*** P7 June 2015 Exam was.. Instant Poll and comments ***

I found the keeping the volume of writing under control to be the main challenge. With such a ethics/qc focus there was plenty to write about.

Quite surprised when i opened the paper…. close to half the marks were there to be had for qc/ethics and prof secpticism.

Can only say the same as leodjakovic… fair paper…if i didnt pass it was focus/time managment or being too vague in my responses. Time will tell.

professional scepticism – was on technical updates on ACCA website
audit quality – was on technical updates on ACCA website

No real surprises except for Q5 part a for 8 marks – you needed to know about construction contracts

Any failure will be down to me not putting enough effort in or poor time allocation across the 4 questions

I wish the exam could be better

Easy if I had practiced enough, which I did not so… I am not sure what to expect

time pressure was crazy!!!!!!

@snowia said:
Paper didnt went well for me. It was very lengthy.Even though all topics were as predicted but scenarios were too much difficult.and relating topics to scenario was very difficult and time consuming.
Audit risks part, IAS33, analytical procedures given calculated,ethics question required a huge amount of information. Even isa 240 relation to scenario.
Unusual paper it was I must say..

Totally agree with you.

This examiner I believe was not so fair in this sitting. She tested too much accounting knowledge of P2 and F7. I mean the whole paper had accounting standards. Time pressure was crazy. How does she expect us to write explanations when there is so much to do? Question four scenario was very odd. Hoped for better. IAS 11 is going to be kicked out soon. Why bother even testing it?

Fingers crossed. Praying to pass this time.

I am very disappointed 🙁 Wish I never chose ACCA seriously.

I thought it was a fair paper. Time pressure was extreme. It’s impossible to answer everything in depth given the time constraints.

Professional scepticism well tipped as well as ICQ1.

Lengthy paper…full of tricks.

In my opinion, the paper was very fair, provided one had a very sound knowledge of the financial reporting topics covered in Papers F7 and P2, in particular for Q2. Having said that, I still missed out on time management and only managed to complete 90% of the paper, mainly due to the level of detail I wrote for audit risk in Q1 (where I had an overrun of – wait for it – 30 mins!)

QUESTION 1
Part (a) on matters to consider when developing the audit strategy for an initial audit engagement

When I read the requirement, I immediately thought of ISA 510 but then changed my mind and discussed the following 6 issues (for 6 marks): business risk and strategy, internal control, accounting policies, nature of entity, measurement of performance and legal, regulatory and other extrnal forces.

Part (b) on audit risks:
I identified 12 risks (not sure whether 1 risk carries 1.5 or 2 marks because the marking schemes are not consistent) for 17 marks.
The risk in relation to the licence was quite tricky – I discussed that as per IAS 18, the income derived from the sale of the licences should not be deferred since Ted transferred the risks and rewards upon sale.

I also discussed a risk re related party transactions since the family of Dougle (or whatever his name was) held 30% of the equity shares, but I doubt this is relevant.

Part (c) on procedures re portfolio of short-term investments and EPS:
Found some probles coming up with procedures for EPS (especially because by this time I was well into the second hour of the exam), but I thought about obtaining tax charge since earnings figure was based on profit before tax.

Question 2
Part (a) (i) on sale and leaseback transaction:
Here I discussed both sale and finance leaseback and operating leaseback, since one of the conditions was that the client could repurchase the complex at the market value at that time at the end of the lease term (which was equal to the useful life) – I doubt whether this is relevant, however.

Part (a) (ii) on subsidiary not consolidated:
Discussed issues of control, and also went into impairment of subsidiary in parent’s individual FS as the subsidiary made a loss.

Part (b) on laws and regulations:
Wrote some points about ISA 250 and recommended the auditors should first understand the issue, discuss with those charged with governance, consider confidentiality if they feel they should report due to public interest and seek legal advice. Also identified the intimidation threat, but I don’t expect more than 4 marks out of the 9 at hand.

