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- This topic has 34 replies, 18 voices, and was last updated 2 years ago by Kim Smith.
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- December 9, 2021 at 10:36 am #643376
The irrecoverable receivable was 2m and this amount was disclosed in notes, but according to auditors it was 2.2m, so in my conclusion this 200k was immaterial and that’s basis for unqualified opinion and included in EoM due to importance and that it is fundamental to users’ understanding of the financial statements
December 9, 2021 at 1:17 pm #643400@Legolas – I may not be understanding your meaning, but I should clarify for the benefit of readers of this post that an auditor’s report refers only to MATERIAL matters – no one is interested in a matter that is not material/immaterial,. To draw attention to something immaterial “as a matter of importance” is a contradiction that would confuse any reader. The nature and purpose of the EoM are correctly explained and illustrated in our notes.
December 9, 2021 at 2:47 pm #643406The difference of 200k is immaterial, so no basis for qualified opinion.
The irrecoverable receivables should be disclosed in EoM because total amount of 2m is significant for users of financial statements.
December 9, 2021 at 3:50 pm #643424Obviously I am not yet privy to the question but auditor’s reports would be very cluttered indeed if they were to draw attention to everything that is material in the notes in an EoM. If the irrecoverability of a receivable has been correctly accounted for – i.e. trade receivables have been written down for the expected credit loss allowance in the SoFP – the accounting treatment is correct and there is no material misstatement. There is nothing more for the reader to understand than is presented in the SoFP.
Compare that with, for example, the disclosure of a non-adjusting event after the reporting date – if this informs the reader that a material amount of inventory or a material asset that is included in the SoFP no longer exists – e.g. due to fire/flood then that IS fundamental to users understanding of the SoFP.
Was this an OT question or a Section C question?
December 10, 2021 at 6:15 pm #643781Have you calculated materiality for 200k receivable difference?
It was above the threshold for PBIT and revenue hence material misstatement and modified- qualified opinion should be issued – material but not pervasive with wording “except for”December 11, 2021 at 12:01 am #643833I got 170k the money was the same for the first 7 months but June to Sep was at 1% and Oct to May was 2% and the 2% was two different figures and then the extra 5k
December 13, 2021 at 9:03 am #644137Multiple choice questions for this paper were super tricky if I get above 15 will be super lucky, also the substantive procedures for me had always been a problem, Audit risk questions was super happy to see ratios, easy calculation marks, also making it easy to comfortably identify risk (I just hope my answers were sufficient) The last bit about adjusting events ( I calculated materiality on what the auditors were suggesting not the difference, though it was an immaterial adjusting event, my questions are were the management refusing to make an adjustment and disclosure??, The last one writing a letter on deficiencies of payroll and recommendations,
December 13, 2021 at 3:14 pm #644179Kim Smith wrote:Obviously I am not yet privy to the question but auditor’s reports would be very cluttered indeed if they were to draw attention to everything that is material in the notes in an EoM. If the irrecoverability of a receivable has been correctly accounted for – i.e. trade receivables have been written down for the expected credit loss allowance in the SoFP – the accounting treatment is correct and there is no material misstatement. There is nothing more for the reader to understand than is presented in the SoFP.
This was an OT question – it was an irrecoverable debt of £2million and the client had accounted for it correctly however the auditor had realised that it should have been £2.2million so the £200k was not material. The question asked you if the auditor report should be modified for the difference between what was accounted for by the client and what the auditor believed to be recorded.
December 26, 2021 at 6:43 am #644838can anyone please guide me which topics will cover the CR portion of exam?
December 26, 2021 at 8:16 am #644842@zainikhan – welcome to OT! To get the most out of our forums please see HERE for guidance how to use them https://opentuition.com/forums/forum-rules – e.g. you should make a post with a suitable subject line (polls such as this are for comments – not for asking questions that you need an answer to).
See here for answer to your question https://opentuition.com/topic/audit-assurance-cbe
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