Everything is not easy in business!

Try to solve 3 problems for auditors

Together with KPMG experts, we compiled three tasks based on very real situations. Try to find a solution and send your answers through the form at the bottom of the page. By the way, the KPMG is actively looking for new employees, so if you cope, you will be invited to an interview.

Problem No. 1. Revaluation of the issued loan

You are instructed to check the financial investments of a large Russian production holding. Its assets include a large loan (several times larger than the level of materiality ), which was issued by a third -party development company for five years. The amount of the loan for the reporting date amounted to $ 100 million - the company should pay so much at the end of the contract. At the same time, each quarter is accrued at a rate of 4% per annum. These interest are paid 15 days after the end of each quarter. The holding, which issued the loan, received a land plot in the suburbs from the company, on which the construction of an elite country village was planned. After a couple of years, an industrial zone began to grow near this land plot, and the construction of the village was once again postponed. The company's management attracted an independent appraiser and found out that the site costs no more than $ 91 million. And a week before the end of the year, analysts reported that the demand for suburban cottages in Russia fell a lot.

What are the risks for financial statements and what to do to the auditor? What is the amount in which the loan should be shown in the holding of the holding at the end of the year?

Problem No. 2.

Now you have to conduct an audit of the financial reporting of the investment fund. It formed a couple of years ago, but for the first time prepares consolidated reporting for 2018. Fund managers believe that almost all investments in the company need to be shown in reporting in the amount of the cost of the fund for their acquisition. There are four companies in the portfolio of the fund:

• The first - develops a wide spectrum. The fund bought the shares of this private company in December 2018, when it attracted money for the next stage of clinical trials.
• The second - for several years has been developing a vaccine for the treatment of tunnel syndrome among office workers. This company owns the Fund together with another investor. In January 2019, the company issued a report on the results of the last stage of testing, which showed that the vaccine does not work at all.
• The third is engaged in green electricity. She builds windmills and solar farms throughout Russia. In June 2018, the company very successfully placed its shares on the exchange.
• The fourth is a private airline, which has been working for many years and has a stable market share. Three investors own it in equal shares, including our fund.

What risks do you see in the approach of the fund managers to draw up consolidated financial statements?

What needs to be done to the auditor to confirm the amount in which the investment should be reflected?

Task No. 3. Inventory of the logs of logs

Finally, you were sent to the forests of the Arkhangelsk region and instructed to conduct an inventory of reserves of a local woodworking plant.

The company produces environmentally friendly wooden windows for cottages. Logs of different tree species are used as raw materials. The warehouse of the company is an open area beyond the territory of the plant. On the snowy field in three parallel lines, logs are neatly stacked. In each line of the log of only one breed of trees. All logs are the same in length, but different in diameter. In some places, the height of the styling reaches about half a meter, in others - up to 5 meters.

• In one line lies a birch, and the logs are laid with a uniform hill.

• In the second - alder. The trees are laid in two slides, reminiscent of the back of the camel.

• In the third line - oak. The laying of logs is chaotic, resembles a ruble exchange rate in relation to the dollar.

You have a roulette, a notebook with a pencil and a calculator. In one day you need to calculate the volume of these logs in cubic meters. At the same time, you cannot move them! How will you solve this problem?