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Dear tutor,
Can I write that revenue recognition policy is wrong, so the impact can be material on the financial statements as they are recognising the revenue earlier i.e., the deposit and final payments are recognised as revenue when the cruise commences? The ACCA answer has not commented on the materiality.
Why the ACCA answer has not identify audit risks on “Social and environmental information” i.e., possible penalty on social and environmental reporting if it was found wrong later, lack of governance in the company on timely reporting to authorities as one month is remaining and they are asking the auditors to provide advise.
Thanks and regards,
Although AAA answers are pretty comprehensive they won’t specify every point that might be awarded credit. You will see from the marking scheme that marks for materiality are “capped” and I suggest are better used where there are numbers to work with. It’s really implicit in the identification of revenue recognition as a significant audit risk that misstatement would be material.
You could indeed have made an audit risk out of potential non-compliance resulting in fines/penalties to be recognised in financial statements for year ending 30 September 20X5.
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