AAA*** June 2022 ACCA AAA exam – Instant Poll and comments ***

That went… ok. That fraud question was a doozy but hopefully I scored a pass.

Ninocka wrote:That went… ok. That fraud question was a doozy but hopefully I scored a pass.

Felt that fraud question was more AA! Didn't do a whole lot of study on goods notes etc! Struggled for time big time. What did people get for the audit report for Q2?

Well it wasn’t too bad, more of a fair paper I felt Few tricky attempts from ACCA on like the legal a action on material misstatements to be discussed with TCWG. Q3 think it was a qualified’except for’ opinion due to the franchise £5m material misstatement. Material but not pervasive. The impairment of hedged fv wasn’t material.

The exam from what I remember is below, tried my best to remember everything but hopefully the below helps anyone who did the exam remember what came up etc Question 1 - Ripley Co - 50 MARKS ROMM (24 marks) Outsourcing Payroll (6 marks) Closing down of law deparment (8 marks) Legal damage claim (8marks) Professional - (4 marks) Question 2 - Forensic accounting / Fraud - 25 MARKS Quantify loss as a result of fraud (9 marks) Evaluation of internal controls - identify opportunities for fraud (8 marks) Directors complaining that auditor didn't detect risk, explain (8 marks) Question 3 - Ribbon Co - 25 MARKS Misstatements 3 areas identified - explain to management (12 marks) Management not adjusting misstatement, and impact on audit opinion (5 marks) Ethics, previous other work done on listed company, unknown prior to audit (8 marks)

Wow good memory :) What romms did you get?

Wthat did you write in the ribbon co?The audit report was qualified?what was the impact on forward contract on profit?should we recognize that profit in pnl or oci?

Time was not enough Anyone remember RoMM?

How many of you were able to complete the exam?

I couldn't complete the exam. I attempted exam of 85 marks and it was okayish. Do you think I will pass?

There was risk of revenue being recognised too early as payments were paid inadvance for two years. Loan interest had been incorrectly capitalised for loan for new premises. Joining fees of known lecturers had been capitalised incorrectly as intangibles. Other income was over stated due to a provision for a legal claim that shouldn’t have been added as outcome was unknown and legal proceedings had only commenced. Can’t remember the others.

only managed 6 ROMM as follows; -impairments for the assets of loss making dept, -treatment of asset held for sale for discontinued operations, -segmental reporting for Law, accountancy and pharmacology- -Intellectual property (new lecturers) - commented on ratios and trends -Legal case-contingent asset I did not include revenue since the scenario stated that revenue was being recognized as courses were offered=don't know if i was correct.

It was difficult paper. lots of items which required application of normal audit skills rather than skills formed from ISAs

I had to withdraw first could not launch on vue then they were not happy pictures it was 13 .05 by the time I got started was in a bit of a tiss rush through q3 first didn’t even open 1 or 2 finished that was happy enough considering then clicked on q2 screen went blank end of exam , I’m still shaken after the experience

tendaichewe wrote:only managed 6 ROMM as follows;

Yes that’s right segment only those three were over the 10% Law department should of been held for sale but wasn’t. The revenue one was sneaky… the info was on another exhibit for the courses covering two years. Was just a small snippet in the middle of other info.

What did everyone put for the quantifying the loss of the fraud bit?

I included revenue but the risk for revenue was not related to recognition of over time or at a point in time as the scenario has already stated that revenue was recognized over time. The risk for revenue was that the control systems would not take into account the discount offered and it will recognize revenue fully on the sales price.

tendaichewe wrote:only managed 6 ROMM as follows;

The intellectual property should not have been recognized as an Intangible asset as the asset is not controllable. The lecturers can leave anytime as the Riley does not control the lecturers. The signing fees should have been expensed instead. Also I included Corporate Governance as a risk.

tendaichewe wrote:only managed 6 ROMM as follows;

The building purchased was also a significant audit risk. The risk that the useful life attached to the building would be over optimistic. Also the loss making Law department could mean the building is impaired as well as this can be an internal indicator of impairment.

tendaichewe wrote:only managed 6 ROMM as follows;

Hi all I had a question regarding borrwing cost in q1 24 marks Romm so should it be captalized or not???

i think i lot very little points for question too, it might mess up my chances

Only during construction of qualifying assets interest can be capitalised.

Sorry, Ripley was not listed because it was a college right? Therefore IFRS 8 operating segments does not apply?

