FAE 2016

15YemenRoad · 16-08-2016 04:07PM

Said that I wouldn't do a postmortem but oh well. I got:

1. FR - Share based payments
2. Finance - Interest Swaps
3. BL - Ethics of reversing accrual
4. Audit - E.coli provision (lol)
5. Finance?? - Covenants. Not sure if this is finance or FR or MA, any thoughts?
6. BL - Half a SWOT. Didn't have much to write on this.
7. MA - BSC
8. Tax - Cash Extraction

Anyone else get similar? Wasn't sure if provision was Audit or FR.

Uncle Mclovin · 16-08-2016 04:07PM

Thought it was grand except for the hedging which I'm not comfortable with. The balance scorecard for the employee appraisal was a bit of a strange one also.

Kristina F · 16-08-2016 04:10PM

15YemenRoad wrote: »

Said that I wouldn't do a postmortem but oh well. I got:

1. FR - Share based payments
2. Finance - Interest Swaps
3. BL - Ethics of reversing accrual
4. Audit - E.coli provision (lol)
5. Finance?? - Covenants. Not sure if this is finance or FR or MA, any thoughts?
6. BL - Half a SWOT. Didn't have much to write on this.
7. MA - BSC
8. Tax - Cash Extraction

Anyone else get similar? Wasn't sure if provision was Audit or FR.

I got the exact same

TAA_ICAI · 16-08-2016 04:11PM

15YemenRoad wrote: »

Said that I wouldn't do a postmortem but oh well. I got:

1. FR - Share based payments
2. Finance - Interest Swaps
3. BL - Ethics of reversing accrual
4. Audit - E.coli provision (lol)
5. Finance?? - Covenants. Not sure if this is finance or FR or MA, any thoughts?
6. BL - Half a SWOT. Didn't have much to write on this.
7. MA - BSC
8. Tax - Cash Extraction

Anyone else get similar? Wasn't sure if provision was Audit or FR.

Yea i had same as you ... I included provision in audit ... It was a funny exam ... Not sure how it went :-/

Gretel2911 · 16-08-2016 04:13PM

Does anyone have any insights on the tax indicator? Thought it was a bit funny with the covenants etc!

giftgrub1991 · 16-08-2016 04:19PM

For the reversing journal I went down the lines of fr/audit as he is condoning fraudulent financial reporting giving the pressure there is to maintain with covenant.

For the tax I some how thought retirement reliefs down the road would also benefit him.

Any thoughts?

Kristina F · 16-08-2016 04:28PM

Anybody use the Hodgons (probly not the right spelling) model for the ethics Q about the accrual?

TAA_ICAI · 16-08-2016 04:38PM

I didn't use 3 step method I went down the FR ethics route that he has directors responsibility to ensure f.s. show true & fair view, etc

For tax I also mentioned retirement relief but forgot to mention about the covenant for d/d :-(

Any thoughts about what to focus on for tomorrow?

Gretel2911 · 16-08-2016 04:38PM

Kristina F wrote: »

Anybody use the Hodgons (probly not the right spelling) model for the ethics Q about the accrual?

I did

Obrieski · 16-08-2016 04:41PM

If the covenant was finance, it means there's going to be 3 finance indicators overall, I would suspect it could be BL but who knows. Big Paul said to avoid boards between exams due to the speculation! ðŸ˜„ Just answer what's asked. Felt tax was weird and the mgmt accounting. Didn't di myself justice in them definitely

ACA2015 · 16-08-2016 04:46PM

Hard to know;

1 FR Share Based Payments
1 MA Balance Scorecard (could be BL either...)
1 Finance (Interest rate swap)
1 BL (Ethics, I think it was a BL framework but you could go down the route of bringing in audit and FR ethical type stuff)
1 BL (SO)
1 Tax (cash extraction)

The one with the provision seemed a bit easy to be a FR one on its own but when you see FR it has to be FR. But then there's definately a chunk of audit in there as well. Could it be two? Only one FR indicator is not happening in core and it was an explicit audit one. Not going to worry too much as I gave a good full answer with the FR issue raised, journals and disclosures along with some audit proceedures ect.

