ACCA考试 F1第三十章试题练习（2）

正确答案：
4 JOHNSTON CO
(a) Reporting responsibilities specific to initial engagements
For initial audit engagements, the auditor should obtain sufficient appropriate audit evidence that:
■ the opening balances do not contain misstatements that materially affect the current period’s financial statements;
■ the prior period’s closing balances have been correctly brought forward to the current period (or, where appropriate, have
been restated); and
■ appropriate accounting policies are consistently applied or changes in accounting policies have been properly accounted
for (and adequately presented and disclosed).
If the auditor is unable to obtain sufficient appropriate audit evidence concerning opening balances there will be a limitation
on the scope of the audit. The auditor’s report should include:
■ a qualified (‘except for’) opinion;
■ a disclaimer of opinion; or
■ in those jurisdictions where it is permitted, an opinion which is:
– qualified (or disclaimed) regarding the results of operations (i.e. on the income statement); and
– unqualified regarding financial position (i.e. on the balance sheet).
If the effect of a misstatement in the opening balances is not properly accounted for and adequately presented and disclosed,
the auditor should express a qualified (‘except for’ disagreement) opinion or an adverse opinion, as appropriate.
If the current period’s accounting policies have not been consistently applied in relation to opening balances and if the change
has not been properly accounted for and adequately presented and disclosed, the auditor should similarly express
disagreement (‘except for’ or adverse opinion as appropriate).
However, if a modification regarding the prior period’s financial statements remains relevant and material to the current
period’s financial statements, the auditor should modify the current auditor’s report accordingly.

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(b) The appraisal system should be well constructed and fair to both the individual and the organisation. However, there are a number of barriers, often because employees see the appraisal as one or more of the following:
Confrontation due to lack of agreement on performance, badly explained or subjective feedback, performance based on recent events or disagreement on longer term activities.
Judgement, the appraisal is seen as a one sided process based entirely on the manager’s perspective.
Chat is the worst of all worlds. The appraisal interview is seen as an informal, loosely constructed and badly managed conversation without purpose.
Unfinished business is when the appraisal is not seen as part of a continuing process of performance management.
An annual event when the appraisal is seen as largely irrelevant and simply an event to set annual targets that quickly become out of date.
A system of bureaucracy based on forms devised solely to satisfy the organisation’s human resources department so that its main purpose, that of identifying individual and organisation performance and improvement, is forgotten.

