FAE Audit Elective 2014

TheDoctor

Grab a beer it's over.

TheDoctor

Soap_Soup wrote: »

Completely gutted.

Put my life on hold for a year for that exam. You can only reasonably prepare based on the level of past papers (I sat one of them for Christ sake), and that was a different level.

Read through and couldn't be sure of what the indicators even were or what they were getting at. That mixed with awkward topics coming up (the ones I at least recognised) and I completely panicked. Ruined myself for time and that was it.

'with no further audit work what would the audit opinion be'? Well considering I haven't a clue of how much works been performed to date, how the **** would I know. Stupid indicator. I assumed they were just taking going concern into account for that one.

Just out if interest, how did you find today's one compared to the other one you sat?

Soap_Soup

And was the report required an assurance report? A few people mentioned AUP afterwards but I thought if they were preparing the info and they wanted a level of assurance (indicated from their draft report) it couldn't be AUP?

womandriver

Soap_Soup wrote: »

And was the report required an assurance report? A few people mentioned AUP afterwards but I thought if they were preparing the info and they wanted a level of assurance (indicated from their draft report) it couldn't be AUP?

I said AUP but I wasn't sure at all, by process of elimination I decided on AUP.

TheDoctor

Soap_Soup wrote: »

And was the report required an assurance report? A few people mentioned AUP afterwards but I thought if they were preparing the info and they wanted a level of assurance (indicated from their draft report) it couldn't be AUP?

I went AUP

ucd man

Just for piece of mind, what were indicators people got?

1. Business risks:
Stock valuation i.e stock going off

Cashflow i.e. decrease in stock

Property plant and equip i.e. assets using lease finance should not be capitalised as operating lease??

International dimension to businesss (fx risk)

2. Impairment Review

3. Review of pro forma report: Agreed upon procedures enggement?? (therefore dont use certify, true and fair view, etc? and procddures (retotal, agree to stock listing).

Case 2:
1. Some key risks not identified (RPTs, need written reps for fraud)?? not sure here what was wanted?

2. Review of group reporting document and guarantee documents???
Review of guarantee (not dated, objetcive??) (not sure what was wanted here??)

3.
Implications for audit report (disclaimer, as significant parts of work not done)

Case 3.
1. We can accept the audit, provided some safueguards e.g. make sure cont fee paid up, no invovkement from tax partner in audit engagement, etc.

2. Inventory system controls 7 recomenndations (self explaanatory here)

Anybody agree/differ on the above??

cian twomey

on sim 3 was there an indicator of what else we had to look at in the audit communication with previous auditor etc

Soap_Soup

For the letter of support I concentrated on the fact that we hadn't reviewed the parents ability to support them. Said we needed to review their financials /forecasts etc. and that we needed letter that management thought it appropriate to use going concern basis.

EDudder

Anybody else mention the Dutch sub wasn't IFRS? I said adjustments would need to be audited.

20 Times 20 Times

LOccitane wrote: »

It was insane. I was very confident going in to that paper but it was bad. To be honest I didn't even know what I was saying for some of Sim 2.

Ran with pervasive limitation of scope re going concern and consolidation of subsidiary if we were to sign the audit opinion now. But I don't know really and don't care anymore.

Gonna go from Decile 1 in the Mock to a Fail..! What a joke...

Enjoy folks anyway, we are done for now at least :-)

I did the same

TheDoctor

Other issues in Sim 3

Audit stock take a month before year end
ISQC 1
ISA 510

womandriver

EDudder wrote: »

Anybody else mention the Dutch sub wasn't IFRS? I said adjustments would need to be audited.

What exactly were we required to do with that Dutch audit report? It wasn't in IFRS, we had no idea of what work was done etc.

ASOT2012

womandriver wrote: »

What exactly were we required to do with that Dutch audit report? It wasn't in IFRS, we had no idea of what work was done etc.

Yeah I said that too!!

Did anyone see the long association threat in Sim 1 ? Wondering did I go down the wrong track there. they were auditors 9 years!

