FAE September 2014

jny107

Pretty nasty paper. Worst than last year by far. Will be interesting given the poor aafrp results who will get yellow on pm!
I struggled for time big time

Dreaming of sunshine

Paper wasn't the worst I've seen but I just didn't perform, nerves and timing killed me!

Mark1916

Completely messed up my time had 20 mins to do the imp and strategy indicator! Big day needed tomorrow to save any hope! Spent wayyyyy too much time on PM and audit

BigMawn12

I said SSE was best but could transfer assets without a group charge since decided as best solution by Chairman - didn't want to make an ass of the big guy. He had enough to handle doing CEO and chairman at the same time.

iwishihadaname

Was the disclosure required under IFRS5 for the disposal? Fair paper I think but nerves got the better of me.

vnervous

Made an absolute baLls of that . Panicked and couldn't calculate cost of option or forward so that's that indicator down the drain , ran out of time on tax. If a handy finance and tax ind don't come up tomorrow in gonezo!!! Also spent waay to long talking bout the onerous contracts on the leases of those loss making divisions !! FML!!

Debs23

What did peoe write for the transfer pricing. I left that out when studying and hoped it wouldnt come up!

applehunter

Debs23 wrote: »

What did peoe write for the transfer pricing. I left that out when studying and hoped it wouldnt come up!

Get a policy that would benefit Jennson overall. Got a bit mixed up.

Said it was an imperfect market situation and that they should evaluate divisions with a method other than profit measurement.

Tricky1979

Debs23 wrote: »

What did peoe write for the transfer pricing. I left that out when studying and hoped it wouldnt come up!

I had three for issues. Sale of immediate sub, onerous leases and ifrs 5 of Frenco future sub disposal. Anybody else ?

Nermal

BigMawn12 wrote: »

Finance - $ payment
Audit - disclosures and financing stuff
Tax - sell assets (or shares?)
IMP - website/online presence
PM - Transfer prices
BL - Corp Gov
FR - were you supposed to do something with the subsidiary disposal? Couldnt see where to fit it in and ran out of time so just did a wee appendix at the back with a goodwill calc and a couple of other things

What am I missing?

Disposal changed from a sub to associate? I waffled a bit about that, threw in a journal.
Corporate governance was grand I though - nothing on ethics.
Transfer pricing was an odd one - there were numbers but I couldn't do anything with them. Just gave a narrative answer.
IMP bit of waffle about collecting more info and using big data techniques to analyse, something like Tesco.
On tax I went for sell shares to avoid CGT & avail of participation exemption, not sure that was correct.
Audit - the draft disclosure is missing one of the payments required, there's no indication of how they will finance YE 2014 payment, auditors may ask to extend management opinion period to 2015, specific work associated with sale of sub, there was plenty there but I was rushed at that stage.
Finance I said take the option - it guarantees you almost bang on EUR20M which you need for your bank arrangement. If you don't hedge the likelihood is you'll get more than that but you can't take the risk.

Lot of scope for linking in there.

GR3YFOXXX

Made a dogs dinner of finance and audit. Could've done more on IMP and Strategy. Nerves and that finance indicator wrecked me.

iwishihadaname

Debs23 wrote: »

What did peoe write for the transfer pricing. I left that out when studying and hoped it wouldnt come up!

I just said the current way isn't working cos the negotiation strength of both parties weren't equal, as jennson had no choice but to buy from melbin. Then said the high cost was ultimately passed on to the customer affecting group performance as a whole. Recommended that group should set transfer prices, taking into account the pricing needing to be set at an arms basis under EU law.

arnie_ni

iwishihadaname wrote: »

Was the disclosure required under IFRS5 for the disposal? Fair paper I think but nerves got the better of me.

Yea, I calculated the gain on disposal, then talked about ifrs 5.

In the finance question. The rates were something like 1.45 - 1.48 or whatever, which one do you use? I just used the first one for both the forward rate and spot rate.

