FAE September 2012

chursy

mrduffy wrote: »

any ideas what I should study to help me pass i seem to be bombarded with notes and tax material takes a bit of time more than financial so much done, so much to do i am forgetting what i am doing as well what should i do ?

I have switched to cases now - they are even more scary - do that now sooner the better I would say and keep one subject going on the side once you have finished tax may be.

Cliona2012

Hi,

Core Sample paper solutions at this link:

http://students.charteredaccountants.ie/Student-Information/Courses/New-Syllabus/Sample-Papers--Solutions/FAE-Sample-Papers-and-Solutions/FAE-Core-Sample-Papers/

ferike1

Did anyone go to the Mock review session? I was unable to attend.

Anything worthwhile said?

Jame Gumb

There's another one on Wednesday (in Dublin). Could you go to that?

The session was good in my view. Main message I took was that students did extremely badly in Performance Measurement.

FYI 2 (yes, two) people passed the FAE Core Mocks in 2010 and 5 (yes, five) passed in 2011. That's out of circa 1,500 people.

ferike1

Jame Gumb wrote: »

There's another one on Wednesday (in Dublin). Could you go to that?

The session was good in my view. Main message I took was that students did extremely badly in Performance Measurement.

FYI 2 (yes, two) people passed the FAE Core Mocks in 2010 and 5 (yes, five) passed in 2011. That's out of circa 1,500 people.

Cheers man, will put extra focus on PM. I am actually studying in Budapest so no go. Which part of PM? Fin a/c or Mgmt accounting or both?

Jame Gumb

ferike1 wrote: »

Jame Gumb wrote: »

There's another one on Wednesday (in Dublin). Could you go to that?

The session was good in my view. Main message I took was that students did extremely badly in Performance Measurement.

FYI 2 (yes, two) people passed the FAE Core Mocks in 2010 and 5 (yes, five) passed in 2011. That's out of circa 1,500 people.

Cheers man, will put extra focus on PM. I am actually studying in Budapest so no go. Which part of PM? Fin a/c or Mgmt accounting or both?

Both to be honest.

IAS 2 question in the cabins questions was horrendously answered per Paul Monahan...as in corrector thinking "this student's a clown...we cannot pass him".

The provisions stuff in the Redemptoria question was poorly answered too per PM.

The "should they take the car dealers gig" in the Comp paper was bad too.

Come to think of it, I think Paul said one of the sessions might be online...have a look.

On the plus side, indicator spotting was very good relative to last year and business leadership was good.

AAFRP results bad vs last year (by 10-15%) so Performance Measurement a real concern is the key message.

ferike1

Yeah as stated previously the car dealer thing was contribution per limiting factor. Completely missed that! lol

That C in PM is worth gold to me at this stage!

TBH though, doing other cases has been okay! I don't know if these cases are easier or the mocks were harder or what.

chursy

Lads

I am just going through JOnes Fine Furniture Case study - Corporate Finance service is being provided in this question to the company despite its an audit client - Agreed that none of the factors are present that would make the auditors not provide this service - However in the answer it begins the discussion with by saying because its an unlisted entity hence we can provide the CF services? i have just go through the appropriate paras in ES5 and no where it mentions that we can offer CF services to an unlisted client only !!! I am a little confused now can someone help me here?

ferike1

I thought as long as there was no self review, management and adovacy threats it makes no difference whether the client is listed or unlisted?
As long as we don't do the stuff as per paragraph 109

chursy

ferike1 wrote: »

I thought as long as there was no self review, management and adovacy threats it makes no difference whether the client is listed or unlisted?
As long as we don't do the stuff as per paragraph 109

precisely my point! i dont think it matters whether its listed or not listed - as far as none of the threats are compromised rightly mentioned by yourself

ferike1

Could just be a mistake. Seems to happen occasionally. Like in the Mechelec case I mentioned earlier.

zabaleta5

Hi guys,

Been following this thread for a while - need a huge favour from a kind soul.

I had all of the pre Xmas notes saved down on my laptop that has since combusted just wondering whether someone could possibly upload the tax notes for the first 4 sessions?

I'd really appreciate it. Cheers

An Citeog

zabaleta5 wrote: »

Hi guys,

Been following this thread for a while - need a huge favour from a kind soul.