LOccitane

ASOT2012 wrote: »

Yeah I said that too!!

Did anyone see the long association threat in Sim 1 ? Wondering did I go down the wrong track there. they were auditors 9 years!

Whichever case it was in I referenced it yeah and said a QRP might need to be appointed. Think it was Sim 2? My mind is shot at this stage!

For Sim 3 I mentioned ISA 501 Existence of Stock roll forward would be required.

ISA 240 if there was a fraud or manipulation going on at one of the branches.

I was reduced to bullets (had 5 mins) so can't really remember. Forgot ISA 510, great point! Feck it anyway...!

womandriver

Yeah I mentioned the long assoc in respect of both the parent who was listed and Stockard, Stockard isn't listed tho so no issue till 10 years and it didn't say if the AEP was same throughout.

I just didn't know what the point of the Dutch audit report was. I critiqued it against an IFRS one but I know that was wrong as they weren't IFRS so it wouldn't be same anyway. I said disclaimer re. Going concern but didn't say any impact of Dutch report, left it last and ran out of time. Hopefully disclaimer will cover both, I dunno.

EDudder

womandriver wrote: »

What exactly were we required to do with that Dutch audit report? It wasn't in IFRS, we had no idea of what work was done etc.

I outlined everything a component auditor should be giving us. And then mentioned the IFRS bit.

But it was a mess. I couldn't tell if we were the group auditors or the overall parent was. We had no idea what had been requested of them/what materiality they used. So it might have had no audit report implications (if you assumed they had been given correct materiality etc and we just need their extra documentation). Or it could have meant completely adverse opinion because we had no idea what work they had done or to what materiality.

I think an indicator to give an adverse opinion basically because the q doesn't give us enough info is really unusual.

Sean Murray gave out about people jumping to audit report implications when it wouldn't be realistic in the real world. And in your job you would never turn around to a partner and say 'here, we need to qualify that audit report. The Dutch lads sent something on but I've no idea what they've done'.

redgerry 86

EDudder wrote: »

I outlined everything a component auditor should be giving us. And then mentioned the IFRS bit.

But it was a mess. I couldn't tell if we were the group auditors or the overall parent was. We had no idea what had been requested of them/what materiality they used. So it might have had no audit report implications (if you assumed they had been given correct materiality etc and we just need their extra documentation). Or it could have meant completely adverse opinion because we had no idea what work they had done or to what materiality.

I think an indicator to give an adverse opinion basically because the q doesn't give us enough info is really unusual.

Sean Murray gave out about people jumping to audit report implications when it wouldn't be realistic in the real world. And in your job you would never turn around to a partner and say 'here, we need to qualify that audit report. The Dutch lads sent something on but I've no idea what they've done'.

I assume the intangible asset valuation was all to do with management experts isa 620 and looking at of we can rely on their work? I then went on to say we may need to employ an auditors expert to verify this measurement on the brand?

I assumed that's what they were after

womandriver

redgerry 86 wrote: »

I assume the intangible asset valuation was all to do with management experts isa 620 and looking at of we can rely on their work? I then went on to say we may need to employ an auditors expert to verify this measurement on the brand?

I assumed that's what they were after

Sugar I said ISA 500 re.mgt expert and that we'd have to assess their work etc. but I didn't say we should use auditor's expert as they were only using a management expert as they didn't have experience re. Impairment. I thought as auditors we'd be able to deal with the impairment ourselves.

Was the ethical standards indicator in sim 3 extremely long? They had loads of ethical issues!

ucd man

Also did anyone notice that in the case with property (case 1 I think), they should have not have been capitalising the property that was being leased as the rights and ownership had not transferred over. As a result, property was overstated by €4m?? I'm not sure bout this one? (think it was operating lease per IAS 17)

redgerry 86

Yeah that's right I just threw in oh we may need an auditors expert if we have no experience in valuing brands and then ****ted on bout how we'd go about getting a lad in with experience in area of valuing a brand!

Ye sim 3 had loads ES 4 ES 5 and issue with secondee - overall I said we should accept once we had safeguards and threw in the buzzword threats self review all that ****e!

