AAA*** December 2021 ACCA AAA exam – Instant Poll and comments ***

What was the right opinion for the subsidiary that was accounted for as an investment?

Q1 24 marks Audit risk with only 3 Exhibit and 25 mark quality control with only one requirement Even experienced my hardest paper I think time was unfair examiner intentionally want to reduce pass rate. ACCA should balance marks and syllabus examined

Q1 24 marks significant audit risks followed by procedures question for 6 marks then Group auditor question for 12 marks and ethics question 4 marks. Time management was still crucial.

AAA exam was honestly tough...

it was time pressured,couldn't fininish it.....

Guys question 3 about the IT company: what opinion you got in the last question for 7 marks - it was material and pervasive - I got materiality of 433% - to losses before tax and put as adverse opinion. Any got the same?

yes same, i concluded material and pervasive to issue adverse opinion

calculated materiality based on total assets

Jennie_fierz wrote:yes same, i concluded material and pervasive to issue adverse opinion

My Q3 was acquisition of subsidiary for which investment was put as 'long-term investment'. I wrote that goodwill should have been calculated. I think it was qualified opinion with except for. The other part of Q3 was KAM. Which matter should be included - I chose inventory valuation and system. Third one I said shouldnt be included in the KAM. Q1 was very tricky - i couldnt understand what they meant by revenue being net of 14m?? I felt the whole question mainly focused on R&D.

Hey everybody, how did you all get on? Here's my exam to the best of my memory :) Q1 - Claude Co - Listed Pharmaceutical Company (a) Business risks - 10 (b) ROMM - 20 (c) Audit procedures and control tests (!!!) about research and development costs - 8 (d) Ethical threats from long association with a client - 8 Q2 (a) Due diligence on potential acquisition for client - 10 (b) Enquiries to target company about future sales & receivables (strange question, assumed they meant what evidence they would need for DD report) - 9 (c) Evidence about a warehouse expansion - 5 Q3 (a) (i) KAMs (ii) KAMs and disclosures around slow-moving inventory, poor internal control system, conflict of interest - 12 (b) Subsidiary not consolidated and implications for audit - 13 (don't know how they expected us to get 13 relevant points down for a single FR issue lol)

lkleponyte wrote:My Q3 was acquisition of subsidiary for which investment was put as ‘long-term investment’. I wrote that goodwill should have been calculated. I think it was qualified opinion with except for.

I had that Q3 also, I hope your answer is 100% correct because that's what I wrote aswell :))))

I went with adverse opinion... Because if they had consolidated, the subsidiary was practically making a loss as it was not functioning and management integrity was questionable for not consolidating... That could mislead intended users

i think there were two different papers, what do you think? Q1 - Jewellery brand with 3 wholly own subs Audit risks principal audit procedures for Inventory Audit strategy Ethics Q2 - Ethics, QC and professional matters Q3 - Matters to consider (going concern, impairment), KAM and Audit report

Had same exam - how did you find the time? Wasn’t Q3 on the investment a subsequent event? As on the 1st day after the YE the net assets changed? So would need to put an adjustment through to decrease the investment?

Yeah! thats was relating to the Goodwill at acq

Jennie_fierz wrote:i think there were two different papers, what do you think? Q1 – Jewellery brand with 3 wholly own subs<br>Audit risks<br>principal audit procedures for Inventory<br>Audit strategy<br>Ethics

There are multiple exams now (at strategic level anyway). The person sitting next to you might have a completely different paper. I find this strange as some people might pass or fail depending on what comes up.

Correct. There were two different variants. I had cloth and jewellery in 1, second it was ethics and lots of impairments. Third it was IT company about going concern, kam and opinion.

what wr your answers? - in audit report , - audit risk? - and last question ?

Q1 - 10 marks for identifying business risks in a Pharmaceutical industry. Possibly 8 marks here for identifying one from each of Financial, Compliance, operational and strategic risks from the info. 20 marks for Risk of Material Misstatement, which in theory could be anything to do with financial statements or our audit of them. Lots of info here, there was R&D, legal cases, loans, going concern risk, project investment, impairment, fair value etc 8 marks on audit procedures to do with R&D of project. I used Analytical, Enquiry, Inspection, Observation and Recalculation detail. 8 marks on ethics on long term associated audit firm and the advantages and disadvantages. Mainly threats of familiarity and self review. Advantages are reduction in cost, understanding of niche areas/expertise, disadvantages are cost, understanding new audit client, competition etc. Q2 was weird - audit completion questions on a manufacturing and packaging supplier. Part1 around due diligence and whether the review could be undertaken by your firm and any matters to be considered - mainly around competence, deadlines, independence, oversight, ISQC1, arms length etc l. Questions on enquiry’s to be be considered in relation to performing the due diligence review - this was tricky against the management accounts but generally I went with supply chain risks, ethics, related party transactions, conflicts of interest, shareholding’s etc. Last section lf Q2 was on other matters relating to the second warehouse, this seemed to be asking what info you would request to assess the issues. I went with checking planning permission, checking loan requirements and lease etc 3 was ISA701 KAM so if you knew that well done because I didn’t. Essentially review risk of material misstatement and significant audit risk - so first two (inventory valuation and control) were KAM, management judgement is a key one. Last one isnt a conflict as there is no engagement. Second part of question was on subsidiary consolidation which again was a bit niche. Noticed that they seemed to have overpaid for their share (52% of 28m is 14m, they paid 34m in cash). Questions around control - if control is correct then should form part of the consolidated financial statements. Material issue as 10% of Total Assets. Few other bits to hopefully grab some marks. Idk how it went, think there was a lot to write about and I ran out of time towards the end. Spent too long on A in the audit risk section. See what happens in January - good luck all.

A lot of similarities with my answers, I struggle a little bit with how things to be write about on the last bit of Q1. Last bit of the Q3 I calculated goodwill since we were given the info, and pointed out that materiality issue. I've failed this exam twice before with 47, I really put my heart into the exam this time, answered everything mechanically, an explanation behind every point and hardly any of my answers were feeling stretched. Best of luck everyone in 6 weeks.

Do you remember if that acquisition of the sub was an event that occurred after year end? Just realized I didn't pay attention to the date of acquisition. Plus... Did you recommend an opinion in the event that management refused to change the accounting treatment

Hi, do you remember the xact question of part 1 of Q2? wasn't it what the audit committee think whether the review could be undertaken by your firm? do u remember the exact question?

amnatanveer7@gmail.com wrote:Hi, do you remember the xact question of part 1 of Q2? wasn’t it what the audit committee think whether the review could be undertaken by your firm? do u remember the exact question?

Yes. I remember this one. It was practice management but from the Group Audit committee’s perspective. In my response I still made reference to the matters an auditor must consider before engaging a non-audit service however, I answered it from the committee’s perspective. Don’t know if this is what they asked for but i referenced the knowledge bit back to the scenario indicating resources, competence, independent, separate engagement letter needed and so on.

chally wrote:

amnatanveer7@gmail.com wrote:Hi, do you remember the xact question of part 1 of Q2? wasn’t it what the audit committee think whether the review could be undertaken by your firm? do u remember the exact question?

I hope u did it right. because this is the exactly way by which i attempted.

Acquisition was 3 months before year end

yes material and pervasive would be adverse opinion

Does anyone know the mark allocation for Q3 (investment property and pension)? I recall Part one asked to comment on the matters and the audit evidence bit of it. Part two asked about the impact on the audit report I think. Was these the only requirement of Q3?