I had all of the pre Xmas notes saved down on my laptop that has since combusted just wondering whether someone could possibly upload the tax notes for the first 4 sessions?

I'd really appreciate it. Cheers

They're all up here: http://students.charteredaccountants.ie/Student-Information/Courses/Course-Timetables/

It auto logs me in there, so if that doesn't work, let me know and I'll upload them here.

zabaleta5

That's brilliant, thanks so much.

Chalk_Farm

ferike1 wrote: »

I thought as long as there was no self review, management and adovacy threats it makes no difference whether the client is listed or unlisted?
As long as we don't do the stuff as per paragraph 109

But does it not say on ES5 paragraph 77 a that for an audit firm to provide valuation services .... "The audit firm shall not undertake an engagement to provide a valuation to : (a) an audited entity that is a listed company..." !!??

chursy

Chalk_Farm wrote: »

But does it not say on ES5 paragraph 77 a that for an audit firm to provide valuation services .... "The audit firm shall not undertake an engagement to provide a valuation to : (a) an audited entity that is a listed company..." !!??

Yes agreed - However it also mentions that Shall not undertake engagement where the valuation would have a material effect on FS - Now there is no mention of listed unlisted under the corporate finance services being provided.

Also for valuation services - its also not allowed for unlisted companies where it will involve a significant degree of subjective judgement and have a material effect on fs!!!

I agree with the previous point as far as the threats are mitigated, should be fine - I am not sure if this is due to the listed unlisted thing! :S

Chalk_Farm

chursy wrote: »

Yes agreed - However it also mentions that Shall not undertake engagement where the valuation would have a material effect on FS - Now there is no mention of listed unlisted under the corporate finance services being provided.

Also for valuation services - its also not allowed for unlisted companies where it will involve a significant degree of subjective judgement and have a material effect on fs!!!

I agree with the previous point as far as the threats are mitigated, should be fine - I am not sure if this is due to the listed unlisted thing! :S

I haven't actually read the said case...you saying that there is no mention in the case as to whether Jones is listed or unlisted??

chursy

Chalk_Farm wrote: »

I haven't actually read the said case...you saying that there is no mention in the case as to whether Jones is listed or unlisted??

No i am saying that the solution suggests that because its an unlisted company hence we can provide corporate finance services, which to me doesn't make sense at all as its not mentioned in ES5 that corporate finance services can be provided to unlisted companies. However it says when you cannot provide the services which in this case are not present in any case.

Chalk_Farm

chursy wrote: »

No i am saying that the solution suggests that because its an unlisted company hence we can provide corporate finance services, which to me doesn't make sense at all as its not mentioned in ES5 that corporate finance services can be provided to unlisted companies. However it says when you cannot provide the services which in this case are not present in any case.

Gone through the APB again, agree with you! Its odd alright - maybe the Institute know something that APB don't

ferike1

Chalk_Farm wrote: »

But does it not say on ES5 paragraph 77 a that for an audit firm to provide valuation services .... "The audit firm shall not undertake an engagement to provide a valuation to : (a) an audited entity that is a listed company..." !!??

That is true but I went with Corporate Finance services which in the APB book is separate to Valuation services.

Anyway, moving on, let us unite against the institute! Does anyone have a good way of preparing for mgmt accounting? The MABF book is waaaay too technical. Just specifically mgmt accounting. SFMA toolkit?

Mavic09

Just a quick question on approach to the study.

I've intended to spend this month revising material (this has involved doing a nominal amount of cases from the toolkits) and the following month on doing cases (the 50 or so in that Excel sheet + Past Actual and Mock exams).

Is this most people's approach? Is anyone finding the revision really time consuming? I'm thinking of bailing into the cases now and trying to revise the material maybe two days a week till the middle of august? Have repeats students on this thread any strong views on this?

@Ferike1- the finance book (Ann Marie Ward's T.Book), the challenging questions at the end of the chapter (usually only 3 typically) I felt were a good way to revise finance. Also, I think the single competence MA cases in the FAE toolkit are still the way to go. If you come across a better way be sure an let us know!

chursy

ferike1 wrote: »

That is true but I went with Corporate Finance services which in the APB book is separate to Valuation services.

Anyway, moving on, let us unite against the institute! Does anyone have a good way of preparing for mgmt accounting? The MABF book is waaaay too technical. Just specifically mgmt accounting. SFMA toolkit?