QUESTION 5
Part (a) on construction contracts:
Discussed briefly the non-compliance with IAS 11 and went on to discuss that audit report should be qualifed “except for” due to a material misstatatement which was not pervasive – brief answer due to time pressure so I only expect 3 marks out of 8.

Part (b) on contingent liability:
I discussed that the auditor should first seek legal advice from its own lawyer since the assessment as payment of fine being ‘possible’ was coming from the client’s lawyer. I was not sure about this scenario but I faintly remembered that one of the uses of an emphasis of matter paragraph was to highlight exceptional litigation, so I issued an unqualified report with EOM. Then I explored the scenario whereby the advice was wrong and that the $40m had to be paid, which brought about a significant doubt on going concern given that the client only had cash of $3m, although then I discussed the fact that the client had sufficient assets ($340m I think) which could be liquidated.

Part (c) on material inconsistency:
I discussed that if the misstatement was in the integrated report, an ‘other matter’ paragraph would suffice, but if the misstatement was in the FS, a qualified “except for” would be issued.

Over all, I think I messed up in this question and I think I only managed to pick up 7 out of 20 marks.

QUESTION 3
Only attempted part (a) and part (b) (ii) – 10 marks in total – on professional skepticism and the audit of impairment of goodwill. Hopefully I managed to get 5 marks.

I just wish I managed to scrape through! I hope the extra time I spent on the first question pays off. :S

1. a) don’t know what to write, so i explained what is audit planning and audit strategy, and write about what need to be considered during planinng – so write about the ICS, nature of business, risks, materiality, laws and regulation.

1. b) Audit risks, i don’t expect to get marks for the forward contract and also short term investment, as i don’t even know the correct accounting treatment, then how to explain the risk? So my risks are capitalisation of licence, revenue recognition from online sales, amortisation of licence, retranslation of oversea sales, split between equity and premium, new audit client, opening balances, capitalisation of development cost of games, and the rest im not sure whether it is a correct classifying it as audit risks, so keep it for myself. lol.

1. c) i don’t even know whether i got the procedures right, but i tried my best using the word inspect, confirmation, written rep, disclosure checklist, enquire, ap, recalculate etc…

2. a)i) sale n leaseback, similar to one of the pyq J13. hopefully could answer this well.
2.a)ii) subsi treated as associate, i think no pyq on this, but it is manageable.

2.b) ISA 250! straight away write that on the answer booklet to secure the 1/2 mark and generally discussing responsibility of management n auditor with regards to laws n regulation, lol. and also with some comment on objectivity n intimidation.

3. did not attempt question on professional scepticism cause i’m not sure about the forensic part.

4. From the article audit quality, the scenario is also similar to the one in the article, hopefully secure good marks here to pass the paper.

5.a) this question was a mess, i start reading this question 25 minutes before the exam ends, so everything was rushed, up to some point my handwriting goes up to 2 lines. construction contract ias 11, say company should recognise for 7 months, since the project start from july, and company year end is 31 january,

if not then AR modified, qualified. n basis for qualified.

5.b) provision. ias 37, n contingent liability, adequacy of disclosure, so if inadequate, qualified opinion.

5.c) material inconsistency, OM paragraph, but i did not write this in the answer booklet. I REALLY HATE IT when the invigilator always starts with you collecting the answer scripts, and i don’t have any extra time to write, meanwhile others are still writing securing that last bit of passing marks, in order to keep them from drowning, urgh, hopefully not answer this easy 6 marks wont reduce my chance to pass.

Q2 Q4 and Q5 was ok. Q1 im hoping for at least 18/35 inorder to pass the passing mark for this question(provided that other questions also secure half of the marks)

time to focus on P6 on friday. but taking some rest for today and start revising for p6 tomorrow.

I think gross profit was overstated because the previous owners were worried about a share price decline if the institutional investors saw a bad performance.