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(a) Principal audit risks
Industry
‘Farming’ is an inherently risky business activity – being subject to conditions (e.g. disease, weather) outside management’s
control. In some jurisdictions, where the industry is highly regulated, compliance risk may be high.
The risks of mail order retailing ‘exclusive’ products are higher (than for ‘essential’ products, say) as demand fluctuations are
more dramatic (e.g. in times of recession). However, the Internet has provided GVF with a global customer base.
The planned audit approach should be risk-based combined with a systems approach to (say) controls in the revenue cycle.
Goat herd
The goat herd will consist of:
■ mature goats held for use in the production of milk and kids which are held for replacement purposes (i.e. of the nature
of non-current tangible assets); and
■ kids which are to be sold (i.e. of the nature of inventory).
Tutorial note: IAS 41 is not an examinable document at 2.5 and candidates are not expected to be familiar with its
requirements. However, those candidates showing an awareness that biological assets are excluded from the scope of
IAS 16 because they are covered by IAS 41 and answered accordingly were not penalised but awarded equivalent marks.
Therefore, the number of animals in each category must be accurately ascertained to determine:
■ the balance sheet carrying amounts analysed between current and non-current assets; and
■ the charge to the income statement (e.g. for depreciation (IAS 16) and fair value adjustments (IAS 41)).
There is a risk that the carrying amount of the production animals will be misstated if, for example:
■ useful lives/depreciation rates are unreasonable;
■ estimates of residual values are not kept under review;
■ they are impaired.
Tutorial note: Under IAS 41 animals raised during the year should be recognised initially and at each balance sheet date
at fair value less estimated point-of-sale costs. There is therefore a risk of misstatement if fair value cannot be measured
reliabiy (e.g. if market-determined prices are not available). However, this seems unlikely.
Kids will be understated in the balance sheet if they are not recorded on birth (i.e. their existence needs to be recorded in
order that a value be assigned to them).
The net realisable value of animals held for sale may fall below cost if they are not sold soon after reaching optimal size and
weight.
The cost of goats is likely to be subjective. For example, the cost of producing a mature goat from a kid might include direct
costs (e.g. vetinary bills and cost of feed) and attributable overheads (e.g. sheltering). Care must be taken not to carry the
goat herd at more than the higher of value in use and fair value less costs to sell (IAS 36 Revised).
Unrecorded revenue
Raised (bred) animals are not purchased and, in the absence of documentation supporting their origination, could be sold for
cash (and the revenue unrecorded).
Although the controls over retailing around the world are likely to be strong, there are other sources of income – the shop and
other activities at the farm. Although revenue from these sundry sources may not be material, there is a risk that it could go
unrecorded due to lack of effective controls.
‘Rabida Red’
The cost of an ingredient which is essential to the manufacturing process has increased significantly. If the cost is passed on
to the customers, demand may fall (increasing going concern risk).
Supplies of the ingredient, Innittu, may be restricted – further increasing going concern risk.
Any disclosure of GVF’s socio-environmental policies (e.g. in other information presented with the audited financial
statements), if any, should be scrutinised to ensure that it does not mislead the reader and/or undermine the credibility of the
financial statements.
‘Bachas Blue’
If ‘Bachas Blue’ has been specifically cited as a cause of a skin disorder then GVF could face contingent liabilities for pending
litigation. However, it is more likely that the fall in demand has threatened GVF’s going concern. As the fall in demand has
not been permanent, this threat has been removed for the time being.
The impairment loss previously recognised in respect of the equipment used exclusively in the manufacture of Bachas Blue
should be reversed if there has been a change in the estimates used to determine their recoverable amount (IAS 36
‘Impairment of Assets’).
The recoverable amount would have been based on value in use (since net selling price would not have been applicable).
GVF’s management will have to provide evidence to support their best estimates of future cash flows for the recalculation of
value in use at 30 September 2005.
Maturing cheese
The substance of the sale and repurchase of cheese is that of a loan secured on the inventory. Therefore revenue should not
be recognised on ‘sale’ to Abingdon Bank. The principal terms of the secured borrowings should be disclosed, including the
carrying amount of the inventory to which it applies.
Borrowing costs should all be recognised as an expense in the period unless it is GVF’s policy to capitalise them (the allowed
alternative treatment under IAS 23 ‘Borrowing Costs’). Since the cost of inventories should include all costs incurred in
bringing them to their present location and condition (of maturity), the cost of maturing cheese should include interest at 7%
per six months (as clearly the borrowings are specific). There is a risk that, if the age of maturing cheeses is not accurately
determined, the cost of cheese will be misstated.
Health and safety legislation
At 30 September 2005 the legislation will have been in effect for three months. If GVF’s management has not replaced the
shelves, a provision should be made for the penalties/fines accruing from non-compliance.
If the legislation is complied with:
■ plant and equipment may be overstated e.g:
– if the replaced shelves are not written off;
– if the value of equipment, etc is impaired because the maturing cheese business is to be downsized;
■ inventory may be overstated (e.g. if insufficient allowance is made for the deterioration in maturing cheese resulting from
handling it to replace the shelves);
■ GVF may no longer be a going concern if it does not have the produce to sell to its exclusive customers.
Grant
There is a risk that the grant received has become repayable. For example, if the terms of the grant specified a timeframe. for
the development which is now to be exceeded. In this case the grant should be presented as a payable in the balance sheet.
If the reason for deferring the implementation is related to cash flow problems, this could have implications for the going
concern of GVF.

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