The Covenants one is strange. I thought finance at first but the ratios were just a bit too easy for it to be that? It wasn't like a normal ratio question where you were asked to talk about performance, so just doesn't seem chunky enough for finance. And they included other stuff like about getting the audit done in 270 days which seemed ambitious. Breach of covenants is something I've seen more in the audit elective. But then you could bring in about trying to get more finance from the bank when you've breached covenants being impossible...confusion

jdt101 · 16-08-2016 04:58PM

E Coli wasn't a provision, agreed pre year end and paid post. Dr Expense Cr Accruals/Other Payables. IAS 8 error if intentional, IAS 10 adjusting event as audit not yet complete?

Cash extraction, €1.6m of loan on BS that can be repaid tax free, with bank permission?

Gretel2911 · 16-08-2016 05:05PM

jdt101 wrote: »

E Coli wasn't a provision, agreed pre year end and paid post. Dr Expense Cr Accruals/Other Payables. IAS 8 error if intentional, IAS 10 adjusting event as audit not yet complete?

Cash extraction, €1.6m of loan on BS that can be repaid tax free, with bank permission?

No indication that the related party loan was to Paul Ryan! Could have been another RP

Rusty91 · 16-08-2016 05:15PM

ACA2015 wrote: »

Hard to know;

1 FR Share Based Payments
1 MA Balance Scorecard (could be BL either...)
1 Finance (Interest rate swap)
1 BL (Ethics, I think it was a BL framework but you could go down the route of bringing in audit and FR ethical type stuff)
1 BL (SO)
1 Tax (cash extraction)

The one with the provision seemed a bit easy to be a FR one on its own but when you see FR it has to be FR. But then there's definately a chunk of audit in there as well. Could it be two? Only one FR indicator is not happening in core and it was an explicit audit one. Not going to worry too much as I gave a good full answer with the FR issue raised, journals and disclosures along with some audit proceedures ect.

The Covenants one is strange. I thought finance at first but the ratios were just a bit too easy for it to be that? It wasn't like a normal ratio question where you were asked to talk about performance, so just doesn't seem chunky enough for finance. And they included other stuff like about getting the audit done in 270 days which seemed ambitious. Breach of covenants is something I've seen more in the audit elective. But then you could bring in about trying to get more finance from the bank when you've breached covenants being impossible...confusion

I'm not see on the covenants, I agree that it was a bit bulky for Finance and I've seem financial performance included in business leadership. I focused a bit to much on the ratios they had too meet rather than things like the other requirements. Bit under pressure with time. I'd love for it to be finance because then all you'd have to get is a BC rather than a C but I have a feeling it could be a BL one

OHGREAT · 16-08-2016 05:17PM

Am I the only one to do BL for the rewarding of employees

superb choice of username · 16-08-2016 05:22PM

That seemed a lot better than previous core exams. Was going to try do some analysis into what topics the indicators were, but from reading the above, remembered there is no point at this stage! Going to chill the head and have a cool beer, you's should too! Good luck tomorrow!

Uncle Mclovin · 16-08-2016 05:39PM

I had indicators a little different to others:

1. FR - Share options
2. FR - Ecoli correction journals + reverse of accrual ethical issue (didn't use Hodgson's)
3. Finance??? - Covenant - this was the longest indicator
4. Audit - audit approach to Ecoli case
5. Tax - Cash extraction - I made assumption that related party loan was directors account and to draw this down as he needed it tax free
6. BL - strengths and opportunities + fact that Emily shouldn't be preparing the business plan for the bank
7. BL/MA - balance scorecard approach for employee appraisal + draw up template
8. Finance - hedging against the interest rate risk (made a right balls of this)

FrStone · 16-08-2016 05:42PM

I split the indicators out as follows:

1. FR - Options and Legal costs/damages.
2. Management Acc - Covenants
3. BL Strategy - Business Plan
4. Finance - Interest Rate Swaps.
5. Audit - ISA 500 Managements expert.
6. Tax - Cash Extraction.
7. BL - Balanced Scoreccard.
8. Ethics - Rates.

The FR could have been split out into 2 indicators, which would suit me as I was happy with them. The ethics could easily be slotted in somewhere else.

