control? could you get points further on consolidation risks of the said subsidiary?

I have not seen the question, but if 2 companies form a new one together and each has 50% of the votes my starting presumption is a JV. However, control is achieved in more ways than one, and the key of joint control is that both parties must be involved in decisions – one cannot unilaterally decide anything. If the board comprises directors in equal numbers from each of the 2 joint venturers, and they have an agreement to decide things together, I doubt it would be a subsidiary. So if the question points heavily at a JV, the risks would in my opinion be wrongly accounting for it as a sub, or not applying the equity method of a JV correctly. As well as the risks of under-disclosure of interests in other entities (IFRS 12).

@achilleasp said:
The question didnt hint about voting nor board structure. as this was ambiguous i focused to say that if the board has more group members then control would be exercised and hence could be classified a subsidiary. the standard says it could be less than 50% and still be a subsidiary. oh well, food for thought. i believe a lot things are open to judgment in this module.

the ambiguity of the scenario is excellent news.

It means that in the audit procedures requirement you currently know nothing and are therefore allowed to test everything. Checking the make up of the board of the new entity, the shareholding structure, whether there is an agreement between the two owners to share control, whether any board meetings have already happened and if so reading minutes to see if both sides are co-controlling … 4 procedures :).

It also means that almost any risk that properly demonstrates knowledge of JV v Sub (and perhaps even v Associate) will score you marks, so be happy as I suspect your initial question ‘s answer is a yes!

Kkkkkk that’s ACCA bring questions, they don’t repeat.

Yes information mean corbirative evidence

@achilleasp said:
excellent news my friend indeed. the ambiquity of the scenario could also justify the 24 marks just for audit risk. lets not forget its audit risk meaning including detection risk.

We have had plenty of audit risk questions that have had 24 marks (or thereabouts), even before we had a 50 marker as Q1, so the marks do not feel strange to me. Detection risk is indeed part of audit risk, but from my experience an audit risk answer is usually close to 100% risk of material misstatement, and typically almost entirely inherent risk. As such I am looking to explain, for 24 marks, around 11 reasons why they might have got their FS wrong in some respect, aiming for 2 marks per risk (the other 2 marks can usually be earned by doing 2 materiality calcs on any 2 risk items).

As you will note from one of my earlier posts, simply knowing there is a grant, a disposal, and an acquisition is enough for me to be able to suggest 6-7 risks, and if the Intro says the client is listed then I reckon I have at least another 2. If question stated individual and consolidated FS are in play, then I probably can get enough risks now before ever reading the scenario (in which there will no doubt another 10 risks if you need them).