Surely that's what they were after

womandriver

redgerry 86 wrote: »

Yeah that's right I just threw in oh we may need an auditors expert if we have no experience in valuing brands and then ****ted on bout how we'd go about getting a lad in with experience in area of valuing a brand!

Ye sim 3 had loads ES 4 ES 5 and issue with secondee - overall I said we should accept once we had safeguards and threw in the buzzword threats self review all that ****e!

Surely that's what they were after

Damn, decided not to say we'd need an expert even tho I did consider it. Yeah guess they would have needed one. What a horrible day. Wrecked and completely drained after the whole thing.

20 Times 20 Times

ucd man wrote: »

Also did anyone notice that in the case with property (case 1 I think), they should have not have been capitalising the property that was being leased as the rights and ownership had not transferred over. As a result, property was overstated by €4m?? I'm not sure bout this one? (think it was operating lease per IAS 17)

I said operating lease and corrected the journals

redgerry 86

I also noticed in that q that investment properties had increased by 8 million and so did revaluation reserves and said they should not be posting gains in inv property to reval reserve. Anyone else see that?

Torres999

Sim 1 there was the impairment review, was there an issue of self review here?

I then did ISR 4400 for the report

Business risks I was looking at the wrong sim so I half my risks are from Sim 2, disaster.

Sim 2 Group Auditing.

SIM 3, I said we shouldnt accept becaue not because of ethics but that you shouldnt accept a job you wont be paid for. Bullet pointed the last indicator, fraud, relate party transactions etc

danko2012

Have to say I thought sim 2 especially was a bit of a joke, I could understand sim 1 and 3 to an extreme but in sim 2 you are given nowhere near level of detail required to be advising?

Yeah sean murray giving out to people jumping to audit conclusions in the real world...well in the real world a newly hired audit manager would NEVER EVER be asked by the audit partner of the last 9 years to give his audit opinion.... I mean really??? If that was an audit partner he deserves some kick in the hole

EDudder

The lease part was weird. I said we'd need to assess if it's operating or finance lease. Whatever they had done was wrong but wasn't wasting time getting into detail when you wouldn't know the correction (as you don't know if it's operating or finance).

IMO the impairment review was auditing work carried out by managements expert. I wouldn't think you'd employ an expert to conduct an impairment review.

This paper seems to have so many plausible alternative answers and indicators compared to any other year.

I noticed the revaluation reserve but didn't know what it was about so moved on. Nowhere near enough time for bits like that.

Torres999

The fact that we were the parent of Stockard Holland and also a sub of the group really confused me, did really know what do do with the planning memo, probably because it was sim2 of day 3 and my head wasnt working anymore

20 Times 20 Times

Last year's board report said more indicators would appear that would require us to think well they certainly achieved that.

EDudder

Torres999 wrote: »

The fact that we were the parent of Stockard Holland and also a sub of the group really confused me, did really know what do do with the planning memo, probably because it was sim2 of day 3 and my head wasnt working anymore

I thought throwing in business risks to that sim was unfair given there was so much else going on in it.

And in general adding in 'let me know of any other issues' or 'any other infornation we need' is really annoying. It makes you too unsure of whether there's another indicator. It's a bit of a cop out.

LOccitane

EDudder wrote: »

I thought throwing in business risks to that sim was unfair given there was so much else going on in it.

And in general adding in 'let me know of any other issues' or 'any other infornation we need' is really annoying. It makes you too unsure of whether there's another indicator. It's a bit of a cop out.

I agree.... It's just every indicator was a compound indicator. I found myself constantly re reading the indicators and trying to squeeze in those parts where I could but not always managing it....

Business Risks was very poor phrasing. It was really audit risks full stop IMO...

For Sim 1 I found...

Growth plans despite sales growth of only 5% YOY and a severe 50% YOY drop on net profit with large cash depletion = unnecessary leveraging if growing and would give rise eventually to GC risk potentially.

Disproportionate or excessive investment in perishable inventory relative to revenue growth. Provision required against such? Details of post year end consumption of such stocks.

