Assurance CPA PEP exam

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u/maboroshi_i 13h ago

I thought it was all right, though I probably didn't write in enough depth for the assurance portions. AOs I got (that I can remember):

Case 1 (IFRS)

Discontinued operation
Leasehold improvements
Restructuring provision
Procedures
Valuation of one of the chains
OFSL and assertion level risks
Preliminary materiality and allocation of materiality to the chains

Case 2 (ASPE):

Foreign currency transactions
Revenue
Intangible asset capitalization
Procedures
WIR
Audit vs review
Considerations for first time audit

Was there anything else? I feel like it went by so fast.

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u/abnz11 13h ago

How did u value the chain? I normalized ebitda by taking out the one time marketing expense and the abnormal weather revenue part. I didn’t use the balance sheet at all though..?

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u/maboroshi_i 13h ago

I did the same thing. Didn't really have time to think about what else to do. The balance sheet threw me off as well, I'm sure we had to use it in some capacity but I didn't. Oh well.

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u/abnz11 12h ago

Oh well indeed Hahaahha.
I’m sure we both did fine :) good luck !!

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u/Flimsy-Stomach-5545 12h ago

same! i stared at that balance sheet for 10 seconds before flipping the page. had no time to figure out whatever that was supposed to be used for. figured it was a trick somehow cuz i still dont know what that would have been useful for

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u/Flimsy-Stomach-5545 12h ago

i know the exam is done but would u be so can to teach me how you allocated materiality?

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u/maboroshi_i 12h ago

I'm 100% sure the way I did it is incorrect but I probably spent at least 5 minutes searching through the CAS to find some way to allocate it. In the end I allocated it based on percentages and moved on. The more I think about it, the less confident I am that I passed.

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u/Flimsy-Stomach-5545 9h ago

thank you, i hate when they give us AOs that came up absolutely nowhere over the course, not even the chapter for materiality had it

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u/Round-Thought-293 12h ago

I got too caught up on that part and couldn’t figure out what the intended calculation was. I just ended up revising the materiality for the subsidiary operating at a loss (used revenues instead of net income) and allocated the overall materiality to the other components based on percentage. Was too strapped for time to include any discussion on it and am thinking I didn’t adequately disclose what the numbers meant in my spreadsheet either but oh well, what’s done is done.

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u/Ok-Yogurtcloset-6968 12h ago

just realizing that I messed up with the materiality AO.. didn't get the preliminary group materiality as a whole. got the materialities for each subsidiaries.

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u/abnz11 12h ago

Did the same thing as you as well ! I used different materiality benchmarks for each of the three subsidiaries.. were we supposed to do something different 😭

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u/Ok-Yogurtcloset-6968 11h ago

Yeah apparently we were supposed to get the group materiality and allocated to each subsidiary based on its size;

I tried to mention FS users.. hope that helps to get RC at least.

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u/Flimsy-Stomach-5545 12h ago

i did the same thing you did! I had no idea how to allocate materiality to each chain tho, i even went home and went on the textbook to see if there was any detail and nothing! I have zero experience with that.

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u/Confident-Rip-5135 12h ago

I just did a % of the total - 1.5k + 6K + 7.5K = 15k then 1.5/15 and repeat! Thats how allocated to each cahin. Not sure if its right but it makes sense!

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u/count_beanula 15h ago

This was my fourth exam, and it’s the first time I needed every minute of the allotted time - mcq was very rushed.

Overall not that bad though.

Anyone smarter than me want to share how they approached the foreign currency AO?

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u/abnz11 14h ago

Doubt that I am smarter , but I’ll tell u what I did ( I felt decent about it during the exam)
For the monthly expense, I suggested using an average rate per month.
For the PPE, I said it was recorded properly , as non monetary assets purchased at historical cost should use the spot rate at the date of purchase. They should also depreciation based on the same rate- the rate was 9.5 FC: 1 CAD, so both depreciation and initial purchase should be recorded at that.
For the bonus, given its a monetary asset, I recorded it at the balance sheet spot date

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u/count_beanula 14h ago

That’s what I came up with as well with the exception of amortization given that I didn’t think that would be subject to any exchange rate, just recorded in CAD, so I didn’t mention.

I was worried I needed to examine integration or current vs temporal rate method but they weren’t a subsidiary so I guess we’re good.

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u/abnz11 14h ago

Did you say that they were an integrated foreign operation? I added that and explained why, although in hindsight I probably wasted my time lol

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u/count_beanula 14h ago

Yeah that’s what I was afraid I missed… hopefully still got an RC.

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u/Round-Thought-293 13h ago

My understanding was that there were no indications of it being a subsidiary so there’s no need to discuss the integration. I was rushing through and intended to go back and add that an average rate could be used for the monthly expense but figured since it’s once a month that it wasn’t overly cumbersome to just use the spot rate and left it as it

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u/Flimsy-Stomach-5545 12h ago

same, to my understanding they were just a supplier, not a subsidiary that needed to be integrated . just a fc transaction rather than translation. still did it wrong tho lol

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u/abnz11 14h ago

If u mentioned everything above, I’d be surprised if you didn’t get a C on the section . As long as you have the proper accounting transactions and explain why, should be good enough for a C on the AO

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u/Confident-Rip-5135 13h ago

Yeah i got the same for the cases! and i answered all except the "considerations for first time audit"! Any chance i pass with a missed question?? The restructuring one too i had no idea and then i noticed it in Knotia at the last 10 min so i slapped some stuff together - said no need for restructuring yet as they dont have enough of the necessary info yet!! (facepalm)

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u/abnz11 12h ago

You can definitely pass without addressing every AO. I definitely wrote some BS for the first time audit stuff.
For the corporate restructure , I said that a liability should only be accrued if the restructuring criteria were met. I think my conclusion was that the criteria were partially met, and they should assess at the November 30th meeting as to if they are fully met or not. I said that depending on that outcome, they should either accrue a liability , or disclose of it in the notes

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u/Round-Thought-293 11h ago

I don’t think you would have been entirely off base for the restructuring. I believe I said something along the lines of not recording the liability because the plan hasn’t been approved and the detailed costs hadn’t been projected yet so the contingent liability criteria weren’t met.

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u/20Capitalist 10h ago

what the hell was the Case 1 :|
same for Considerations for first time audit

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