2020年ACCA考试“四选二”科目特点及报考建议

3 Local neighbourhood shops are finding it increasingly difficult to compete with supermarkets. However, three years

ago, the Perfect Shopper franchise group was launched that allowed these neighbourhood shops to join the group

and achieve cost savings on tinned and packaged goods, particularly groceries. Perfect Shopper purchases branded

goods in bulk from established food suppliers and stores them in large purpose-built warehouses, each designed to

serve a geographical region. When Perfect Shopper was established it decided that deliveries to these warehouses

should be made by the food suppliers or by haulage contractors working on behalf of these suppliers. Perfect Shopper

places orders with these suppliers and the supplier arranges the delivery to the warehouse. These arrangements are

still in place. Perfect Shopper has no branded goods of its own.

Facilities are available in each warehouse to re-package goods into smaller units, more suitable for the requirements

of the neighbourhood shop. These smaller units, typically containing 50–100 tins or packs, are usually small trays,

sealed with strong transparent polythene. Perfect Shopper delivers these to its neighbourhood shops using specialist

haulage contractors local to the regional warehouse. Perfect Shopper has negotiated significant discounts with

suppliers, part of which it passes on to its franchisees. A recent survey in a national grocery magazine showed that

franchisees saved an average of 10% on the prices they would have paid if they had purchased the products directly

from the manufacturer or from an intermediary – such as cash and carry wholesalers.

As well as offering savings due to bulk buying, Perfect Shopper also provides, as part of its franchise:

(i) Personalised promotional material. This usually covers specific promotions and is distributed locally, either using

specialist leaflet distributors or loosely inserted into local free papers or magazines.

(ii) Specialised signage for the shops to suggest the image of a national chain. The signs include the Perfect Shopper

slogan ‘the nation’s local’.

(iii) Specialist in-store display units for certain goods, again branded with the Perfect Shopper logo.

Perfect Shopper does not provide all of the goods required by a neighbourhood shop. Consequently, it is not an

exclusive franchise. Franchisees agree to purchase specific products through Perfect Shopper, but other goods, such

as vegetables, fruit, stationery and newspapers they source from elsewhere. Deliveries are made every two weeks to

franchisees using a standing order for products agreed between the franchisee and their Perfect Shopper sales

representative at a meeting they hold every three months. Variations to this order can be made by telephone, but only

if the order is increased. Downward variations are not allowed. Franchisees cannot reduce their standing order

requirements until the next meeting with their representative.

Perfect Shopper was initially very successful, but its success has been questioned by a recent independent report that

showed increasing discontent amongst franchisees. The following issues were documented.

(i) The need to continually review prices to compete with supermarkets

(ii) Low brand recognition of Perfect Shopper

(iii) Inflexible ordering and delivery system based around forecasts and restricted ability to vary orders (see above)

As a result of this survey, Perfect Shopper has decided to review its business model. Part of this review is to reexamine

the supply chain, to see if there are opportunities for addressing some of its problems.

Required:

(a) Describe the primary activities of the value chain of Perfect Shopper. (5 marks)

3 You are the manager responsible for the audit of Keffler Co, a private limited company engaged in the manufacture of

plastic products. The draft financial statements for the year ended 31 March 2006 show revenue of $47·4 million

(2005 – $43·9 million), profit before taxation of $2 million (2005 – $2·4 million) and total assets of $33·8 million

(2005 – $25·7 million).

The following issues arising during the final audit have been noted on a schedule of points for your attention:

(a) In April 2005, Keffler bought the right to use a landfill site for a period of 15 years for $1·1 million. Keffler

expects that the amount of waste that it will need to dump will increase annually and that the site will be

completely filled after just ten years. Keffler has charged the following amounts to the income statement for the

year to 31 March 2006:

– $20,000 licence amortisation calculated on a sum-of-digits basis to increase the charge over the useful life

of the site; and

– $100,000 annual provision for restoring the land in 15 years’ time. (9 marks)

Required:

For each of the above issues:

(i) comment on the matters that you should consider; and

(ii) state the audit evidence that you should expect to find,

in undertaking your review of the audit working papers and financial statements of Keffler Co for the year ended

31 March 2006.

NOTE: The mark allocation is shown against each of the three issues.

1 Stuart is a self-employed business consultant aged 58. He is married to Rebecca, aged 55. They have one child,

Sam, who is aged 24 and single.

