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yea the close friend relationship is an issue as non executive directors are expected to be independent and should challenge the board views. So if the friend is hired he may not be objective and independent as he may not want to tamper his relationship with his friend ,the chairman.
other cg issues i remember was that the finance director was responsible in determining the salaries of all directors including herself. the problem was that she could award herself and other directors huge remuneration package. So a remuneration committee should be set up to resolve this issue
the balance on the board was not right, the cg code state that at least half of the board should be neds and out of 8 , 3 only was ned
bonus of directors was based on profit which could be subject to manipulation, their bonus package should be related to performance such as using share optionsthe chairman was previously the chief executive. there is a lack of accountability since he weill be reviewing his own work
in q5 what were point that company was going concern or not going concen?not sure if i write the opposite
In Q5 one of the requirements was about audit opinion on the assumption made by the director about going concern.
I write that if the assumption is appropriate-modified opinion with emphasis of matter paragraph after the opinion paragraph.
If the assumption is not appropriate and director refused to make amendments – adverse or disclaimer of opinion, including basis of adverse/disclaimer opinion paragraph before the opinion paragraph.
Is that correct ?!loss of major customer, loss of revenue
loss of specialists, cannot improve or launch new products thus difficult to compete in the market
shareholders not wanting to invest, further lack of funding
reputation risk due to customer incurring severe losses, losing other customers
the legal claim by the customer if successful could have adverse financial consequences on clarinet and one more i forgotif i recall correctly the question asked what should be done if auditors find out that the going concern status is correct then i forgot the end of the question xD
Zubainrhira I think we have to write about audit procedures about going concern – analytical procedure, review cash flow forecast, review board minutes etc, but I am not sure…..
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sorry think u are making a mistake Question 2 didn’t have anything to do with audit risks,it asked about Vale for money audits and sampling
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I am releived to have finished this paper. My fingers are crossed. Time management was my biggest issue.
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I will pass it… help me lord!!! 😀
i like reading thru these comments, they always give me a smile things like the examiner’s gift to us ..lol..
all in all i think this paper was fair and i really expect to pass. got in exam room late just before they started writing so didnt have reading time, but as soon as i saw qn 1 about payroll i started smiling. thanks Open tuition for your tips, they helped me much.
i managed to attempt all questions apart from qn 5 (a) which i think was 4 marks.
am sure its a pass for me, and hope you guys all pass.
crazy exam in my opinion!
time contraints were a big issue but the corporate governance question was a blessing!!
lets hope for the best and a big THANK YOU to mr GROMIT for improving my concepts regarding going concern and hope that will be enough!
@rositca “I write that if the assumption is appropriate-modified opinion with emphasis of matter paragraph after the opinion paragraph”
This is not correct. If the auditor agrees that company is a going concern, then an unmodified opinion is given with an emphasis of matter paragraph.
Let’s just hope that F9 is as good as this or even better. I hope that the theory is just good. Very scared about F9
1) Was about a hotel and how employees record overtime worked. The question asked you to identify audit risks, name tests of control and substantive tests. Substantive tests for tax.
2a) define the 3 Es (value for money audit)
2b or 2c) sampling: explain the need and what it is
3) Company selling 24 month contracts. Are receivables overstated? Identify risks and recommendations.
4) Corporate overnance issues: identify issues and make recommendations (appointing close friend, remuneration determined by finance director, no board training, no audit committee).
5) Company with lots of going concern issues. Identify issues (major competitor, loss of employees, supplier difficulties, cashflow issues, litigation), procedures to look for going concern issues, etc State impact on audit opinion when auditor agrees with going concern but there’s material uncertainty (unmodifed opinion but emphasis of matter paragraph).
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Can’t finished my paper done 60% had write extra for Q1 which leads to lack of time at the end.
Know each and everything asked But can’t perform well. Is it possible that i can Get 50 out of 60.. ? Seems impossible to me 🙁
Somewhere there was a company using a continuous inventory count. Some questions related to that, including tests.
Answered about 80 marks worth so not much room for error on the bits I did answer. Anyone know how long before model answers uploaded? Not sure if I waffled too much hahaha.
My life (as an international student in UK with student visa) literally depends on this paper for the time being and I didn’t do well. 🙁
Time management was a struggle to me. No time to pause and think and plan the answers.
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Ok I totally read the going concern question wrong sh*t!!!!! I understood it as what are the six possible indicators that company is not a going concern to be that the company will survive..I took it as a double negative so!!! Oooops…..how many marks was that worth? And what are the 3 es for the value for money audit…I didnt know that either!! Best of luck to the F9’ers tomorrow lets pray it was as good as this paper was!!!
It was an ok exam. I had time issue also didnt answer a few questions. I hope what i did will allow me a pass.
@tbm13 i think if i remember well, the auditors believed it was a going concern but with material uncertainity. my understanding was that the issue at hand was material enough so i thought it was best to modify the report but i may be wrong.
somehow i think it was meant to be an emphasis of matter.
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