ACCA Paper AAA September 2020 Exam was.. Instant Poll and comments

This is what I said too. Phew! There was also something along the lines of employees being asked to sell goods on cruise as that stream of the business accounted for high margins. Any audit risk in that respect?

@queen1234 I added this as a separate risk. Managers put pressure on staff as operating margin is high on these type of sales so there is a perceived risk of earnings management

Your Q2 sounds like my Q3. Matters to consider for a provision and lease? And then audit reports appraisal?

nobody is talking about analytical review, afterall the draft fs was for a reason, and materiality calculations all the way…. i am hoping to secure marks in these areas, to make up for potential pitfalls from this exam…

Was there a subsidary acquired in the year? Missed this risk!! I hate how they said “do not include exchange rate risks” ?

AAA is 90% technique and 10% new knowledge. the other knowledge you must have got via AA. AAA is about technique in answering questions. There is a pattern in answering AAA. By just reading the text, you will not get this. So please please don’t waste your time like I have. I am confident I will pass this time.

Yeh I said incentive to make more money can lead to manipulation of revenue, management bias in showing high revenue. Not sure if this was a valid point tbh though

Yeh that’s right audit appraisal report after. So did the rest did the UK version then? I don’t recognize held for sale discontinued ops unless I completely missed it!!

There were not many issues to justify 26 marks period… Its like they expected us to bring audit risks from home with so little background information and 3 flagged issues from the financial information….

Okay guys!!!

Q1

a) Audit risks ( interest repayable on both loan amounts are material and should be capitalised up until ships are ready for use. Risk they will still be capitalised after asset is ready, Licence issue with sub material to revenue, will impact cash flow and revenue projections so risk revenue overstated, related party inadequate disclosure risk, Indicator of impairment for the older ships so assets may be understated and PBT overstated, Assets held for sale/disposal (ships and gym equipment) risk not presented seperately (?), Intangible assets should be also be presented seperately, not as part of PPE, Non-Compliance and weak Internal controls re cyber attack, so possible litigations and revocation of licenses but have to quantify how material this will be, etc)

b) audit procedure for the Group’s revenue (Correspondences to confirm govt intention for the loss of licence to be temporary and any further plans or terms that may indicate when to permit use, Enquire with mgmt re the impact on group’s revenue of licence loss, note down issues that it may raise and how it will impact revenue, Analytical procedure on revenue figure, does it make sense? compare to past years and industry avgs, are mgmt assumptions plausible? (Can’t remember anything else I put now).

c) Matters to consider before take up offer on the social and environment information,which will report to regulation ( Self review if will be audited later, Whether use of the report is appropriate e.g on the website?, Will carrying out the work affect independence and objectivity, possible exposure to legal proceedings as will be perceived as advocating for company as other users may rely on this, reporting on Social and environmental issues may inadvertently lead to Auditors assuming mgmt responsibilities which is prohibited under standards). Was this the time pressured one? I also put did they even have enough staff with the expertise?

d)benefit of use of data analytic for audit work ( No time! forced myself to leave this one to move on).

Q2
a) Evaluation of 2 issues.and implication on completion and impact on audit report
Issue 1:
(Sale of division after year end,IFRS5 ,discontinued (major) operation, disclosure required as division accounts for over 10% revenue and 10% profits reported and is material. Also, event according to standards is an adjusting event as even though the sale will happen shortly after year end, conditions indicating this already exist right now and therefore mgmt point re next year’s results is incorrect and not compliant. Negotiations are at an advanced stage and already found a buyer so will likely have to derecognise the division shortly as sale is likely now. As will have material impact that will eventually become pervasive to the presentation of the reports, I put the opinion would be adverse if they won’t disclose the sale? because then the rest of the division’s results won’t mean much. Not sure if “except for” though.

(change of IFRS 16 Lease. Lease was material and also change of accounting policies in standards means a change must be made retrospectively for all the leases held in the same class. If mgmt won’t make the change, definitely a qualified ‘except for’ opinion in auditor’s report.

Issue 2:
b) Responsibility of auditor in other information& impact on auditor’s report

Chairman’s statement had contradictory info. Auditors should address inconsistency by putting a statement/clause in Audit report that their responsibility is solely to provide an opinion on the financial statements and are not responsible for opinion and nor does their opinion extend to the chairman’s statement. Also the chairman claimed all printing moved to recyled paper but auditors have evidence otherwise. They will need to evaluate whether this claim throws into doubt any other evidence obtained during the Audit. Lastly, can address this inconsistency in the ‘Other information’ heading in the Audit report.

Q3
a)Comments on planning of audit, ethical And professional matters during quality control review and further actions (Engagement partner responsible for direction supervision and planning of audit. Bob spent just 2 hours so obvs throws into doubt quality of audit. Also familiarity threat, self review threat by accepting non-audit service whilst also serving as engagement partner, The Audit manager isn’t at the level of expertise to be able to sign off the final review, nor does she have the authority to do so. Should be responsibility of engagement partner. Also Junior accountant – should also be engagement partner’s responsibility to ensure the team are well experienced and qualified which our lovely Bob has evidently failed to do. So I put that substantive procedures would need to be done on Junior’s work as she may have been susceptible to threats of intimidation and therefore objectivity.

b)Evaluation of issues to be considered before accepting the Audit of the Group ( With a lot of the subs being foreign, will framework apply to all/most? expertise and experience of staff, resources available for the work, Due dilligence ID checks for fraud and money laundering legal requirement, possible litigation going on, how material is this? think they can’t accept engagement if it’s a big’un but correct me if I’m wrong. Wildfire going on..how would that affect reputation? and then going concern if fines, penalties? also have to rely on other auditors for the components..would they be able to trust their work?

Time management has always been an issue for me but I’m hoping to have at least given myself a fair shot! fingers crossed!!!!!

*Assets may be overstated

I could not do my paper, technical issues – my exam never launched – the internet kept disconnecting jus before the launch of exam. Ah ! Dont kno whta next