It was a plc so listed

Hello everyone, I had following questions in my exam: 1. There was question concerning the Gemini Group, where two subsidiaries were supermarkets chain and one was providing bank services. a) Evaluate business Risk (Exchange Rates as one subsidiary was in another country, Rivalry with other supermarket chain, Inventory Management, New accounting system, Higher gearing and going concern, Highly regulated industry of banking services entity) b) Risk of material misstatements (Exchange Rates IAS 21, Provision IAS 37, Management bias, Renovation of supermarkets IAS 16, Inventory Valuation IAS 2, IFRS 3 and IAS 28 on accounting treatment, IAS 1 as one subsidiary has non IFRS accounting etc.) c) Provide audit procedures concerning capital expenditure (renovation of supermarkets) d) Explain ethical matters (Self-interest as contingent fee, self-review as additional non-audit services, Advocacy as Company insisted that Audit Partner should search for new companies) 2. a) Explain matters and provide audit evidence expected to obtain (i) It was related to sale of subsidiary and Company did not apply IFRS 5 Discontinued Operations and asset held for sale. I wrote about impairment and criteria of IFRS 5 if there were met. (ii) Relates to the material fine concerning of non-compliance with laws. It was material for individual FS, however for the group it was not. The assessment of IAS 37 has to be made and necessary adjustment (iii) The joint venture with government was set up and how to classify it in the consolidated FS. Company has majority on Board and entity has to be fully consolidated (IFRS 3,10 and IAS 28 consideration) b) Two adjustment has been made except the material one concerning sale of subsidiary. The opinion has to be qualified with sentence: except for as the misstatement was material, but not pervasive. 3. a) Provide considerations before the forensic assignment has to be accepted. I wrote about scope of work, fees, intended users, timeline, ethical matters (independence, objectivity) and preconditions (access to data and people). b) Provide procedures over the quantification of loss. I have provided (in shortcut): - Physical count - Obtain all orders and verify them - Obtain all GRNs - Verify all invoices and payments to customer - Inspect all manual GRNs made by suspected employee. c) Evaluate effectiveness of IC system and why it is insufficient: - Lack of segregation of duties - The were not check of orders and anyone can make it - No reconciliation of GRNs vs Orders vs Invoices - Accounting system was not linked to Warehouse system - Procurement Manager has access to warehouse system and can make adjustments.

Hey! I also got the same exam! For Q 3 b, have you written 5 procedures only? I also have written 5 but due to time issue. There will be 1 mark for each procedure so that means we have lost at least 4 marks here, right? And for Q2, I have written everything same as you but I couldn't write audit evidence in a good way. How many points have to be written for audit evidence in any part? Also, can you share 1-2 examples of audit evidence you have written? It would be helpful. Thank you.

In 3A, question said ethical and professional considerations, so doesn't it mean that only points related to question should be discussed? For example- I only wrote about fees, timeline and ethical considerations. Didn't write anything related to scope of work,access to data etc.

In 3A, question said ethical and professional considerations, so doesn't it mean that only points related to question should be discussed? For example- I only wrote about fees, timeline and ethical considerations. Didn't write anything related to scope of work,access to data etc. In 2A, do we have to calculate material of every subsidiary first (using 15% benchmark) And then calculate materiality of issue to both subsidiary and company? I think calculating materiality of subsidiary to group was useless and I wasted so much time here.

In Q3 b) I wrote around 7 procedures, however in my post I have provided only short breakdown of it as the description of the procedures were quite lengthy. In addition to the above: - Verify if the goods, where purchased on market price as there was risk that the goods were overpriced. For Q2, I assume there was 4-5 points for discussion matters and 2-3 points for audit evidence(based on previous exams marking scheme). (i)Audit evidence: Obtain Board Minutes that Management decided to sell the subsidiary, Obtain and verify latest FS to verify value of assets, Verify if the entity in the consolidated FS was classified as discontinued operation, Perform inquiry and mathematical check of impairment assessment before classification as asset held for sale, Inspect correspondence with potential buyers and verify if the Management is committed to sale and sale price. (ii) Audit evidence: Inspect correspondence with local authorities concerning fine, Perform inquiry over the estimation of provision by Management and verify all inputs used to calculate it, Inspect post year bank statements to verify actual amount paid, Obtain written representation that estimation was made based on best knowledge. (iii) Audit evidence: Obtain Company agreement and verify stakeholders %(all necessary terms), Obtain report from Companies Houses and verify stakeholders, Inspect individual FS and check the value of assets/revenue, Obtain board minutes and check if 5 from 9 board members were appointed by the Company, Inspect FS if the necessary disclosures were made. More or less I have write something like that :)

In 3A, the question was about the pre-aceptance conditions to accept forensic assignment. Yes, indeed ethical and professional considerations should be met. However: fees, scope, capacity and professional competence also has to be considered. In 2A, I have only calculated only materiality for Group and evaluated impact on consolidated FS. However in point (ii) it as quite visible that 1,4m of fines was material to subsidiary as profit of subsidiary was 0,9m.

Shouldn't it be segment reporting fir the restaurant, nursery opened in the designated stores these are any which ways subsidiaries