ACCA AAA September 2026: The KAM Question Is in Every Exam — Here's Why Most Answers Fail

Completion and reporting questions appear in every single AAA exam session — the examining team says so explicitly. And in the latest examiner report, KAM answers were the difference between passing and failing Question 3.

What the SD 2025 examiner report found

Question 3 (Phoenix Co) tested Key Audit Matters. Candidates were given matters from the Report to Those Charged with Governance and asked: is this a KAM, and if so, what goes in the KAM section?

The weakest answers described where the KAM section sits in the auditor's report. Zero marks — position wasn't asked. Others ignored the instruction that requirement (a) was standalone and forced Phoenix Co into their answer, then repeated the same points in (b) and capped their own marks.

Two knowledge gaps stood out. Disappointingly few candidates knew that KAM are selected from matters communicated to TCWG — that's the ISA 701 starting point. And few knew the auditor gives no separate opinion on a KAM. On why KAM help users, many wrote that they "help investors make better financial decisions" — wrong, and it misunderstands the auditor's role. The marks were for transparency over the audit process and increased challenge over management judgements.

The partner rotation trap

One matter in the scenario was the rotation of the audit engagement partner. Most candidates correctly said "not a KAM" — then scored little, because they couldn't say why. Worse, many burned time reciting the IESBA seven-year rotation rule when the scenario clearly stated the safeguard was already in place.

Wrong answer: "The partner has served seven years so must rotate under the IESBA Code to reduce the familiarity threat…" — rule recitation, doesn't answer the question.

Right answer: "Not a KAM. Partner rotation is an independence matter communicated to TCWG under ISA 260. A KAM under ISA 701 must be an area of significant auditor judgement or attention in the audit of the financial statements — an independence disclosure doesn't meet that definition."

Same conclusion. Completely different marks.

The revenue recognition giveaway

Revenue recognition in the scenario was high risk and clearly a KAM — most candidates got that. But many then wrote out the IFRS 15 five-step model. In a reporting question, accounting rules score nothing. The marks were for justifying why it met the KAM definition (complex contracts driving risk, significant auditor attention, use of the internal expert team), describing how the audit addressed it, and referencing the related disclosures in the financial statements — the point most answers missed.

What to do

1. Apply the two-step ISA 701 filter to every matter. Step one: was it communicated to TCWG? Step two: did it require significant auditor attention — high assessed risk, significant judgement, or a major event? Both yes = KAM. Anything else = not a KAM, and say which step fails.

2. Justify your "no" as fully as your "yes." The conclusion is worth almost nothing on its own. The reasoning is where the technical and professional skills marks sit.

3. Ban accounting standards from reporting answers. If the requirement says KAM or auditor's report, IFRS recitation scores zero. Write about risk, audit response, and disclosure instead.

The bottom line

AAA's pass rate was 39% in June 2026 — still the lowest of any ACCA paper, even after the record 42% in March. The examiner's overall comment was blunt: candidates "continue to show a lack of what should be assumed knowledge for materiality, ethics and auditor reporting."

A reporting question is coming in September. It's the most predictable 25 marks on the paper — go and earn them.