business-reporting-july-2010-marks-plan

Will also need to complete work on detailed

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Consolidation schedules are at summarised level. Will also need to complete work on detailed disclosures within group accounts. Work done on consolidation adjustments comprises largely a description of the adjustment. Need to ensure that the amounts of the adjustments and the financial statement captions to which they have been posted has been substantiated by agreement to individual company results or other supporting documentation. Also need to ensure that completeness of the consolidation entries has been considered by comparison to prior year and our knowledge of the way the companies trade and interact.
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TI BR – Advanced Stage – July 2010 © The Institute of Chartered Accountants in England and Wales 2010 17 Examiner’s comments Certain subsections of this question were answered well . The issues relating to Bhagat, and the going concern problems with Aducit demonstrated judgment and assimilation skills. Relatively fewer candidates spotted the pensions aspect of Bhagat, but many got the point about the differences between Ruritanian and international standards and the points relating to reliance on other auditors' work and Ruritanian auditing standards. Aspects of the question, which were done less well, were relating to consolidation. Few candidates made the substantive point that the audit work done on the consolidation schedules was completely inadequate. Very few appreciated that the calculation of goodwill involved the identification of fair values on acquisition. Most candidates betrayed a scanty knowledge of accounting for groups. Overall it was disappointing to see that students in most cases were focussed solely on the implications of the issues at the individual company level rather than considering the wider implications for the group accounts. This was particularly the case in respect of the going concern and the obsolescence issue. Many candidates demonstrated a familiar obsession with foreign currency translation, and this was quite often the only contentious issue identified in relation to the consolidation schedule. The quality of the audit work suggested varied but overall candidates were probably more specific in the nature of the work suggested than in past sittings.
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TI BR – Advanced Stage – July 2010 © The Institute of Chartered Accountants in England and Wales 2010 18 BR Question 4 - Precision Garage Access plc Scenario The scenario is a listed company, PGA, which manufactures and installs garage doors for private residences. There are two types of garage door produced which have different prices and margins. The candidate is a senior working for PGA’s auditors and is currently supervising the planning and interim audit work. As part of the planning process, an audit junior has completed some initial analytical procedures on the interim 9 months management accounts. The analysis by the audit junior is inadequate and the candidate is required to carry out more detailed analytical procedures with supporting calculations. The candidate is also required
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