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QPluto(6/09)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › QPluto(6/09)

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • April 24, 2014 at 9:27 am #166078
    hasanali95
    Member
    • Topics: 239
    • Replies: 248
    • ☆☆☆

    In the answer to part b,the bpp kit says that because the directors have not disclosed the EPS figures cz they think it will be distorted due to discontinuing operations.
    So the auditor should issue an ‘except for’ report and quantify its financial effect-ie disclose the EPS figure!

    Is it really the auditors job to calculate an EPS figure for the AR?

    April 24, 2014 at 11:47 am #166095
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    The general principle to apply to any qualified auditors’ opinion is “state clearly the matter giving rise to the qualification and quantify where possible”

    The principle may be easier to understand when, for example, a client has failed to apply depreciation to assets with a finite life. In that situation, the auditor will calculate the amount and then state that the profit is overstated by $X, and the assets and the retained earnings are overstated by (cumulatively) $Y.

    Except for the matters referred to in the above paragraph, in our opinion ……

    OK?

    April 24, 2014 at 6:16 pm #166179
    hasanali95
    Member
    • Topics: 239
    • Replies: 248
    • ☆☆☆

    Yes,but with the EPS matter,is it really the auditor’s work to calculate the EPS adjusted for the discontinued operations or only the simple EPS?

    April 24, 2014 at 7:03 pm #166182
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    It’s part and parcel of the same point. The basic eps is required to be shown whether it’s affected by discontinued operations or not, as also is the diluted eps. If it’s a requirement, it’s a requirement and if the directors fail to do so, the auditors point out this breach of IAS / IFRS.

    Think of it in terms of the depreciation example I gave in my first response.

    I agree with you that it shouldn’t be the auditors that do the calculation and I sympathise with you in that it’s not within the normal ambit of an auditor’s responsibilities. But if you apply the general principle of “Quantify where possible” then I think you will see my point.

    The one area that I used to say was a requirement for auditors to remedy non-disclosure was in the matter of directors’ emoluments which are required BY LAW to be disclosed (in the UK) and, in the situation where directors were refusing to disclose, then the auditors had to remedy that deficiency.

    But I believe that things have moved on since those days. I find it hard to disagree with the BPP answer that you have quoted to me

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