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

<cite>@c0olmat3 said:</cite> Q1 a. 24+4 /// 16+2 b. 7 /// 5 Q2 a. 13 /// 8 b. 12 /// 7 Q3 a. 8 /// 3 b. 7 /// 2 c.5 /// 2 Q5 a.7 /// 4 b.7 /// 0.5 c.6 /// 0.5 100 /// 50 :-P

The UK variant was different to this. It said Q1 - 31+4 marks. Q2 - 25 Marks Q3 - didn't do Q4 - 12 / 8 Marks Q5 - 20 Marks There was no breakdown of individual point allocation

The Irish version was the same Q1 31 marks & 4 professional Q2 25 marks Q3 12marks & 8 marks Q4 20 marks for 3 separate audit opinions Personally, the less said about this exam the better - my final exam and put everything into it, time pressure was immense. pulled of q1 after an hour - did 12 audit risks but missed easy ones too. did q4 and q5 ok. went back to q2 - did the plannin ok, but wrote little than a few lines for the forensic investigation (time pressure again) - and the bpp had a question identical to it - q1 in mock paper 1 and i knew it but didnt have time to bang it down in the paper. I have only myself to blame - tried my best to stay within time with each question but couldnt. its an exam that requires great skill in reading the scenario CAREFULLY and pulling from it the main things and then answering exactly what is required. I failed, simply to exam technique

<cite>@05008967 said:</cite> Analytical procedures normally take place before a year end and so projected draft statements are always required. The difference between forecast and projection as terms are negligible in under one year timeframe.

True, but if u see past exams, Examiner always used, Forecasts instead of Projections and both the terms has different meaning. so well, anyway, i made a point about projections being hypothetical estimates.. Lets see whats gona happen!

What analytical procedures were to be conducted in q1(a)??? Ratios??? What about q5(a) & (c)???

Hi owais875, The analytical procedures are ratios. You would have seen a trend in the cash (Liquidity ratios), that fell from .82 to .24 - indicating that they may not be able to pay their short term obligations when they fall due. This would also impact on the development cost being capitalized, as in order to do this, the company would have to be able to generate economic benefits from the asset which was not probable as they would not be able to have sufficient cash to continue the development of the product. In addition, you could calculate supplier and debtor days and would have seen the trend there too. Also, I spoke about the going concern issues that were triggered by the Low cash, aggressive competition and being highly geared (additional loan did not help out the cash problem). The risk for the audit: Financial Statements prepared as going concern and should have been prepared on a break-up basis. Not sure if I was right on this, but would welcome additional comments. Cannot remember question five???

Download P7 J13 questions: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/int/P7INT_2013_Jun_q.pdf

opentuition team thank u so very much for posting the exam questions link !! Q1 ( b ) ethics !! i was shocked that how can i do ethics question wrong !! everybody here is saying confidentiality issue and all that !! but did u guys missed the financing of the attractive acquisition by mgmt to firm ?? the mgmt threat / self review / self intrest / advocay !! every single threat was there. Thank God i screwed that Q1b ethics question !! mentioned IESBA code of ethics too .. close busienss relationship !!! YAHOOOOOOOOOO !!! again thanks for posting question link :)

The Paper wasnt hard even with little preperation I could answer the questions though I should have gone with my gutts in Q1 a) and did a few more ratio analysis. I calculated materiality there too lol at that time I just wanted to do everything. Audit risk part was easy as there were many things you could write about from the scenerio given plus I identified what kind of risk it was IH etc etc. b) was pretty straight forward it was related to due diligence request from the last paragraph I wrote and confidentiality as they might be giving us this task knowing that other company is our client. I in the end wrote it should be declined as the due diligence request would be material to the financial statement and it would lead to self review threat. Hopefully that was correct. 2 wasnt hard pretty straight forward plus if you looked at the revision kit there were many questions similar to this. b) was really bad I made the stupid mistake of not going over forensic accounting and stick with the tips. Wrote basic stuff in part i) and part ii) i dont even remember what I wrote now lol it was just a tooka. For the 3 question i calculated materiality and explained the audit evidence you'd expect from it though from reading stuff here I should have mentioned IAS relating to the problem. 4 a) was pretty easy if you remember F8 and P1. Pretty straight forward and easy marks to obtain here. How its the managements responsibility to detect fraud not the auditors though they did have a case with the statement by the partner but still the responsibility lies with the management. b) didnt write much here hoping to get atleast 3 or 4 marks didnt know much about it. Over all hoping for a pass, but I didnt write a lot