Need to sight lease agreement. Highly likely incorrect classification. On face of it if finance lease accounted for correctly at lower of PVMLP however likely operating given life of such assets. Calculated Materiality showed impact of adjustment. Seemed to be realising a surplus potentially on incorrectly capitalised assets (leased) as well or suggestions of doing so with the EUR 6,250...

Impairment of Buildings/Valuation. Local property available for much cheaper. IAS 36. Has such an assessment been completed.

Other Assets - Rebates receivable. Significant management estimation. Material YOY increase. Need details and post year end details of amounts received.

20 Times 20 Times

The info supplied as well with our knowledge it was an operating lease, I reversed the journals corrected them...

EDudder

20 Times 20 Times wrote: »

The info supplied as well with our knowledge it was an operating lease, I reversed the journals corrected them...

Think I was rushing through that bit. I thought it said something like '5 yr lease and you can return at the end'. I thought that could be an operating lease, or a lease with option to buy (which is finance), or a lease of equipment with a short economic life.

I didn't spend much time on that though so reckon I missed or misread something.

Androma1984

in relation to the similar amounts for the reval reserve and increase in investment property, I said if they are related we should check the reasons and confirm first if it is correct via additional work. And if so, gain should have gone to P&L not BS. Didn't re-read the paper since, but in SIM 2 the company we were auditing was a subsidiary and we were giving our report to the parent, but the Holland BV one was our company's sub. This sound correct? In the report we received from Holland BV in the middle of one of the paragraphs, it said that they did not stand over the operating controls so I said we needed to perform further work potentially. Ended up slightly getting confused as it is like the type 1 report for service organisations but obviously was not.

EDudder

Just to people who think they coped with it half way decently - were you very cut throat with your time?

I started with the last sim and definitely spent too long on the ethical indicators.

Was anyone very strict with their timing? In my head if I was too strict I wouldn't have done well in the only indicators that seemed clear cut.

Howiyanow88

Soap_Soup wrote: »

And was the report required an assurance report? A few people mentioned AUP afterwards but I thought if they were preparing the info and they wanted a level of assurance (indicated from their draft report) it couldn't be AUP?

That's what I thought.. I think we're right as they were producing the report!

20 Times 20 Times

Howiyanow88 wrote: »

That's what I thought.. I think we're right as they were producing the report!

No partner in Ireland would give a true and fair view for 3k however I Wentworth Iase3000 limited assurance... I think technically the answer is aup but surely they have to accept limited assurance.

Chris Partlow

So I seemed to be the only person who suggested not to accept the Winnifield audit. Balls!

Listed all the problems, mentioned mentioned the threats, mentioned one or two possible safeguards off the top of my head. But overall concluded that a reasonable and informed third party would not say that we were independent considering all the Non audit work we do/have done for them. Therefore, don't accept.

I hope to God I get some kind of credit for it because the thought process for my Audit Report answer wasn't nearly as coherent so I can write off that indicator!

The Little Fella

20 Times 20 Times wrote: »

No partner in Ireland would give a true and fair view for 3k however I Wentworth Iase3000 limited assurance... I think technically the answer is aup but surely they have to accept limited assurance.

Went with isae 3000 as well

20 Times 20 Times

The Little Fella wrote: »

Went with isae 3000 as well

Limited ?

The Little Fella

20 Times 20 Times wrote: »

Limited ?

I went with reasonable but I'd say either way was grand. Isae 3000 seemed like the stand out way to answer in my opinion.

Howiyanow88

20 Times 20 Times wrote: »

No partner in Ireland would give a true and fair view for 3k however I Wentworth Iase3000 limited assurance... I think technically the answer is aup but surely they have to accept limited assurance.

Well that was one of the issues that you had to spot in their draft report. you were expected to get sufficient appropriate evidence that the stock amounts were accurate and given lower amount of risk ( checking amounts of stock ) I went with reasonable ( positive ) assurance.

