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

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

<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>@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???

<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.

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

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

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

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

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.

asa

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

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