AAA*** P7 December 2013 Exam was.. Post your comments ***

Not really sure what I thought about it... A lot to read and consider, and too little thinking time. Brain scrambled. Here's hoping for a pass.

what did you write for the question 2 part (a) and (b)?

what did you write on ROMM on 1st questions?

Benfits. Adds credibility in obtaining bank loan. Experitise of assurance providers, as the directors have not aquired the company previousaly .

It is a very subjective paper, what you think is right may be wrong or vice versa..

A couple of my ROMM's were: FX movements Goodwill may not be calculated correctly Disposal of Sub may still be included in YE assets Disposal of Sub may be masking Related Party Transactions Going concern assumption without distribution centre Inventory recorded at selling price - risk that assets overstated Inventory in vehicle industry may need written down if held too long due to tech changes Probably got these all wrong, but oh well...

I know that feel bro.

hi , what was the ethical issue in part c apart from valuation service not allowed for listed clients ?. why were those numbers given ?.

yea if they ignore grammar

I think they were given so you could calculate materiality of the actuarial valuation to total assets, and then state it is not material in value....but it is in nature, due the complexity of the calculation....I think

what was q2 testing p7 or p4 . I could not figure out what to write, done it last 5 min i thought it might be asking procedures, I only wrote 2 lines agreed upon enquires and analytical . did think about writing org structure, ratios etc but no time . Could some tell me if I will get 1/2 or 1 mark for those 2 lines.

hope you pass

I think...it is ok but depends on the marker who mark it... Good ;uck to all of you.............

For Q2 a) Benefits - Due diligence review will ascertain whether the target company is in a fit financial state and is not saddled with debts. Also ascertains whether the target is appropriate with a competitive advantage in its business environment (no point buying a company which is useless). Third point - can't remember b) I found this quite tricky, threw me off!! I wrote about profitability over the various years, using the operating margin as a ratio. Recommended the SOFP be available so can calculate ROCE. Also requested that a break down of the COS was available to determine if GP margin and Operating margin were rising in line with each other. Solvency - Calculated the interest cover for the various years and also requested information on the loans that were being serviced as the finance cost didn't change - was this a fixed repayment, interest only or cap & interest? SOFP required for appropriate liquidity. Ownership - are the founders on a contract after aquisition? Cannot control them as an asset as they are people. Premises - following acquisition, what will the rent cost on commercial basis, how will this affect the profit. Revenue Recognition - Were the two year products split evenly over life of contract? Database - Has this been recorded as in intangible, cannot be as internally generated even though generates an income Not sure what else I wrote for Q2.

how could i calculate materiality it only had plan assets and plan liab figures. initially I thought it was modified opnion so I could write about whether matter has been resolved. but then it was unmodified opinion 6 marks for this part , I hope I can full marks in part a and b

Q1 i totally got a black out! When it says risk of material misstatement, it is FS risk ( Inherent risk and control risk), can we include accounting standards? such as isa 21 for retranslation, stock wrongly accounted, not in line with ias 2 etc? please advise. The paper was tough!!! Insha Allah, I will pass... Thanks for helping!!

Due diligence as prdicted..Additional information..me wrote...Statement of Financaical Position Statement of Cash Flow ..Market reputation etc...due diligence was about ..negative assurance...not an audit opinion...did well in q#2..

Question 3 (A) requirement Plz ??

sudhir....are you talking about Q5? I can't remember the exact scenarios well or the questions....but Q5, part C.... this was unmodified opinion with an emphasis of matter paragraph. If it was 6 marks allocated....I'm not sure how to get all of them. I guess you could have spoken about what the opinion would have been, had they not have added a disclosure note....I did not write that much though as I ran out of time :(

Spent more time on difficult ones and left the easiest one as I ran out of time. Q2 was terrible as it is difficult for any one to write about due diligence for 16, 18 marks in part b especially when examiner asked about general benefits and reporting styles in separate parts. Im regretting i couldn't complete question 4 which was the easiest part overall. I can see that time management was the issue with every one so hoping a pass.

also, incorrect classification of Subsidiary to Associate of vice versa. Inter company transaction disposal of subsidiary mid way through sale and disposal -- and lot more. not sure if i am correct though.

i feel...depressed. reading all of y'all's answers...i don't think i even wrote that.. qs 1 asks about the FS risks during planning the group audit. i think we have to take the restructuring of the audit into consideration. there was acq of sub so for the risk, i talked about the forex translation and their inappropriate treatment which could result to an overstatement or understatement of asset. now for cash in transit...i ruined that, it should've been intragroup consolidation, but i talked about theft during transit and inventory may be overstated. about the disposal...that was abit tricky...it asked about the principal audit procedures regarding the disposal of sub. it says that someone else became the principal auditor of that subsidiary so i talked about that the group auditor should communicate with the prospective auditor regarding any matters arising from the disposal sub? due diligience part b..i think i lost my mind. i had no idea what i wrote in there. i talked about financial statements, comparing trends. i talked about some numbers may be incorrect and therefore needs to recalculate. i talked about the bank balance of $500 000 and that there may be a possible CF problems since the wages are high due to its specialist nature of work. qs 3... that coal mining... i think i messed up with part 1. it asked about matters to consider when reviewing the draft FS and working papers. i talked about non compliance to the law and regulations. the H&S...i talked alot about the regulations and prof skepticism. audit evidence was probably alot easier. and the last part was asking for the auditor's responsibilites and what they should do since the management is not disclosing the accident to the regulatory body. so i talked about idenfitying non compliance, obtain suffiicient appropriate evidence, discuss with governance and consider resigning if this is not solved. talked about confidentiality so reporting to regulatory body due to the laws and public interest. what do you think? :( not hopeful at my end here

madisonaubin I am talking about q4 part c ethics, q5 I did write emphasis of matter paragraph, also wrote communicate to those charged with governance and management , if still not resolved then emphasis of matter paragrah . I dont know why wrote it could question integrity of management if they do not disclose a note and further audit procedures should be performed . If further problems then exercise right to heard in shareholder meeting take legal advise consider resigning . there was no quality in my answer all mixed . I hope above points might be valid .

Thanks :) Q4 I did calculate materiality for the actuarial valuation $105k / $35m = not material. But now I'm worrying that I may have used the total assets figure of $35m given for part a) or even b)....so not relevant to the company in c)....doh!!

there were 2 figures given one for plan assets and one for plan liab, but don't know how mateliality of plan liab could be valid based on plan assets . there might be some other reason for that

I write that the actuarial valuation could be done by a separate team. Considering the immaterial nature of the balance this would be allowable. Fees from the combined audiit and acty services cannot exceed 15% of the total audit fees.

i was in the impression that you can't provide non audit services to listed clients.

I think that with regards to Qs4 c, they were right to get the company to offer them assurance services to calculate the defined benefit plan as this has to be done by an Actuary. It was not material to the accounts, however only one audit partner could do this calculation, so who is going to check his work, especially as complex calcs? Also, even though he's a qualified Actuary, he is working as an Audit partner, therefore could be out-of-touch etc.

its all about time managmenttttttttt :(

Q1: Was difficult and lengthy but one ca say it was attempt-able. There were some key issues which were spotted. Q2. Was in simple words ridiculous. Quite a lot knowledge based at this level and then making it so lengthy as well. Q3. Did not read. Q4. Mixed feeling about this some stuff managed to write down but the time management forced to skip some easy bits. Q5. I though this was quite OK. Attempted most of it well. Overall i think it was a hard paper considering the difficulty level and time issues. Best of luck all for this and up coming exams for those who are supposed to be giving any other paper.