In the end, I said a forward contract was best

Debs23

applehunter wrote: »

Get a policy that would benefit Jennson overall. Got a bit mixed up.

Said it was an imperfect market situation and that they should evaluate divisions with a method other than profit measurement.

I said why the current policy wasnt working. A few advantages and disadvantages on negitiating policy and then said they should adopt marginal cost as there was no external market!

Is that wayyyy off?

Aidodub87

Tricky1979 wrote: »

I had three for issues. Sale of immediate sub, onerous leases and ifrs 5 of Frenco future sub disposal. Anybody else ?

Oh **** onerous lease never even thought of that?

Mark1916

iwishihadaname wrote: »

Was the disclosure required under IFRS5 for the disposal? Fair paper I think but nerves got the better of me.

I said if it wasn't sold by year end ifrs 5 and then made an attempt at the disclosures then after the date it would be treated under IAS28. Calculated the good will done the disposal calculations commented on the deferred consideration having to be at fair value under ifrs 3 and journals!

iwishihadaname

Aidodub87 wrote: »

Oh **** onerous lease never even thought of that?

I don't think that's a big thing as this was.a BL indicator? Like none of it happened yet, we were just looking at strategy. I think a mention added value to the indicator but not a requirement imo

applehunter

Debs23 wrote: »

I said why the current policy wasnt working. A few advantages and disadvantages on negitiating policy and then said they should adopt marginal cost as there was no external market!

Is that wayyyy off?

Sounds like a Competent answer.

We weren't given specific figures so it was more of a general discussion on the options available.

I think the rewarding of the division managers based on profit was flawed as well.

iwishihadaname

arnie_ni wrote: »

Yea, I calculated the gain on disposal, then talked about ifrs 5.

In the finance question. The rates were something like 1.45 - 1.48 or whatever, which one do you use? I just used the first one for both the forward rate and spot rate.

In the end, I said a forward contract was best

I had to check my notes, but I think it was the second rate. Also said the forward contract was the best. What did people say for IMP? Seemed kinda like a marketing indicator!

applehunter

I had 5 IMP points and 5 online marketing points.

applehunter

Based on today's exam can we rule out anything for tomorrow now?

BigMawn12

Didnt get down IAS 37 frig sake. Ah well. Sounds like time killed everyone. Got down a couple of audit standards and IAS1 just. Meh - load of balls. So hard to do a weeks worth of work in 4.5 hours. Nearly missed that the rental cost was included in the loss. Thought that was a bit sneaky the way it was laid out.

Tricky1979

iwishihadaname wrote: »

I don't think that's a big thing as this was.a BL indicator? Like none of it happened yet, we were just looking at strategy. I think a mention added value to the indicator but not a requirement imo

Prob a good pt. I didn't do a swot. Raging now.

iwishihadaname

BigMawn12 wrote: »

Didnt get down IAS 37 frig sake. Ah well. Sounds like time killed everyone. Got down a couple of audit standards and IAS1 just. Meh - load of balls. So hard to do a weeks worth of work in 4.5 hours. Nearly missed that the rental cost was included in the loss. Thought that was a bit sneaky the way it was laid out.

Oh god, missed the rental costs being included

Mark1916

Guys everyone missed something, if 70% of people included all these points if be very surprised, it's time to get the focus on tomorrow I know for me my timing needs to be better and i need a good BL and PM tomorrow so time to start getting the head right on what I can do and not what should have been done! Let's go kick some ass!

ashmcg9

S*it, I completely missed onerous leases and ifrs 5 of Frenco future sub disposal

suref

Tough enough exam..very time pressured but no point on dwelling. Don't think too much about it...everyone has made a bit if a bollix of it..need to move on now. I'm thinking 2 imp over the 2 tomorrow (thought today was more digital mkt), company valuation, internal audit, exec remuneration and a fairly big ethics (tried making an ethics answer out of taking shops out of a disadvantaged area but think I was clutching straws). Think we've been fairly hit with pm so would expect only one. Let's keep focused and do this!

arnie_ni

What did everyone say for the stores, I said close store 1 continue store 2 and 3 because the rental loss was more than trade loss. Also said if chance trf price they would appear more profitable. Also store 1 and one 5 mins away so was poor use of resources.