20 Times 20 Times

Howiyanow88 wrote: »

Well that was one of the issues that you had to spot in their draft report. you were expected to get sufficient appropriate evidence that the stock amounts were accurate and given lower amount of risk ( checking amounts of stock ) I went with reasonable ( positive ) assurance.

The amount of work you need to do in real life to provide reasonable assurance - you would not do it for 3k.

LOccitane

I read this as being an AUP engagement: the EUR 3K is bang on what you would be paid for such in my experience.

I noted that the 'true and fair view' was completely inappropriate and ran with the contents of an ISRS 4400 engagement. No idea if that's correct but given the fee level I thought we would not be expressing any assurance, just factual findings.

Also noted re duty of care and tripartite relationship...

But could obviously be completely off..

20 Times 20 Times

LOccitane wrote: »

I read this as being an AUP engagement: the EUR 3K is bang on what you would be paid for such in my experience.

I noted that the 'true and fair view' was completely inappropriate and ran with the contents of an ISRS 4400 engagement. No idea if that's correct but given the fee level I thought we would not be expressing any assurance, just factual findings.

Also noted re duty of care and tripartite relationship...

But could obviously be completely off..

AUP is 100% right in my opinion - However Limited Assurance can be given and i went with that and the procedures that would be required to give it . I also mentioned duty of care and tripartite relationship and i redrafted the note to read as limited assurance.

I spoke to Sean Murray after the exam he said both answers would be correct the key thing is that we WOULD NOT offer reasonable assurance.

Chris Partlow

20 Times 20 Times wrote: »

AUP is 100% right in my opinion - However Limited Assurance can be given and i went with that and the procedures that would be required to give it . I also mentioned duty of care and tripartite relationship and i redrafted the note to read as limited assurance.

I spoke to Sean Murray after the exam he said both answers would be correct the key thing is that we WOULD NOT offer reasonable assurance.

Did he say anything about other indicators?

Howiyanow88

20 Times 20 Times wrote: »

AUP is 100% right in my opinion - However Limited Assurance can be given and i went with that and the procedures that would be required to give it . I also mentioned duty of care and tripartite relationship and i redrafted the note to read as limited assurance.

I spoke to Sean Murray after the exam he said both answers would be correct the key thing is that we WOULD NOT offer reasonable assurance.

Way to make me feel good .. Thanks. Anyways it's one indicator lets not all get our collective nickers in a twist

20 Times 20 Times

Chris Partlow wrote: »

Did he say anything about other indicators?

I don't think its fair on people for me to put stuff up here so I wont say anything.

womandriver

LOccitane wrote: »

I read this as being an AUP engagement: the EUR 3K is bang on what you would be paid for such in my experience.

I noted that the 'true and fair view' was completely inappropriate and ran with the contents of an ISRS 4400 engagement. No idea if that's correct but given the fee level I thought we would not be expressing any assurance, just factual findings.

Also noted re duty of care and tripartite relationship...

But could obviously be completely off..

Is the duty of care/tripartite relationship M39 which was examinable in 2012? Just no mention of it in relation to it in the notes but I did see it in the 2012 solution.

LOccitane

womandriver wrote: »

Is the duty of care/tripartite relationship M39 which was examinable in 2012? Just no mention of it in relation to it in the notes but I did see it in the 2012 solution.

Hey: yeah that's it. It's in the AAE book. Basically I tied it in with the Address issue on the Report - it was open ended, exposing us to potential limitless liability.

We need to investigate whether we are in a tripartite engagement, the extent of duty of care owed etc before proceeding with the engagement. That's the approach I took anyway :-)

danko2012

LOccitane wrote: »

Hey: yeah that's it. It's in the AAE book. Basically I tied it in with the Address issue on the Report - it was open ended, exposing us to potential limitless liability.

We need to investigate whether we are in a tripartite engagement, the extent of duty of care owed etc before proceeding with the engagement. That's the approach I took anyway :-)

I didnt bother with deciding whether we could accept the engagement as ur wan said she was happy we could proceed... went with Isrs 4000 AUP as didnt want offer assurance but again its subjective as most indicators are!