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- April 18, 2020 at 1:01 pm
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.
April 20, 2020 at 8:11 am“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.
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