For cb I talked about fact it was listed company they are meant to follow code, comply explain, said need more ineds as some are independent. Said CEO and chairman shouldn't be same person, talked about the 3 committes, anything else?

lowenstein

so gutted missed the line about rentals included in the operating loss, such an easy thing just carelessness. also f*cked up accounting for disposal of sub as forgot they only sold 60% shares. Took the net assets €24m to be equal to 60 and recognised a loss

LOccitane

Said I wouldn't comment here but just had to after that Paper...

Consolidation was well flagged. IFRS 10, IFRS 3, IAS 28, IAS 1 were the relevant standards I thought. There was a replica question almost in the DC Book.

Finance - only calculated an effective hedge taking out a loan in US$ and investing locally in EUR and discussed other options.

Tax and Audit went well I thought. Audit GC disclosures, ISA 570, 705 and 706.

Destroyed the remaining 4 indicators. I had an hour left to do 4 of them.

Was reduced to just pointing out the evident breaches in CG - 5 I think. I treated IMP as a compound Marketing IMP indicator and don't think volume was sufficient. Had 10 mins for Transfer Pricing and concluded on a negotiated price but volume too low for C I feel and that's if the corrector can read my writing.

Overall, to produce consistently C answers I thought the volume was excessive. Timing was a disaster for me and has left me in a bad position for BL. I need to hit Green in BL tomorrow or I'm gone I feel just due to lack of time and volume as a result.

1 Finance, 1 IMP, 2 BL, 2 PM, 2 Audit and 1 Tax tomorrow?

Have a blinding headache after it all! Heartbreak when you don't have time to show what you know.

Did a really detailed plan however and I'm hoping that will also be considered..

Nermal

arnie_ni wrote: »

What did everyone say for the stores, I said close store 1 continue store 2 and 3 because the rental loss was more than trade loss. Also said if chance trf price they would appear more profitable. Also store 1 and one 5 mins away so was poor use of resources.

For cb I talked about fact it was listed company they are meant to follow code, comply explain, said need more ineds as some are independent. Said CEO and chairman shouldn't be same person, talked about the 3 committes, anything else?

Close 1, you'll save over the four years with additional contribution in the other store.

Keep open 2, cashflow positive over closing it and we need the money (though in retrospect, it's nothing compared to the 120M we're supposed to find, 60M of which we have no plan for. Close 3 for same reason.

Put in a lot of caveats as you say over the data, particularly transfer pricing - how much margin is MELBIN getting on their behalf? Not much to go on strategically, tried to link to the eCommerce indicator.

Mentioned the onerous contracts provisions but didn't have time to calculate.

The Little Fella

arnie_ni wrote: »

What did everyone say for the stores, I said close store 1 continue store 2 and 3 because the rental loss was more than trade loss. Also said if chance trf price they would appear more profitable. Also store 1 and one 5 mins away so was poor use of resources.

For cb I talked about fact it was listed company they are meant to follow code, comply explain, said need more ineds as some are independent. Said CEO and chairman shouldn't be same person, talked about the 3 committes, anything else?

No senior independent NED, supposed to meet with Neds annually, one of independent NED had a long association - review independence, majority of board weren't independent

lowenstein

could you pass with a yellow in BL? or do you have to hit green? or is it depending on the curve?

