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December 2010 Clooney

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › December 2010 Clooney

  • This topic has 5 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 16, 2016 at 8:04 pm #349360
    Muslim Farooque
    Member
    • Topics: 190
    • Replies: 134
    • ☆☆☆

    Sir i was doing this questions (b) part and one of the evidences that were written in the solution basically looked at the forecasts for the divisions performance to see whether impairment might be temporary . Now if the sales are increasing in next year how does that have to do anything with us charging impairment this year so what is the examiner basically getting at?

    November 16, 2016 at 8:33 pm #349364
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23329
    • ☆☆☆☆☆

    “…to see whether impairment might be temporary ”

    Just from this extract from your post it seems to me that you have missed the point

    Without looking at the question it sounds to me that there was evidence suggesting an impairment this year and that the auditors are looking to see whether such an impairment may be only temporary

    The increasing sales following this year suggest that the impairment may in fact be only temporary but there needs to be great care taken by the auditors to ensure that the sales figures are not being manipulated by the company

    November 17, 2016 at 8:40 am #349514
    Muslim Farooque
    Member
    • Topics: 190
    • Replies: 134
    • ☆☆☆

    i get that sir, but why would we need to check after year end sales figures or forecasts to check whether impairment was temporary? like for example in 2010 there was impairment indicator and hence impairment should be charged, now regardless whether sales got better in 2011 it doesnt diminish the fact that impairment should be charged this year, am i right??

    November 17, 2016 at 8:55 am #349519
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23329
    • ☆☆☆☆☆

    No, not really

    typically an audit will not be completed until, say, 3 months after the financial year end.

    In that 3 month period the auditor can get a better idea of whether a hiccough at 31 December was just that, a blip, or whether it was something more serious and long-lasting

    It’s like checking to see that your client has a cold but has recovered in the new year or checking to see whether the disease that you saw at the end of the year has persisted (and potentially got worse)

    Subsequent events can cast great light on the client’s health and will sensibly be considered by the auditor

    OK?

    November 18, 2016 at 9:46 am #349777
    Muslim Farooque
    Member
    • Topics: 190
    • Replies: 134
    • ☆☆☆

    oh ok thanks sir, got it

    November 18, 2016 at 2:50 pm #349822
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23329
    • ☆☆☆☆☆

    You’re welcome

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