I am planning to go through the lectures which are online - There will help you revise alot of the management account CAP1 stuff - then top it up with reading a few chapters on divisional performance etc may be. SFMA toolkit may be for management account aspects - The cases brush up alot of finance/Valuations/Sources of Finance - i would place reliance on these i would say.

chursy

Mavic09 wrote: »

Just a quick question on approach to the study.

I've intended to spend this month revising material (this has involved doing a nominal amount of cases from the toolkits) and the following month on doing cases (the 50 or so in that Excel sheet + Past Actual and Mock exams).

Is this most people's approach? Is anyone finding the revision really time consuming? I'm thinking of bailing into the cases now and trying to revise the material maybe two days a week till the middle of august? Have repeats students on this thread any strong views on this?

@Ferike1- the finance book (Ann Marie Ward's T.Book), the challenging questions at the end of the chapter (usually only 3 typically) I felt were a good way to revise finance. Also, I think the single competence MA cases in the FAE toolkit are still the way to go. If you come across a better way be sure an let us know!

Jump on to cases chief straight away! and then fill the gaps i would say - there are 33 odd cases alone for 2010/2011 and 20 cases for 2012 - then you have all the past papers/mocks/sample papers as well. Alot of the stuff you will revise as you are going along and pick up alot of stuff from the cases as well! they are time consuming !!

chursy

how is the terminal value calculated in mechelec ltd?

Also for the Free cashflow, why do they deduct depreciation from EBITDA? A little lost on the EBITDA relation with the DCF approach? can someone will help explain this?

faer2203

Does anyone remember what sean murray mentioned in auditing on the unexaminable ISA's? I had it written down but can't find it,

Thanks

ferike1

chursy wrote: »

how is the terminal value calculated in mechelec ltd?

Also for the Free cashflow, why do they deduct depreciation from EBITDA? A little lost on the EBITDA relation with the DCF approach? can someone will help explain this?

This is exactly what I was struggling with. It doesn't make sense. FCF is EBIT - taxes + depreciation - change in WC - capital expenditure.

For some reason they are taking depreciation as capital expenditure.

Here is a way of calculating terminal value. http://www.investopedia.com/university/dcf/dcf4.asp#axzz20zfTW600

chursy

Yes it assumes that depreciation is capital expenditure - The DCF formula that i have is
Net operating income +depreciation-taxes-change in working capital- investments ( projects).

I presume operating income is EBITDA - hence it doesnt make sense to deduct depreciation, should this be added?

Also when you apply the terminal growth formula i dont get 105,578 ( 15562(1.05)/(0.13 ( assumed wacc {wtf})- 0.05) - Please let me know if i am doing something wrong here?

ferike1

See there are two things there that don't make sense

EBITDA is earnings before interest taxes depreciation and amortisation. So if you have to add back depreciation you wouldn't need to with EBITDA because its already included.
And assuming depreciation is capital expenditure is just plain nonsensical. I gave up with it after that.

The only thing I see you doing differently is not discounting the terminal value back to PV.

chursy

ferike1 wrote: »

See there are two things there that don't make sense

EBITDA is earnings before interest taxes depreciation and amortisation. So if you have to add back depreciation you wouldn't need to with EBITDA because its already included.
And assuming depreciation is capital expenditure is just plain nonsensical. I gave up with it after that.

The only thing I see you doing differently is not discounting the terminal value back to PV.

I get 110,704 after discounting it and then you add the 47,222?

Actually didnt even take the interest which is addes in the solution - i simply took the tax and increase in WC away and discounted everything?

Can you show me how you are calculating the Terminal value?

ferike1

FCF = EBIT(1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - Capital Expenditure

Read more: http://www.investopedia.com/terms/f/freecashflow.asp#ixzz20zqOl6LV

Don't even know why they are adding back interest. I got the same terminal value formula as you.

I need to find my solution, its in a pile of papers, I was just looking at the amended solution and was getting confused as hell because it didn't make sense, sorry chursy.

I think the lesson to take from here is to explicitly state your formula. Because for example gearing could be
Debt/Equity or Debt/Equity + Debt, I have seen different formula's for capital employed and FCF and what have you. So best is just to explain what you are assuming and go with that.