Hi again owais875, Regarding question 5 a and c: a: Accrual of $500,000 not in the accounts causing a misstatement of the Liabilities. Toy Co is in breach of IAS 37. The amount is material to the financial statements accounting for 25% of profits. An adjustment must be made in the accounts to reflect the probable liability and a corresponding note to the Financial statements describing the nature of the litigation, and the amount. Not adjusting the statements will result in a modification of the audit report. Including an "except for..." paragraph. c: Chairman's statement contradict's the financial statements. This is a breach of the standards-(can't remember the name of the IAS). However he Directors need to adjust/change the statement to reflect what is in the accounts. If you were to deduct the $1.44m (90% of $1.6m) from the revenue of $18m, the total revenue would now be $16.56 (approximately $17K), Which is the same as last year. In addition an increase of 20% would cause revenue to be $20.4M and not $18m. Therefore the Chairman needs to change the statement, as it is misleading the shareholders. If the statement isn't change the directors may need to inform those charged with governance or modify the audit report by including an "OTHER MATTERS" paragraph on this. Not sure if I am right, but this is what I wrote. Hope I scored something for that!!!

<cite>@skull said:</cite> i should b shot on head for blunder i made.. :/ can nyone tell me in Q1 other than the 23 marks part..wat was the other part and requirement of that part for i think 8 marks as i literally forgot that part nd wasted 8 marks straight :(..plz nyone tell me wat was the requirement of that part??.. Best of luck to all.

The second part of Question 1. b was Ethical implications that may encounter due to the advice on the acquisition of the beauty boost company. :)

<cite>@opentuition_team said:</cite> Download P7 J13 questions: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/int/P7INT_2013_Jun_q.pdf

I wish the question paper was accompamied by answers to give us a bit of relief

<cite>@hazelnuts said:</cite> Hi owais875, The analytical procedures are ratios. You would have seen a trend in the cash (Liquidity ratios), that fell from .82 to .24 - indicating that they may not be able to pay their short term obligations when they fall due. This would also impact on the development cost being capitalized, as in order to do this, the company would have to be able to generate economic benefits from the asset which was not probable as they would not be able to have sufficient cash to continue the development of the product. In addition, you could calculate supplier and debtor days and would have seen the trend there too. Also, I spoke about the going concern issues that were triggered by the Low cash, aggressive competition and being highly geared (additional loan did not help out the cash problem). The risk for the audit: Financial Statements prepared as going concern and should have been prepared on a break-up basis. Not sure if I was right on this, but would welcome additional comments. Cannot remember question five???

Any idea about analytical procedures marks???

@kuddus Yes its a lengthy paper indeed. I also tried to do 100% but i left 8 or 7 marks un-attempted. But I did attach an extra sheet this time lol But I think they should pass me this time. Lets hope we both pass this time. I.A.

<cite>@skull said:</cite> i should b shot on head for blunder i made.. :/ can nyone tell me in Q1 other than the 23 marks part..wat was the other part and requirement of that part for i think 8 marks as i literally forgot that part nd wasted 8 marks straight :(..plz nyone tell me wat was the requirement of that part??.. Best of luck to all.

