ACCA2010年12月份试题（P7）

　　Section A-BOTH questions are compulsory and MUST be attempted

　　1 Jolie Co is a large company,operating in the retail industry,with a year ended 30 November 2010.You are a manager in Jen & Co,responsible for the audit of Jolie Co,and you have recently attended a planning meeting with Mo Pitt,the fi nance director of the company.As this is the fi rst year that your fi rm will be acting as auditor for Jolie Co,you need to gain an understanding of the business risks facing the new client.Notes from your meeting are as follows:

　　

　　To help your business understanding,Mo Pitt has e-mailed to you extracts from the draft statement of comprehensive income,and the relevant comparative fi gures,which are shown below:

　　Extract from draft statement of comprehensive income

　　

　　Required:

　　(a)Prepare briefi ng notes to be used at a planning meeting with your audit team,in which you evaluate the business risks facing Jolie Co to be considered when planning the fi nal audit for the year ended 30 November 2010.(15 marks)

　　Professional marks will be awarded in part(a)for the format of the answer and the clarity of the evaluation.(2 marks)

　　(b)Using the information provided,identify and explain FIVE fi nancial statement risks.(10 marks)

　　(c)Recommend the principal audit procedures to be performed in respect of the valuation of the JLC brand name.(5 marks)

　　(32 marks)

　　2 You are a manager in Newman&Co,a global fi rm of Chartered Certifi ed Accountants.You are responsible for evaluating proposed engagements and for recommending to a team of partners whether or not an engagement should be accepted by your firm.

　　Eastwood Co,a listed company,is an existing audit client and is an international mail services operator,with a global network including 220 countries and 300,000 employees.The company offers mail and freight services to individual and corporate customers,as well as storage and logistical services.

　　Eastwood Co takes its corporate social responsibility seriously,and publishes social and environmental key performance indicators(KPIs)in a Sustainability Report,which is published with the financial statements in the annual report.Partly in response to requests from shareholders and pressure groups,Eastwood Co's management has decided that in the forthcoming annual report,the KPIs should be accompanied by an independent assurance report.An approach has been made to your firm to provide this report in addition to the audit.

　　To help in your evaluation of this potential engagement,you have been given an extract from the draft Sustainability Report,containing some of the KPIs published by Eastwood Co.In total,25 environmental KPIs,and 50 social KPIs are disclosed.

　　

　　You have also had a meeting with Ali Monroe,the manager responsible for the audit of Eastwood Co,and notes of the meeting are given below.

　　

　　Your firm has recently established a sustainability reporting assurance team based in Oldtown,and if the engagement to report on the Sustainability Report is accepted,it would be performed by members of that team,who would not be involved with the audit.

　　Required:

　　(a)Identify and explain the matters that should be considered in evaluating the invitation to perform an assurance engagement on the Sustainability Report of Eastwood Co.(12 marks)

　　(b)Recommend procedures that could be used to verify the following draft KPIs:

　　(i)The number of serious accidents in the workplace; and

　　(ii)The average annual spend on training per employee.(6 marks)

　　(c)You have a trainee accountant assigned to you,who has read the notes taken at your meeting with Ali Monroe.She is unsure of the implications of the charitable donations being disclosed as a different fi gure in the financial statements compared with the other information published in the annual report.

　　Required:

　　Prepare briefi ng notes to be used in a discussion with the trainee accountant,in which you:

　　(i)Explain the responsibility of the auditor in relation to other information published with the fi nancial statements;and

　　(ii)Recommend the action to be taken by Newman&Co if the figure relating to charitable donations in the other information is not amended.(8 marks)

　　Professional marks will be awarded in part(c)for the format and clarity of your answer.(2 marks)

　　(28 marks)

　　Section B–TWO questions ONLY to be attempted

　　3 Clooney Co is one of the world's leading leisure travel providers,operating under several brand names to sell package holidays.The company catered for more than 10 million customers in the last 12 months.Draft fi gures for the year ended 30 September 2010 show revenue of $3,200 million,profit before tax of $150 million,and total assets of $4,100 million.Clooney Co's executives earn a bonus based on the profi t before tax of the company.

　　You are the manager responsible for the audit of Clooney Co.The fi nal audit is nearing completion,and the following points have been noted by the audit senior for your attention:

　　In July 2010,thousands of holiday-makers were left stranded abroad after the company operating the main airline chartered by Clooney Co went into liquidation.The holiday-makers were forced to wait an average of two weeks before they could be returned home using an alternative airline.They have formed a group which is claiming compensation for the time they were forced to spend abroad,with the total claim amounting to $20 million.The items which the group is claiming compensation for include accommodation and subsistence costs,lost income and distress caused by the situation.The claim has not been recognised or disclosed in the draft fi nancial statements,as management argues that the full amount payable will be covered by Clooney Co's insurance.

