• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

MAGNOLIA GROUP M/J’17(A) Kaplan kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › MAGNOLIA GROUP M/J’17(A) Kaplan kit

  • This topic has 2 replies, 2 voices, and was last updated 8 months ago by Kim Smith.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • October 6, 2021 at 5:10 am #637078
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    (a)Hyacinth Co – internal controls and results of control testing(i)Audit planning and performance
    4th paragraph :

    It seems that the communications between Group and component auditors is not robust. The instructions given by Crocus & Co to the component auditors seem to lack detail, for example, Crocus & Co should be instructing the component auditors to carry out specific procedures on intra?group balances and transactions.

    maam nowhere in the question there is nay sort of inkling that communication is not robust between group auditor and component auditor; so what evidence from the question according to you could have been used to deuce the above?

    2nd doubt: 3rd paragrapph

    Further, if these balances have not been appropriately reconciled, this could create significant issues on consolidation.

    maam against what do we reconcile these intra grp amounts here in this case, when looking from individual FSs figures?

    October 6, 2021 at 7:51 am #637109
    Kim Smith
    Keymaster
    • Topics: 88
    • Replies: 6096
    • ☆☆☆☆☆

    Your 2nd question first:

    “The tests of controls confirmed that intra-group transactions are not being separately
    identified in the Group’s accounting system and reconciliations of amounts owed between the
    subsidiaries are not performed.”

    Balances with each group company will be a receivable/payable in the receivables/payables ledger. But – it is not enough just to reconcile the balance from a supplier’s perspective and “agree to differ” that the balances can be different due to timing differences. For group companies the timing differences must be accounted for somehow/somewhere. So if Group Co A says Group Co B owes $10,000 but Group Co B says it owes only $8,000 because it hadn’t received $2,000 goods – you have to eliminate the whole of the $10k – which will partly cancelled against the $8k, with $2k included in inventory in consolidated FS (less PURP).

    October 6, 2021 at 7:53 am #637111
    Kim Smith
    Keymaster
    • Topics: 88
    • Replies: 6096
    • ☆☆☆☆☆

    “The group audit manager has concluded on the audit working papers that “as intra-group
    balances are cancelled on consolidation, this issue has no impact on the Group audit and NO FURTHER WORK IS NECESSARY”.”

    This is wrong – group audit instructions need to cater for the fact that there is a lack of identification/reconciliation of intra-group balances.

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • ben920331 on Discounted Cash Flow Further Aspects, Lease versus Buy – ACCA Financial Management (FM)
  • John Moffat on The Statement of Financial Position and Income Statement (part d)
  • Viktoriia.Yanchuk on The Statement of Financial Position and Income Statement (part d)
  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy