FAE September 2012

faer2203

Hi all, question on pension schemes, just on page 65 of the tax books, it mentions the tax limits of pension contributions. It says that the age and earnings limit apply for sole traders paying into PRSA/personal pension plan and for personal contributions made by an employee/director to a corporate pension plan.

They are always on about the advantage of pension plans in companies rather than sole traders. I just don't see the difference between the two if they say that above, is it revenue approved only ones that have the advantage of no restrictions?

If anyone knows more could they let us know, so confused!!

Thanks guys!!

Saint Sonner

7upfree wrote: »

Quick question. For the exam is it just our student number is our exam number or have the institute sent out a letter with an exam number on it. I know for cap 2 we had an exam number different to our student number.

I vaguely remember getting something about where the exams were going to be on but can't find the letter anywhere.

You should get an exam number. I think they are to send it by e-mail today afaik I haven't checked my account yet.

7upfree

Saint Sonner wrote: »

7upfree wrote: »

Quick question. For the exam is it just our student number is our exam number or have the institute sent out a letter with an exam number on it. I know for cap 2 we had an exam number different to our student number.

I vaguely remember getting something about where the exams were going to be on but can't find the letter anywhere.

You should get an exam number. I think they are to send it by e-mail today afaik I haven't checked my account yet.

I just got an email about it there now. That's kinda weird but atleast I have it. Thanks :-)

Dee29

faer2203 wrote: »

Hi all, question on pension schemes, just on page 65 of the tax books, it mentions the tax limits of pension contributions. It says that the age and earnings limit apply for sole traders paying into PRSA/personal pension plan and for personal contributions made by an employee/director to a corporate pension plan.

They are always on about the advantage of pension plans in companies rather than sole traders. I just don't see the difference between the two if they say that above, is it revenue approved only ones that have the advantage of no restrictions?

If anyone knows more could they let us know, so confused!!

Thanks guys!!

The company can pay in additional top up contributions subject to certain limits and get tax relief on this (must physically pay it - not allowed on an accruals basis). A sole trader does not have this option available to them. If the co's pension contributions (regular or top up) are accrued and not paid over need to add back and ensure to account for a deferred tax asset.

okdune

I wish I was an auditor before these exams - as audit just boggles me totally.

Could I please ask and audit swot what key topics I should have covered - broadly speaking. I have so many notes and have read the book from cover to cover - but pointers as to the key areas would be so so appreciated.

Terrified of falling down in audit.

Thanks so much.

Happy to help anyone on the Finance side of things in return!

okdune

Username2011 wrote: »

Finance

Guys I am struggling a lot with co. valuation and investment appraisal.
It seems that every single question has a different approach to valuing it. Would you have any advice

Luckily when it comes to valuations it is not a specific art if you see what I mean. There would be rather a lot of flexibility to a solutions I would imagine given the subjectiveness of any valuation as long as your assumptions are backed up.

What exact problems are you having?

I'll do you a audit vs finance trade off - I work in corporate finance - so stuffed when it comes to audit. Its like Latin to me.....

thetrainee

For Audit I reckon the main areas will be Fraud, Going Concern, Identifying risks, Internal controls and Ethics. And know in each of these areas how to link to Directors duties/Corporate Governance.

Have ye printed the PQA's? Don't recommend reading them from cover to cover but getting an idea of what they cover as the can provide very helpful guidelines across the board!

If doing the elective, pre engagement procedures, reporting to third parties, and need to know audit reports inside out!!

I am extremely open to suggestions and constructive (:P) criticisms on my suggestions.

Eiriu

Noni Goggins wrote: »

Lads, you all need to lighten up a bit in here. <Mod Snip- Unnecessary comment>

Regarding the query on the Swap in Active Health, the reason that they want to swap even though the have a comparative advantage at both fixed and floating rates is because there's no point having a comparative advantage if you can't crystallise that advantage.

Entering into the swap arrangement with Horton results in Horton subsidising some of Active Health's borrowing costs but they're more than willing to do this because they also derive a lower overall interest cost as part of the transaction.

It should be noted that the actual figures used in the sample paper solutions contain some typo errors so that could be what's causing some confusion for people also.

The error in the solution relates to Active's net borrowing cost following the swap. In the solution this works out at 6% net but should in fact be 6.05%.