　　One part of the company's activities,operating under the Shelly's Cruises brand,provides cruise holidays.Due to economic recession,the revenue of the Shelly's Cruises business segment has fallen by 25% this year,and profit before tax has fallen by 35%.Shelly's Cruises contributed $640 million to total revenue in the year to 30 September 2010,and has identifi able assets of $235 million,including several large cruise liners.The Shelly's Cruises brand is not recognised as an intangible asset,as it has been internally generated.

　　On 15 November 2010,Clooney Co acquired Craig Co,a company offering adventure holidays for independent travellers.Craig Co represents a signifi cant acquisition,but this has not been referred to in the fi nancial statements.

　　Required:

　　Comment on the matters that you should consider,and state the audit evidence you should expect to fi nd in your review of the audit working papers for the year ended September 2010 in respect of:

　　(a)The compensation claim,(8 marks)

　　(b)Shelly's Cruises,and(7 marks)

　　(c)The acquisition of Craig Co.(5 marks)

　　(20 marks)

　　4(a)You are a manager in Neeson&Co,a firm of Chartered Certifi ed Accountants,with three offices and 12 partners.About one third of the fi rm's clients are audit clients,the remainder are clients for whom Neeson&Co performs tax,accounting and business advisory services.The fi rm is considering how to generate more revenue,and you have been asked to evaluate two suggestions made by the fi rm's business development manager.

　　(i)An advertisement could be placed in national newspapers to attract new clients.The draft advertisement has been given to you for review:

　　(8 marks)

　　(ii)A new partner with experience in the banking sector has joined Neeson&Co.It has been suggested that the partner could specialise in offering a corporate fi nance service to clients.In particular,the partner could advise clients on raising debt finance,and would negotiate with the client's bank or other provider of finance on behalf of the client.The fee charged for this service would be contingent on the client obtaining the finance with a borrowing cost below market rate.(5 marks)

　　Required:

　　Evaluate each of the suggestions made above,commenting on the ethical and professional issues raised.

　　Note:the mark allocation is shown against each of the issues.

　　(b)You have set up an internal discussion board,on which current issues are debated by employees and partners of Neeson&Co.One posting to the board concerned the compulsory rotation of audit firms,whereby it has been suggested in the press that after a pre-determined period,an audit fi rm must resign from office,to be replaced by a new audit provider.

　　Required:

　　(i)Explain the ethical threats created by a long association with an audit client.(3 marks)

　　(ii)Evaluate the advantages and disadvantages of compulsory audit firm rotation.(4 marks)

　　(20 marks)

　　5(a)You are the manager responsible for the audit of Willis Co,a large client of your audit firm,operating in the pharmaceutical industry.The audit work for the year ended 30 August 2010 is nearly complete,and you are reviewing the draft audit report which has been prepared by the audit senior.You are aware that Willis Co is developing a new drug and has incurred signifi cant research and development costs during the year,most of which have been capitalised as an intangible asset.The asset is recognised at a value of $4·4 million,the total assets recognised on the draft statement of fi nancial position are $55 million,and Willis Co has a draft profi t before tax of $3·1 million.

　　Having reviewed the audit working papers,you are also aware that management has not allowed the audit team access to the results of scientific tests and trials performed on the new drug being developed.An extract from the draft audit report is shown below.

　　

　　Required:

　　(i)Critically appraise the draft audit report of Willis Co for the year ended 30 August 2010,prepared by the audit senior;

　　Note:You are NOT required to re-draft the extracts from the audit report.(10 marks)

　　(ii)Identify and explain any other matters to be considered,and the actions to be taken by the auditor,in respect of the management-imposed limitation on scope.(5 marks)

　　(b)You are also responsible for the audit of Moore Co,with a year ended 30 September 2010.The following notes have been left for your attention by the audit senior:

　　'Our audit testing performed so far on trade payables revealed some internal control defi ciencies.Supplier statement reconciliations have not always been performed by the client,and invoices were often not approved before payment.We have found a few errors in the payables ledger and the individual accounts of suppliers making up the trade payables balance,the total of which is material to the statement of fi nancial position.'

　　Required:

　　Recommend the further actions that should be taken by the auditor,and outline any reporting requirements in respect of the internal control defi ciencies identifi ed.(5 marks)

　　(20 marks)

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