Related to Examiner Answer
Q3(a)
Salaries and other payment:
I. How the percentage of 8.5% and 9.4% as well as 4.1% being calculated?
Repayment of the bank loan
"therefore,the loan repayment event represents a material uncertainty which may need to be fully disclosed in the financial statements of Rope Co in accordance with IAS 1 Presentation of Financial Statements"
ii. This question is for Review of PFI(ISAE 3000) or part of the audit procedure(examine the GC status) to examine the CF forecast ? as I have a bit confused abt the requirement of the question, which if it's related to review engagement , the above paragraph will not necessary?
Further audit procedures
iii.The fifth one. What are the agreements in principle?
Thank you.
Ask the Tutor ACCA AAA
Sept/Dec 2016 Q3(a)
6y ago#1"While annual receipts from customers and payments to suppliers are forecast to rise during the forecast period by 8·5% and 9·4%, respectively, the amounts attributable to salaries and other operating payments are only forecast to rise by 4·1%."
So you should be looking at ANNUAL amounts and FORECAST period - e.g. receipt from customers (14,950 + 15,400)/(13,945 + 14,050) = 1.0845095 - i.e. 8.5% increase.
Remember to read the intro sentence/para to a scenario for context "a cash flow forecast covering six-month periods to 30 September 2018 as prepared by management as part of their assessment of the going concern status" - and read requirements carefully:
(a) ... further AUDIT procedures ...
(b) ... further AUDIT procedures ...
The context of this Q is entirely audit.
You should be able to find any number of descriptions of "agreement in principle" if you browse for it - but you should also be able to make a reasonable guess based on context - clearly it's not as much as a signed agreement - but it is more than correspondence. So essentially it is an agreement of terms (not necessarily all) to a contract.
Miss, related to part (i)
why the calculation of the forecast period is only considered for the period from 31 March 2018 to 30 Sept 2018 , how about the forecast y/e 2017 which is one year later?
Thank you.
6y ago#3I do not know what you mean. There is actual info to 30/9/16 and forecast info for two years to 30/9/18. The answer considers the two-year period.
"So you should be looking at ANNUAL amounts and FORECAST period – e.g. receipt from customers (14,950 + 15,400)/(13,945 + 14,050) = 1.0845095 – i.e. 8.5% increase."
refers to this part calculation
how about 14300 and 14700 for receipt from customer?
6y ago#5I have illustrated already how 8.5% was derived. If you cannot play around similarly with the numbers in the Q/A to see where they are coming from I suggest you ask a fellow student on the AAA forum. You will see in the answer that for receipts it considered 6 month comparison - for salaries, an annual comparison.
There are clearly alternative and equally acceptable answer points that could have been given - obviously what is important is to compare like with like.
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