黑龙江考生注意：在ACCA考试中提前交卷后果怎么样？不堪设想……

正确答案：
(d) Factors that should be considered by the directors of ITL include:
(i) The cash flows are estimated. How accurate they are requires detailed consideration.
(ii) The cost of capital used by the finance director might be inappropriate. For example if the Snowballer proposal is less
risky than other projects undertaken by ITL then a lower cost of capital should be used.
(iii) The rate of inflation may vary from the anticipated rate of 4% per annum.
(iv) How strong is the Olympic brand name? The directors are proposing to pay royalties equivalent to 6% of sales revenue
during the six years of the anticipated life of the project. Should they market the Snowballer themselves?
(v) Would competitors enter the market and what would be the likely effect on sales volumes and selling prices?
N.B: Only three factors were required.

正确答案：
(b) Financial statement ratios can provide useful measures of liquidity but an analysis of the information in the cash flow
statement, particularly cash flow generated from operations, can provide specific insights into the liquidity of Warrburt. It is
important to look at the generation of cash and its efficient usage. An entity must generate cash from trading activity in order
to avoid the constant raising of funds from non-trading sources. The ‘quality of the profits’ is a measure of an entity’s ability
to do this. The statement of cash flow shows that the company has generated cash in the period despite sustaining a
significant loss ($92m cash flow but $21m loss). The problem is the fact that the entity will not be able to sustain this level
of cash generation if losses continue.
An important measure of cash flow is the comparison of the cash from operating activity to current liabilities. In the case of
Warrburt, this is $92m as compared to $155m. Thus the cash flow has not covered the current liabilities.
Operating cash flow ($92 million) determines the extent to which Warrburt has generated sufficient funds to repay loans,
maintain operating capability, pay dividends and make new investments without external financing. Operating cash flow
appears to be healthy, partially through the release of cash from working capital. This cash flow has been used to pay
contributions to the pension scheme, pay finance costs and income taxes. These uses of cash generated would be normal for
any entity. However, the release of working capital has also financed in part the investing activities of the entity which includes
the purchase of an associate and property, plant and equipment. The investing activities show a net cash outflow of
$43 million which has been financed partly out of working capital, partly from the sale of PPE and AFS financial assets and
partly out of cash generated from operations which include changes in working capital. It seems also that the issue of share
capital has been utilised to repay the long term borrowings and pay dividends. Also a significant amount of cash has been
raised through selling AFS investments. This may not continue in the future as it will depend on the liquidity of the market.
This action seems to indicate that the long term borrowings have effectively been ‘capitalised’. The main issue raised by the
cash flow statement is the use of working capital to partially finance investing activities. However, the working capital ratio
and liquidity ratios are still quite healthy but these ratios will deteriorate if the trend continues.

正确答案：
5 Dexter Co
(a) Responsibilities of management and auditors
Responsibilities
ISA 570 Going Concern provides a clear framework for the assessment of the going concern status of an entity, and
differentiates between the responsibilities of management and of auditors. Management should assess going concern in order
to decide on the most appropriate basis for the preparation of the financial statements. IAS 1 Presentation of Financial
Statements (revised) requires that where there is significant doubt over an entity’s ability to continue as a going concern, the
uncertainties should be disclosed in a note to the financial statements. Where the directors intend to cease trading, or have
no realistic alternative but to do so, the financial statements should be prepared on a ‘break up’ basis.
Thus the main focus of the management’s assessment of going concern is to ensure that relevant disclosures are made where
necessary, and that the correct basis of preparation is used.
The auditor’s responsibility is to consider the appropriateness of the management’s use of the going concern assumption in
the preparation of the financial statements and to consider whether there are material uncertainties about the entity’s ability
to continue as a going concern that need to be disclosed in a note.
The auditor should also consider the length of the time period that management have looked at in their assessment of going
concern.
The auditor will therefore need to come to an opinion as to the going concern status of an entity but the focus of the auditor’s
evaluation of going concern is to see whether they agree with the assessment made by the management. Therefore whether
they agree with the basis of preparation of the financial statements, or the inclusion in a note to the financial statements, as
required by IAS 1, of any material uncertainty.
Evaluation techniques
In carrying out the going concern assessment, management will evaluate a wide variety of indicators, including operational
and financial. An entity employing good principles of corporate governance should be carrying out such an assessment as
part of the on-going management of the business.
Auditors will use a similar assessment technique in order to come to their own opinion as to the going concern status of an
entity. They will carry out an operational review of the business in order to confirm business understanding, and will conduct
a financial review as part of analytical procedures. Thus both management and auditors will use similar business risk
assessment techniques to discover any threats to the going concern status of the business.
Auditors should not see going concern as a ‘completion issue’, but be alert to issues affecting going concern throughout the
audit. In the same way that management should continually be managing risk (therefore minimising going concern risk),
auditors should be continually be alert to going concern problems throughout the duration of the audit.
However, one difference is that when going concern problems are discovered, the auditor is required by IAS 570 to carry out
additional procedures. Examples of such procedures would include:
– Analysing and discussing cash flow, profit and other relevant forecasts with management
– Analysing and discussing the entity’s latest available interim financial statements
– Reviewing events after the period end to identify those that either mitigate or otherwise affect the entity’s ability to
continue as a going concern, and
– Reading minutes of meetings of shareholders, those charged with governance and relevant committees for reference to
financing difficulties.
Management are not explicitly required to gather specific evidence about going concern, but as part of good governance would
be likely to investigate and react to problems discovered.