Tax was the indicator that tripped me up. I addressed the 3 options he suggested and then suggessted it would be better to increase contributions to his pension to get a tax free lump sum. However, I completely forgot to put in that he could transfer his shares to his wife tax free - I just presumed he knew that. I wonder will that be enough for me to get BC or will I be NC. So tomorrow I'll be focussing hugely on the tax indicator.

Rusty91 · 16-08-2016 06:01PM

Uncle Mclovin wrote: »

I had indicators a little different to others:

1. FR - Share options
2. FR - Ecoli correction journals + reverse of accrual ethical issue (didn't use Hodgson's)
3. Finance??? - Covenant - this was the longest indicator
4. Audit - audit approach to Ecoli case
5. Tax - Cash extraction - I made assumption that related party loan was directors account and to draw this down as he needed it tax free
6. BL - strengths and opportunities + fact that Emily shouldn't be preparing the business plan for the bank
7. BL/MA - balance scorecard approach for employee appraisal + draw up template
8. Finance - hedging against the interest rate risk (made a right balls of this)

When you say draw up a template on balanced scorecard did you just put in the four headings and list measures under each heading?

Was the reversing on the legal costs a provision or accrual? I thought provision that then affected the reported figures for EBITDA?

I think I made a mess of this now reading all these different approaches

Rusty91 · 16-08-2016 06:04PM

Does anyone know what the fee was on the interest rate swap and what the deal with Jane arranging no fee?

Kristina F · 16-08-2016 06:04PM

Did anybody else put a provision in for the Ecoli issue?

Rusty91 · 16-08-2016 06:05PM

Kristina F wrote: »

Did anybody else put a provision in for the Ecoli issue?

Yes! Thought is was an adjusting event that confirmed the amount to be recognised at year end

Kristina F · 16-08-2016 06:05PM

Rusty91 wrote: »

When you say draw up a template on balanced scorecard did you just put in the four headings and list measures under each heading?

Was the reversing on the legal costs a provision or accrual? I thought provision that then affected the reported figures for EBITDA?

I think I made a mess of this now reading all these different approaches

I put the Ecoli issue in as a provision aswell but now that I think of it that might be wrong because it was paid

Rusty91 · 16-08-2016 06:09PM

Kristina F wrote: »

I put the Ecoli issue in as a provision aswell but now that I think of it that might be wrong because it was paid

But because it was paid and settled post year end (the 5 affected accepted the amount) does that not mean that a provision needs to be recognised in 2015.

marmul92 · 16-08-2016 06:15PM

Im almost certain a prevision needed to be recognised. It was not paid until after the year end. Thus, at 31 December there was a present obligation from a past event that could be measured reliably. This satisfied the requirements to recognise a provision.

Kristina F · 16-08-2016 06:17PM

marmul92 wrote: »

Im almost certain a prevision needed to be recognised. It was not paid until after the year end. Thus, at 31 December there was a present obligation from a past event that could be measured reliably. This satisfied the requirements to recognise a provision.

But post year end the actual amount was paid so it became certain and therefore the provision should now become an accrual ie post balance sheet event (adjusting).

Rusty91 · 16-08-2016 06:17PM

marmul92 wrote: »

Im almost certain a prevision needed to be recognised. It was not paid until after the year end. Thus, at 31 December there was a present obligation from a past event that could be measured reliably. This satisfied the requirements to recognise a provision.

That's what I thought, probably didn't say it as well as that but it's what I done. It ties in nicely with audit of provisions and work around how they would confirm the balance and any subsequent amounts to be recognised

Rusty91 · 16-08-2016 06:20PM

Kristina F wrote: »

But post year end the actual amount was paid so it became certain and therefore the provision should now become an accrual ie post balance sheet event (adjusting).

I'm not sure now tbh. What journal did you propose?

Kristina F · 16-08-2016 06:25PM

Rusty91 wrote: »

I'm not sure now tbh. What journal did you propose?

I done it wrong in the exam as I recognised the provision but it should be an accrual..Dr P&L and Cr Accrual €350k

Uncle Mclovin · 16-08-2016 06:26PM

To be honest there isn't a whole pile of difference between a provision and accrual. I think as long as the adjusting event was recognised we'll be grand.

Rusty91, on the balance scorecard - I just drafted a template with the four headings and tried to put in a few areas that it should focus on. I don't think I answered that indicator very well though.

FAE 2016

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