I think it is about ethical issues that arise from part Q1(a)

<cite>@nagdam said:</cite> there was a question about subsequent event. Lol. My answer is the same as yours. Non adjusting event. Anyone did q4? =/ Does anyone know what it should be ? adjusting or non adjusting and why I put non adjusting because the matter of administration did not exist at year end.

could not complete in time. missed the financial instrument part completely. overall it was OK.

Lets see... So what i have read so far is: Q1: You have a pretty good chance to score some decent marks, say 25 to 28 marks out of a possible 35. (Although i have not shown the ratios calculations on the answer sheet, but on the Q paper) Q2: Part a went well, cant say for the b part because i had started to run out of time. So i would assume... 14- 15 ? Q3. I Suppose i may have made some normal errors when writing, but i did identify the IASs, the Materiality and the gave proper audit procedures as well as evidences. 12 to 14 i hope ? Q5.... Gotta be honest, this Question really took me down. Not only i was short of time, i missed alot of points in b and c. Gave entirely irrelevant answers in b and c, especially c. so lets say... 6 to 8. So if i mark myself according to what i think i may get, i SHOULD Score 54 to the lowest to 63 highest ? Then again, this is me. Hope the Examiner clears my paper !! I'll send her a thank you note ! haha

I found the paper somehow reasonable. Unfortunately, i attempted only 1 compulsory and three optional questions. It was due to 1) Exam stress and 2) Am new for the paper. Can any one tell me what would be my destiny? Do you think the marker will consider the issue?

this attempt was relatively easy,but there was time pressure,i did last question in just 20 minutes there shud b xtra provision or grace marks for pakistani students as we are facing 16 hours load shedding may GOD giv success to every one

<cite>@dagmawisol said:</cite> I found the paper somehow reasonable. Unfortunately, i attempted only 1 compulsory and three optional questions. It was due to 1) Exam stress and 2) Am new for the paper. Can any one tell me what would be my destiny? Do you think the marker will consider the issue?

dnt worry there r lotof my friend who attempt q1,n two optional questions n they were passed

a good paper questions 1 2 and 3 are just like the past papers. I just need to made time to study hard

The paper was very easy overall. The first question offers alot of easy marks. But i spend alot of time on ques 1 so had to rush through the rest of the paper and struggled to write sufficient in the last question. Still hoping to pass if get high marks in question1

Question 1 The non current asset may be overstated due to Misclassification of lease as finance lease intangible asset increased. This may be due to overstatement of dev cost considering company was experiencing finance problem to finance the cost (considered IAS 38 Intangible asset) Computed % increase in inventory. Then stated that the inventory may be overvalued since competitor had introduced a new product forcing prices down. Also economy was experiencing recession (Considered IAS 2 Inventories) it shud be written down from cost to NRV Computed receivable day stated that receivable may be overstated due to the recession. shud be written down to recoverable amount Provision had increased by 300 yet the provision shud hv bn made is 450. so may b understaed provision of 250 wrongly classified in cost of sale Going concern problem. account shud b prepared on break up basis. Risk of failure to disclose Internal control weakness. after the weakness was solved was another problem of segregation of duty coxz it was done by finance dept only, they may overstate their overtym Accounts been projection they r subjective hence prone to risk of mistatement. First tym audit bring about detection risk Additional information required lease agreement- determine whether is a finance lease Written statement by lawyer abt claim of 450 nt oral on the probability and amount likely Confirmation from Bank B Ethical issue Self review Self interest and confidentiality Safeguard Not accept audit use a different team for the work Question 3a Qualify as asset held for sale under IFRS 5 Shud b valued at lower of cost of cost and FV Less cost to sale i.e 24 Different of 2 (=26-24) should be expensed Shud be classified as non current asset nt non current Then discussed implication on report if not the case Evidence Enquiry from mgt a review of minutes review disclosure 3B Sales and lease back (IAS 17 LEASES) Different of 10=(37-27) Should be defered over 20 yrs Asset shud b classified as non current asset at lower of cost and PV of MLP Obligation shud b broken down b2n long term n short tem Depreciation shud nt b computed as it took place at the end of the year Evidence Test on physical inspection Review of lease agreement recomputition of PV of minimum lease payment 3C Distribution of licence Materiality computition Shud b capitalised as per IAS 38 (Intangible asset) Shud be amortized over 5 years. for curent yr i dd a computition Evidence Copy of licence Recomputition of Armotization Trace of payment to statement Can i score anything on the 2 questions. I will update the rest am frustrated with p7