Active Health can borrow floating at LIBOR + 0.5% (ie. 6.25% given that LIBOR is currently 5.75%).

They 'gain' 0.2% from the swap arrangement, with Horton getting the other .05% after the bank's commission. Therefore their net cost is LIBOR (5.75%) + 0.5% - 0.2% = 6.05%.

In summary, Active Health want to have floating interest rates but have a higher comparative advantage over Horton at fixed so they borrow at fixed and enter into the swap. This crystallises a gain of 0.5% which is reduced by 0.25% by the bank's arrangement fee so Horton and Active Health have the other 0.25% to split between themselves. Since it states in the question that Active Health must save 0.2% from any swap arrangement then they take 0.2% and Horton take 0.05%.

I've done a lot of rambling there but you should be able to make sense of some of it. There's a reason I'm an accountant and not a teacher!

This is a good explanation, the typo put me off. However apart from mechanics of the swap in the question it states that Active health are worried about interest rate risk. If this is the case why would they swap a fixed rate for a variable rate?

Eiriu

Noni Goggins wrote: »

Lads, you all need to lighten up a bit in here. <Mod Snip- Unnecessary comment>

Regarding the query on the Swap in Active Health, the reason that they want to swap even though the have a comparative advantage at both fixed and floating rates is because there's no point having a comparative advantage if you can't crystallise that advantage.

Entering into the swap arrangement with Horton results in Horton subsidising some of Active Health's borrowing costs but they're more than willing to do this because they also derive a lower overall interest cost as part of the transaction.

It should be noted that the actual figures used in the sample paper solutions contain some typo errors so that could be what's causing some confusion for people also.

The error in the solution relates to Active's net borrowing cost following the swap. In the solution this works out at 6% net but should in fact be 6.05%.

Active Health can borrow floating at LIBOR + 0.5% (ie. 6.25% given that LIBOR is currently 5.75%).

They 'gain' 0.2% from the swap arrangement, with Horton getting the other .05% after the bank's commission. Therefore their net cost is LIBOR (5.75%) + 0.5% - 0.2% = 6.05%.

In summary, Active Health want to have floating interest rates but have a higher comparative advantage over Horton at fixed so they borrow at fixed and enter into the swap. This crystallises a gain of 0.5% which is reduced by 0.25% by the bank's arrangement fee so Horton and Active Health have the other 0.25% to split between themselves. Since it states in the question that Active Health must save 0.2% from any swap arrangement then they take 0.2% and Horton take 0.05%.

I've done a lot of rambling there but you should be able to make sense of some of it. There's a reason I'm an accountant and not a teacher!

This is a good explanation, the typo put me off. However apart from mechanics of the swap in the question it states that Active health are worried about interest rate risk. If this is the case why would they swap a fixed rate for a variable rate?

ferike1

No that is good. Audit is very much linked to good CG so you are covering two things there.

I just hope construction contracts dont come up. They always differ from the examples in the books and I never get them right.

okdune

thetrainee wrote: »

For Audit I reckon the main areas will be Fraud, Going Concern, Identifying risks, Internal controls and Ethics. And know in each of these areas how to link to Directors duties/Corporate Governance.

Have ye printed the PQA's? Don't recommend reading them from cover to cover but getting an idea of what they cover as the can provide very helpful guidelines across the board!

If doing the elective, pre engagement procedures, reporting to third parties, and need to know audit reports inside out!!

I am extremely open to suggestions and constructive (:P) criticisms on my suggestions.

Thanks a million. I've covered all that and audit reports. I never know if I am writing jibberish though!

What are the pqa's? God is that a real dumb ass question? I hate studying audit!

Szewinska

Szewinska wrote: »

Hi All

For what now seems like my daily post in a request for help on my problem

Mocks 2010

Comp Paper Indicator 6

For the IAS 11 solution, why is revenue of only 5m recognised. I think the costs are 5m as its 50% complete.

Now Ok

Second problem

Mocks 2010 again

Sim II Indiator 2

Probably being a bit too fussy on this but its niggling me. At the end of the second tutorial note it mentions that if 166k was paid for the shares that the CAT liability would be eliminated. How does one work that out.

