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

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.

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 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 🙂

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

I had the same issue, I have been checking constantly to see if it will allow me to rebook, but there is now a credit in my account. Hoping someone can also shine some light on this?

Hi @riya24 and @qwert443 I also got the same paper
I have two doubts
First my section B was not as I expected it to write as Section A but what I remember is in Section A it was audit risk for 21 marks not ROMM

Also, in section B as Riya said only ethical requirements were needed in Q2 ans in Q3 said you are a audit manager and what documents you expect there in audit review and it was not like the normal audit procedure I think the marks will be deducted for that also, correct me if I am wrong.

is they asked same question asked last week for who wrote AAA today exam..?