Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › June 2014
- This topic has 1 reply, 2 voices, and was last updated 5 years ago by Kim Smith.
- AuthorPosts
- April 8, 2019 at 2:43 am #511420
Hello sir,these are the question from PYQ JUNE 2014
Q1(c) Payroll substantive procedures:
(i)”Cast a sample of payroll records to confirm the completeness and accuracy of the payroll expense.”
[Why only cast a sample of payroll records will confirm the completeness and accuracy of the payroll expense? if the payroll records are not accurate then adding up will not help it?]
(ii)”– Compare the total payroll expense to the prior year and investigate any significant differences.”
“– Review monthly payroll charges, compare this to the prior year and budgets and discuss with management for any significant variances”[What is the difference between both above? one is total and one is monthly? one is for completeness, one is for occurrence?]
(iii)– Select a sample of joiners and leavers, agree their start/leaving date to supporting documentation, recalculate that their first/last pay packet was accurately calculated and recorded.
[Why only calculate their first/last pay packet instead of all pay?]
——————————————————————————————
Q1(d) Accrual for income tax payable on employment income
– Agree the subsequent payment to the post year-end cash book and bank statements to confirm completeness[Why the accrual for income tax need to agree with payment to the cash book after year end? and why it is to confirm completeness rather than accuracy?]
—————————————————————————————
Q3)audit risk and response
(i)”Inventory could be under or overstated if the continuous
(perpetual) inventory counts are not complete and the
inventory records accurately updated for adjustments.”[is it accurately or not accurately?][is it typo?]
(ii)Increased sales cut-off testing will be performed along with
a review of any post-year-end cancellations of contracts as
they may indicate cut-off errors[why review of post year end cancellation of contract may indicate cut off error?not completeness and occurrence?]
——————————————————————————————-
Q5(a)
“The potential misstatement should be discussed with Clarinet Co’s management in order to understand why these inventory differences are occurring?[As the question has mentioned the WIP affected and not operating effectively, is it still a valid point for the answers which provide by the examiner?]
——————————————————————————————
Q5(d)
“If the disclosures are adequate, then the audit report will be modified as an emphasis of matter paragraph would be required.
The paragraph will state that the audit opinion is not modified, indicate that there is a material uncertainty and will cross-reference to the disclosure note made by management. It would be included immediately after the opinion paragraph.”[Why the examiner using EOM rather than Material Uncertainty Related to Going Concern? and why its located after the opinion paragraph not after the basis of opinion paragraph?]
Thank you.
April 8, 2019 at 8:13 am #511430Please do not put all Qs on one post – it is easier for me to answer and of more use to other users of the forum if you ask questions by topic.
Q1(c) Payroll substantive procedures:
(i) Recalculation/summation is a test of completeness and accuracy. Most testing is done on a sample basis – which gives rise to sampling risk (see page 52 of the notes). It is impractical to test everything 100%.
(ii) Both are analytical procedures – you don’t have to give both – the examiner is illustrating different but equally acceptable answer points that would earn a mark.
(iii) It would be in their starting/leaving that errors are more likely to arrive. That their regular monthly pay has been completely and accurately accounted for would be covered by the other tests (above).
Q1(d) Accrual for income tax payable on employment income
As for trade payables, accruals are a liability and the greater risk is omission (see page 81). Yes it would also confirm accuracy but after-date cash payments test the assertion of completeness also.Q3) (i) It is just saying “not complete and … [not] accurate”
For clarity the word “not” could have been repeated.(ii) You have to appreciate that test can meet more than one assertion – if cut-off is wrong it clearly has implications for other financial statement assertions. So if a sale is recorded in 20X1 which should not have been recorded at all – that would also be testing occurrence of sales in 20X1. If a sale is recorded in 20X1 which should have been recognised in 20X2, then that is also completeness assertion for 20X2 sales. But “cut-off” should be regarded as a test in its own right for transactions either side of the year end.
Q5(a) It’s valid because the answer doesn’t go far enough in explaining the amount of the write down – for how long did the product have faults?/are all product affected?/has it been fixed?/can it be rectified?/at what cost? (relevant to determining NRV). Discussion provides only internal/oral evidence – so obviously, this alone would not provide sufficient evidence and would require substantiation.
Q5(d) – for the same reason on this post https://opentuition.com/topic/dec-2011-4/
- AuthorPosts
- You must be logged in to reply to this topic.