Anybody look at this in their studies???

princesslolly wrote: »

My last post was actually meant to be about the Daymoo case and Vortech case, does anyone know where to get them? thanks a mill

Anybody locate these. Even what paper are they from?

thetrainee

PQA's are Procedures for Quality Audit. They used by smaller firms to format their audits, set out procedures for each area and give a list(not comprehensive but fairly close) of questions that an auditor must ask themselves bout that area in order to ensure they have ticked all the boxes! A student version is available in the core materials section.

okdune

thetrainee wrote: »

PQA's are Procedures for Quality Audit. They used by smaller firms to format their audits, set out procedures for each area and give a list(not comprehensive but fairly close) of questions that an auditor must ask themselves bout that area in order to ensure they have ticked all the boxes! A student version is available in the core materials section.

Of course, great I one from the guys in work. Thanks a million for the pointers!

Millyhow1986

Hi all, I was just wondering if anyone had any advice for study for management accounting? I've pretty much done the case studies but seriously worried bout man acc and the cases in the MABF book seem way too long and complex for something we might get asked

Any advice is greatly appreciated!!!

funkymonkey9

In Sutherland holdings (sim 2 in sample paper 1) in indicator 3,it says John will get interest as a charge relief on the loan to buy shares in the company,it then goes on to say that retirement relief is not available to the father on sale of the shares as it's not a trading company,so if that's the case,should interest as a charge relief not be available as it's not a trading company?how do they determine it's not a trading company also?it's a holding company with one trading subsidiary and one investment subsidiary?how do you determine if that falls into the category of a trading company?thanks

mrduffy

funkymonkey9 wrote: »

In Sutherland holdings (sim 2 in sample paper 1) in indicator 3,it says John will get interest as a charge relief on the loan to buy shares in the company,it then goes on to say that retirement relief is not available to the father on sale of the shares as it's not a trading company,so if that's the case,should interest as a charge relief not be available as it's not a trading company?how do they determine it's not a trading company also?it's a holding company with one trading subsidiary and one investment subsidiary?how do you determine if that falls into the category of a trading company?thanks

in my knowledge charge relief on interest is cancelled is this correct ?
in my knowledge it is an investment co like property rental so no trading

funkymonkey9

mrduffy wrote: »

funkymonkey9 wrote: »

In Sutherland holdings (sim 2 in sample paper 1) in indicator 3,it says John will get interest as a charge relief on the loan to buy shares in the company,it then goes on to say that retirement relief is not available to the father on sale of the shares as it's not a trading company,so if that's the case,should interest as a charge relief not be available as it's not a trading company?how do they determine it's not a trading company also?it's a holding company with one trading subsidiary and one investment subsidiary?how do you determine if that falls into the category of a trading company?thanks

in my knowledge charge relief on interest is cancelled is this correct ?
in my knowledge it is an investment co like property rental so no trading

The case is set in 2009 so relief is still available,the shares in the holding company are being sold,one of it's subsidiaries is a rental company so yeah not a trading company,the other subsidiary is a property development company so is developing and selling properties so is a trading company,most of the revenue in 2009 is being made in the investment company so would that mean that the group would be considered non trading overall?therefore the interest relief shouldn't be available?

supernova84

ferike1 wrote: »

I just hope construction contracts dont come up. They always differ from the examples in the books and I never get them right.

The AAFRP book sorted me out with constuction contracts. Just follow that layout and you'll be grand.

chursy

Accrual Intentions wrote: »

This is a bit of a stupid insignificant question but one of those things that is bugging me nonetheless.

In the actual exam, what are people doing in terms of planning/rough work?

For the mocks and in general I always did my planning on my own rough pieces of paper but I've realised now that this may be stupid as you're not showing the examiner that you planned the answer and also the examiner might pick something up from your plan that you didn't put in the answer.

So I've decided, apart from rough sheets of paper I'll use during the reading time, everything else that I do will be in the answer booklet. But how should this be presented? Before each case study would you just have a page or two of your own fairly haphazard scribbles or something resembling a plan and then just write above it 'ROUGH WORK' or 'PLAN'? What way do you guys normally do that sort of thing?

What i am usually worried about is, the fact that you spend alot of time getting the information together/Planning the answer/ etc. Eventually may struggle getting things down in the report/memo properly within the prescribed time.

Something that i did for a comprehensive paper the other day was

While Reading the case
Picked up the indicators
wrote one line ( for the indicator) - Left blank spaces so i have like 8 indicators over 4 pages may be. So while I read the appendixes/other information provided I was putting down points that may be releventfor each indicator.