Nermal

The Little Fella wrote: »

majority of board weren't independent

I missed that one - took NEID at face value. M Conroy is MD of MELBIN and is not independent, right?

danko2012

FR - movement from sub to associate calculated profit on sale and laid out journals was unsure if required. Also ifrs5 and onerous lease.
BL - strategy review of the stores
BL - CG ran out of time on this so threw down about 3 points of ur man being CEO and Chairman and ur one being MD of the sub but on the board as a NEID?
Audit - struggled for time here but threw down the disclose note missing a payment and no mention of how they plan to raise 60m due and stated emphasis of matter in the audit opinion? As say was struggling time here
Finance - go for the option as it returns the 20million pretty much bang on and the futures was risky as no contract signed
Tax - advised them to try a share sale to avail of participation exemption? Scoured the book to see what there some other form of relief!
Imp - mentioned should try club cards and loyalty cards as a way of gathering data and hire a specialist or outsource work to people who can collate this data for them to improve website.
PM - found transfer pricing odd as someone already mentioned seemed to be no real direction in what they wanted you to do. Gone about a page of narrative from it but mentioned current policy is incorrect as there is no Market value

Need a good audit and Bl day tomorrow me thinks.

ashmcg9

I know someone last year that got 6 yellows and passed - so it is possible!

danko2012

LOccitane wrote: »

Said I wouldn't comment here but just had to after that Paper...

Consolidation was well flagged. IFRS 10, IFRS 3, IAS 28, IAS 1 were the relevant standards I thought. There was a replica question almost in the DC Book.

Finance - only calculated an effective hedge taking out a loan in US$ and investing locally in EUR and discussed other options.

Tax and Audit went well I thought. Audit GC disclosures, ISA 570, 705 and 706.

Destroyed the remaining 4 indicators. I had an hour left to do 4 of them.

Was reduced to just pointing out the evident breaches in CG - 5 I think. I treated IMP as a compound Marketing IMP indicator and don't think volume was sufficient. Had 10 mins for Transfer Pricing and concluded on a negotiated price but volume too low for C I feel and that's if the corrector can read my writing.

Overall, to produce consistently C answers I thought the volume was excessive. Timing was a disaster for me and has left me in a bad position for BL. I need to hit Green in BL tomorrow or I'm gone I feel just due to lack of time and volume as a result.

1 Finance, 1 IMP, 2 BL, 2 PM, 2 Audit and 1 Tax tomorrow?

Have a blinding headache after it all! Heartbreak when you don't have time to show what you know.

Did a really detailed plan however and I'm hoping that will also be considered..

Can't see 2 PM Given we got 2 today and also the aafrp but you prob spot on otherwise

ASOT2012

Nermal wrote: »

I missed that one - took NEID at face value. M Conroy is MD of MELBIN and is not independent, right?

Right. And she isnt a non exec as she is a manager

danko2012

ashmcg9 wrote: »

I know someone last year that got 6 yellows and passed - so it is possible!

I got 6 yellows last year and failed! That has hurt me a lot knowing someone hot 6 yellows and passed now!

BigMawn12

I put a paragraph in about redundancies re shop closures and correct protocol to follow.

applehunter

Wrote down to get company should try and get on an odds comparison website.

The gambler in me coming out.

galway321

Hard to know how today went; but here how I approached it;

(1) FR - Calculation of gain moving from sub to associate and disclosures. Also disclosure of potential Frenco sale and possible onerous lease. Although I said the losses couldn't be accurately measured and so no provision to be made.
(2) Tax - Fine - assets v share sale - participation exemption -€50m availible to fund repayments
(3) Strategy - made a mess of this - said keep 1 & 2 open as the losses were less than the rental payments and so were mitigating the losses to a certain extent. Don't think this is right. Close store 3 with break clause.
(4) Mgmt - Transfer pricing - said current method isn't good for group - cost plus pricing for retail hurting sales due to high TP. Make manufacturing a cost center and transfer at cost. Evaluate manufacturing dept on cost reduction/efficiency rather than profits.
(5) Audit - disclosure not adequate, redrafted. stated what the auditor will look for and how Jensen doesn't have any of this in place - budgets/forecasts etc. No way to pay €60m in Dec 14 - Definite EoM paragraph - responsibility of directors to prove going concern in appropriate.
(6) Corp Gov - couldn't have asked for better - made 6 good points where they were non compliant and made recommendation for each.
(7) IMP - made a balls of this - didn't know if it was marketing or analytics or digital marketing.
(8) Finance - absolute nightmare - couldn't calculate anything so just said its a month away so no need to hedge, no experience with this, once off receipt so no need for hedging strategy - board should be focussed on going concern not hedging.

