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Q3(a) no title , Q3() Juliet Co
Q:”Auditors should accept some of the blame when a company on which they have expressed an unmodified audit opinion subsequently fails, and they should also do more to highlight going concern problems being faced by a company.”
[The second part of the statement asks whether the auditor should do more to warn stakeholders about going concern issues.It could be argued that it is the responsibility of management to make such warnings, and in fact, fi nancial reporting standards require a lot of disclosure about concentrations of risk. In particular IFRS 7 Financial Instruments: Disclosures requires detailed notes to the accounts describing and providing details on concentrations of certain risks. So, a lack of disclosure may not be the critical issue.]
1. Why the answer say that lack of disclosure may not be the critical issue?if its required by IAS ,it will have audit implication?
[In addition,shareholders’ meetings could be used more often as a vehicle for the auditor to raise concerns with shareholders. Auditors,however, may be reluctant to voice concerns in such a forum, and may be put under pressure from management not to speak out.]
2.Why auditor may be reluctant to voice concerns in the shareholder meeting?
1. We are talking about financial collapse when audit opinion is unmodified. This means it’s not the lack of disclosure that is the issue (because the audit opinion would have to be modified if disclosure was inadequate).
2. Because if anyone (doesn’t have to be the auditor) suggests a company may not be a going concern the first thing most shareholders might want to do is sell their shares (!)Past exams that are obviously available from ACCA only go back to the S/D17 www https://www.accaglobal.com/pk/en/student/exam-support-resources/professional-exams-study-resources/p7/past-exam-papers/international-stream.html
So when students make posts about old p7 questions they will hopefully be referencing them from an up-to-date Kaplan or BPP kit.
You may also still find them in the ether even though they are not displayed on ACCA www – for example, I put “acca p7 juliet 2010” into google search and the top hit is the p7(IRL) pdf.
However, I strongly recommend all students to refer to updated versions of Qs and As in a current approved kit that are not only technically current but of AAA exam style and standard – this is quite different to the previous P7 exams.
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