In the end you have all the relevent facts for each indicator at one place and you are not going up n down the case looking for facts to back up! something that you may have read somewhere! Many people can do that! i cant!

wheatser

Anybody got any samples of valuing a company using the CashFlow method. Cant find any anywhere?

Thanks

Millyhow1986

wheatser wrote: »

Anybody got any samples of valuing a company using the CashFlow method. Cant find any anywhere?

Thanks

Theres a discounted cash flow method in mechelec ltd

Flange/Flanders

Wow, I did Precision Cut there, what a ridiculous case study. 90 minutes, 5 indicators, some seriously long indicators as well and 2 fairly hard indicators, the performance management one and the working capital one. Feel a bit dejected now, I'm really hoping that that sort of sim is at the far end of the spectrum....if not its gonna be a tough 2 weeks!!

Username2011

Hi guys,

In sample paper 1, sim 1 Autoparking they are expensibg franchise costs which would normally be an intangible. There's no mention of it in solution. Any one else cone across this?

notanocelot

okdune wrote: »

I wish I was an auditor before these exams - as audit just boggles me totally.

Could I please ask and audit swot what key topics I should have covered - broadly speaking. I have so many notes and have read the book from cover to cover - but pointers as to the key areas would be so so appreciated.

Terrified of falling down in audit.

Thanks so much.

Happy to help anyone on the Finance side of things in return!

Every time there's a mention of a related party transaction, say that the firm will need to search for additional undisclosed related party transactions. ISA 550 is the one for that.

Every time a client proposes doing something wrong, i) explain why it's wrong with reference to the accounting standard/company law, ii) give the impact it'll have on the audit report if it's not adjusted.

Controls are huge and they always want lots of examples.
Here's a list of controls I typed up which I'm going to bring into the exam. For CAP 2 I had lots of photocopies from the book but it's quicker to read this way.

whytenc

notanocelot wrote: »

Every time there's a mention of a related party transaction, say that the firm will need to search for additional undisclosed related party transactions. ISA 550 is the one for that.

Every time a client proposes doing something wrong, i) explain why it's wrong with reference to the accounting standard/company law, ii) give the impact it'll have on the audit report if it's not adjusted.

Controls are huge and they always want lots of examples.
Here's a list of controls I typed up which I'm going to bring into the exam. For CAP 2 I had lots of photocopies from the book but it's quicker to read this way.

that list is actually very good thanks...will be printing that!

Out of interest, are pple quoting the IASs in their answers....Im not doing the audit elective so havent actually read the standards.....just know ES1-5 in detail-everything else comes from the book....got me through CAP2, hoping its enough for FAE!

Acc7777

notanocelot wrote: »

Every time there's a mention of a related party transaction, say that the firm will need to search for additional undisclosed related party transactions. ISA 550 is the one for that.

Every time a client proposes doing something wrong, i) explain why it's wrong with reference to the accounting standard/company law, ii) give the impact it'll have on the audit report if it's not adjusted.

Controls are huge and they always want lots of examples.
Here's a list of controls I typed up which I'm going to bring into the exam. For CAP 2 I had lots of photocopies from the book but it's quicker to read this way.

Thanks for post that, controls do seem to be asked often

chursy

whytenc wrote: »

that list is actually very good thanks...will be printing that!

Out of interest, are pple quoting the IASs in their answers....Im not doing the audit elective so havent actually read the standards.....just know ES1-5 in detail-everything else comes from the book....got me through CAP2, hoping its enough for FAE!

No need to quote stuff from the auditing standards like you need to do for the IFRS. This was clearly mentioned in the board report for audit elective 2010

notanocelot

whytenc wrote: »

Out of interest, are pple quoting the IASs in their answers....Im not doing the audit elective so havent actually read the standards.....just know ES1-5 in detail-everything else comes from the book....got me through CAP2, hoping its enough for FAE!

Start everything by saying "The relevant standard is ISA xxy." Even if you don't quote from it, you'll still have referred to it.

whytenc

chursy wrote: »

No need to quote stuff from the auditing standards like you need to do for the IFRS. This was clearly mentioned in the board report for audit elective 2010

havent gotten that far yet, but thanks