Question 1 was tricky. They asked for Audit Risks but in the scenario they give a lot of Business Risk information. The paper was not hard but was extremely time-pressed. Hope I get a pass

Business Risks is different to audit risks. While Business risks looks at the way the risks have affected the company's ability to meet its goals and objectives, audit risks looks at the competency of the auditor, that is the auditor's ability to identify misstatements in the financial statements. Having said that, a business risks and knowledge of it, can help the auditor identify the misstatements. As the auditor will now conduct additional testing and procedures to identify the misstatements. Note too, that the auditor is not responsible for risks, that is mainly the responsibility of management, they are responsible for forming an opinion on the financial statements. In question one, when you identify the business risks, you now had to go a step further and understand how it would affect the audit, hence audit risks.

I am always amused when I get a question about the directors suing the auditors when the auditors did not discover a fraud when doing their auditing of the FS. The auditors always take the precautions to emphasize that it is the directors' responsibility to implement controls to prevent or detect fraud. If they failed in their responsibility how could they sue the auditors? Even if the auditors were inefficient in carrying out their audit.

asa

i donoe. i just hope fr the best

If you really want, the full question paper can be found here: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p7/exampapers/int/P7INT_2013_Jun_q.pdf )

How can the examiner think this paper have enough time to complete. If I have 4 hours then the exam was like super easy. I had to leave some of the points I knew just to jump to next question. And in that rush made some silly mistakes. Hope the marker keeps this in mind. Felt like giving theory of P2 more than P7.

dear all, can anybody help me out on the feedback the Way i approached the exam.. in q1 a i did analytical proceedures and went on to disscuss profitabilty, liquidity, ias 38 issues, opening balances, control defficiency. i went onto disscuss ias 36 since economuc conditioner were worstning but i After doing the exam i realized instead of wtiting assets to be impaired i wrote inventory , but the effect of impairment of understated profit i mentioned it corrwctly.. i hope examiner lenient on this... in b part i wrote that the due dillegence is allowable but the auditor should not b the principle advisor and they should not comment on figures other then audit report... i had to rush for other questions hence i stopped and move forward. q5 a) ... the first part i did materiality , disscussed 37 and effect on audit report.... b) i did said subsequent events . calculated materiality , profit impact and openion effect. c) chaiman statement disscussed inconsistency, should state in other matter paragraph...but here i realized that i wrote auditor should audit b/c it was so time pressured the words did not come to my mind... i cannot recall correctly but i wrote that the auditor should modify his openion bevause i was rushing ad i can go to other questions... i hope examiner takes the time effect marking.. q4) part a did the duty of care stuff and justified this to the scenario.. b) disscussed that fair value disscussion and accounting issues...did wrote hedging item and hedging instrument issues ... subjectivity issues ... q2) i realized that i had 20 mins and had to complete this 25marks, so i rushes and wrote in part a that disscussion with cliënts by juniors is unproffesional, payables and dffererd taz complicated ares, setting evidemce testing in advance not appropriate etc etc .. linked Isqc 1 where possoble.. for the part b) i rushed as i only had 7 minutes .. wrote matters to condider, identify fraud and rrport... for the planning part just waffled that how long fraud is talking place, the quontum of fraud etc etc.. these were all One liners as i had no time ... can U comment as to i have done sufficient to get 50?? m.really scared.;( .. praying to god and will welcome ur comments..