AdvancedAuditing.pdf - THE INSTITUTE OF CHARTERED...

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Page 1 of 4 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN EXAMINERS’ COMMENTS SUBJECT Advanced Auditing SESSION Final Examination – Winter 2012 General : Generally, the performance of students was not upto the desired level keeping in view that all the students at least had a couple of years of practical audit experience. The main reason for below average performance was the inability to carry out an in-depth analysis of the given situations. Consequently, most students were unable to mould their answers in line with the exact requirements of the question. However, the knowledge of ISAs seemed a lot better and that was why a relatively better result was witnessed. Question-wise comments are as under: Question 1 Extracts from financial statements were given alongwith information pertaining to acquisition of a new plant and intangible assets (software installed). Students delved a lot on horizontal changes with little focus on vertical analysis. Most of them were able to identify the apparent risks such as impairment in inventories and debtor, liquidity issues, understatement of financial charges. However, they were found lacking as regards the following: While discussing the liquidity, most of the students were concerned about the concept of ‘going concern’. Although the liquidity position of the company seemed to have worsened, yet, apparently there was no indication that it may lead to a going concern issue. Most of the students were unable to identify the fact that operating expenses have declined as compared to the previous year which was quite unusual in the given scenario, i.e. when the company had introduced new products. Most of the students pointed out the risk of impairment of plant and intangible assets but did not provide any significant reason to support their point of view. In fact there was quite an imminent risk of impairment in the value of plant because of the fact that the overall sales had increased by only Rs. 16 million i.e. 1.5% despite the fact that several new products were being manufactured on the new plant.
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