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Analytical Procedures in Planning

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Analytical Procedures in Planning

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by Kim Smith.
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    Posts
  • September 2, 2021 at 1:25 pm #633975
    farid2016
    Member
    • Topics: 5
    • Replies: 20
    • ☆

    Hi Kim,

    I’m really struggling to grasp the above when practising past questions.

    I just can’t seem to link everything together to come up with risks.

    Do you have any tips on this? I’m taking the exam on Monday and a tad panicked to be honest.

    Thanks Tahira

    September 2, 2021 at 1:42 pm #633981
    farid2016
    Member
    • Topics: 5
    • Replies: 20
    • ☆

    ( I mean when you have to work out the ratios.. i struggle with that element.. not sure which ones to work out and now to link it to the question)

    September 3, 2021 at 7:50 am #634075
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6797
    • ☆☆☆☆☆

    I strongly recommend that you read a recent examiner’s report to see what the examiner expects here https://www.accaglobal.com/an/en/student/exam-support-resources/professional-exams-study-resources/p7/examiners-reports1.html

    See here this post where I illustrative how to be effective in writing the evaluation of materiality and analytical procedures/ratios https://opentuition.com/topic/aaa-exam-2

    In essence you want to look at the numbers you’re given – if something has “gone up”/”gone down” – ask yourself whether there could be over/understatement – you can’t assess this without looking at what has gone up/down in context. For example, if revenue has gone up and GP% has increased – revenue/GP% could be overstated if revenue is inflated (in some way) – i.e. does not have matching cost of sale. This could be due to error (cut-off on sales invoices) or fraud (fictitious invoices). If, however, the GP% has been maintained, the increase in revenue would look “bona fide” – rather than overstated.

    It might help to imagine, in your head (not in your answer), that you are doing an “interps” Q from FR – only where something is not making clear business sense (e.g. sales/cos go up and GP margin is maintained because the co is selling more) that is where you are identifying potential misstatement).

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