Need to focus on finance and BL big time tomorrow.

galway321

Did people address the Transfer pricing answer to the MD of the manufacturing dept or just put it in the main memo with the other indicators??

Nermal

galway321 wrote: »

Did people address the Transfer pricing answer to the MD of the manufacturing dept or just put it in the main memo with the other indicators??

I did the whole thing as a memo to to Kate, but in the introduction said if she wanted it in the format of a report to the board to ask me. Now there's a hedging strategy.

Tricky1979

Nermal wrote: »

I did the whole thing as a memo to to Kate, but in the introduction said if she wanted it in the format of a report to the board to ask me. Now there's a hedging strategy.

Irish Annex got corp gov?

Torres999

FR- calculated sub to assoc and mentioned onerous lease but not didn't mention IFRS 5

Audit- Said that the auditor will more then likely put an EOM in

Tax- sale of shares for participation exemption

CG - did about 5 points, your one wasn't independent, no mention of committees, chairman and CEO, meeting with Chairman and INEDS

Finance- Jesus, rambled about forward contracts, money market hedges and options wasted an hour


Strategy - embarrassed by my answer

Transfer pricing- said shouldn't be rewarding loss makers by giving them a lower price, need goal congruence and all that spoof

IMP - no time

Shorty11857

Tough exam, mainly for time reasons. My last couple of indicators were terrible due to time pressure, just had to write down what I could as quickly as possible probably made some mistakes

A few notes on what I said

Close Store 1 (the contribution from the business being transferred to the other store is worth more)
Keep Store 2 open (It's profitable if you exclude the sunk cost of rent)
Close Store 3 (Break clause is in 2 years, going to lose more in the next two years than it makes so close it now)

For the foreign currency I said to take the option because it was the most secure way and that they needed the 20 million at the end of the month. Also said they could try a taking a loan out in USD but that they'd be unlikely to get the lower rate

For tax I said selling the shares was a better option but that they might struggle to get 50 million due to the buyer wanting a discount for the (future) capital gains charge you were passing to them

For transfer pricing I said they should either sell at cost or sell to everyone at a set rate (no more loss-making stores getting discounts), also the way I read it it seemed like they were charging way over 20% Variable Mark Up, 15 Variable + 8% Total has to be at least 23% variable + 8% fixed, at least how I read it

Financial Reporting I tried to calculate the Sub to an Associate did it fast not sure if it was right and then mentioned they'd need to disclosure under IFRS 5

Audit, didn't have a lot of time to do it, rewrote the disclosure to include more information on the terms with the bank

Corporate Governance, CEO is chairman, one had been on board for 10 years not Independent anymore, one of them was a managing director of one of the subs, the lack of meetings between the chairman and NEID, lack of a senior NEID (although I forgot what to call it but think I got point across)

m1ck007

Made a hash of the stategy today. Didnt think the leases had anything to do with pm. It was def a strategy indicator. Expecting 2pm 1tax 1 finance 2imp 1 audit 1.5 bl tomorrow. Need a big performance in bl and finance tomorrow.

Torres999

m1ck007 wrote: »

Made a hash of the stategy today. Didnt think the leases had anything to do with pm. It was def a strategy indicator. Expecting 2pm 1tax 1 finance 2imp 1 audit 1.5 bl tomorrow. Need a big performance in bl and finance tomorrow.

Would it not be 1 IMP and 2 BL? Is there 3 IMP?

PhilipLuke

Dreaming of sunshine wrote: »

Paper wasn't the worst I've seen but I just didn't perform, nerves and timing killed me!

I am in the same bracket, I am absolutely bulling with myself!!
Haven't a clue if I did enough, all I know is I didn't do myself justice