In November 2005 Stuart sold a house in Plymouth for ￡422,100. Stuart had inherited the house on the death of

his mother on 1 May 1994 when it had a probate value of ￡185,000. The subsequent pattern of occupation was as

follows:

1 May 1994 to 28 February 1995 occupied by Stuart and Rebecca as main residence

1 March 1995 to 31 December 1998 unoccupied

1 January 1999 to 31 March 2001 let out (unfurnished)

1 April 2001 to 30 November 2001 occupied by Stuart and Rebecca

1 December 2001 to 30 November 2005 used occasionally as second home

Both Stuart and Rebecca had lived in London from March 1995 onwards. On 1 March 2001 Stuart and Rebecca

bought a house in London in their joint names. On 1 January 2002 they elected for their London house to be their

principal private residence with effect from that date, up until that point the Plymouth property had been their principal

private residence.

No other capital disposals were made by Stuart in the tax year 2005/06. He has ￡29,500 of capital losses brought

forward from previous years.

Stuart intends to invest the gross sale proceeds from the sale of the Plymouth house, and is considering two

investment options, both of which he believes will provide equal risk and returns. These are as follows:

(1) acquiring shares in Omikron plc; or

(2) acquiring further shares in Omega plc.

Notes:

1. Omikron plc is a listed UK trading company, with 50,250,000 shares in issue. Its shares currently trade at 42p

per share.

2. Stuart and Rebecca helped start up the company, which was then Omega Ltd. The company was formed on

1 June 1990, when they each bought 24,000 shares for ￡1 per share. The company became listed on 1 May

1997. On this date their holding was subdivided, with each of them receiving 100 shares in Omega plc for each

share held in Omega Ltd. The issued share capital of Omega plc is currently 10,000,000 shares. The share price

is quoted at 208p – 216p with marked bargains at 207p, 211p, and 215p.

Stuart and Rebecca’s assets (following the sale of the Plymouth house but before any investment of the proceeds) are

as follows:

Assets Stuart Rebecca

￡ ￡

Family house in London 450,000 450,000

Cash from property sale 422,100 –

Cash deposits 165,000 165,000

Portfolio of quoted investments – 250,000

Shares in Omega plc see above see above

Life insurance policy note 1 note 1

Note:

1. The life insurance policy will pay out a sum of ￡200,000 on the death of the first spouse to die.

Stuart has recently been diagnosed with a serious illness. He is expected to live for another two or three years only.

He is concerned about the possible inheritance tax that will arise on his death. Both he and Rebecca have wills whose

terms transfer all assets to the surviving spouse. Rebecca is in good health.

Neither Stuart nor Rebecca has made any previous chargeable lifetime transfers for the purposes of inheritance tax.

Required:

(a) Calculate the taxable capital gain on the sale of the Plymouth house in November 2005 (9 marks)

5 You are the manager responsible for the audit of Blod Co, a listed company, for the year ended 31 March 2008. Your

firm was appointed as auditors of Blod Co in September 2007. The audit work has been completed, and you are

reviewing the working papers in order to draft a report to those charged with governance. The statement of financial

position (balance sheet) shows total assets of $78 million (2007 – $66 million). The main business activity of Blod

Co is the manufacture of farm machinery.

During the audit of property, plant and equipment it was discovered that controls over capital expenditure transactions

had deteriorated during the year. Authorisation had not been gained for the purchase of office equipment with a cost

of $225,000. No material errors in the financial statements were revealed by audit procedures performed on property,

plant and equipment.

An internally generated brand name has been included in the statement of financial position (balance sheet) at a fair

value of $10 million. Audit working papers show that the matter was discussed with the financial controller, who

stated that the $10 million represents the present value of future cash flows estimated to be generated by the brand

name. The member of the audit team who completed the work programme on intangible assets has noted that this

treatment appears to be in breach of IAS 38 Intangible Assets, and that the management refuses to derecognise the

asset.

Problems were experienced in the audit of inventories. Due to an oversight by the internal auditors of Blod Co, the

external audit team did not receive a copy of inventory counting procedures prior to attending the count. This caused

a delay at the beginning of the inventory count, when the audit team had to quickly familiarise themselves with the

procedures. In addition, on the final audit, when the audit senior requested documentation to support the final

inventory valuation, it took two weeks for the information to be received because the accountant who had prepared

the schedules had mislaid them.

Required:

(a) (i) Identify the main purpose of including ‘findings from the audit’ (management letter points) in a report

to those charged with governance. (2 marks)