ACCA AAA September 2026: Why Your Due Diligence Procedures Score Zero (25 Marks)
A written representation is an audit procedure. In a due diligence question it scores nothing. AAA passed 39% in June 2026 — the lowest of the whole sitting — and Question 2 in September/December 2025 is a clean illustration of why.
The examiner's diagnosis
Question 2 (Kerr Co) was a 25-mark question on a due diligence engagement. The examiner's summary is blunt: performance was "disappointing", and "many candidates clearly did not understand the main objective of a due diligence engagement with many answering both parts of the requirement from an audit perspective."
That is the whole problem in one sentence. Due diligence is not a smaller audit. There is no opinion on the financial statements, no assertions to sign off, and no set of ISAs telling you what evidence is sufficient. Your client is a buyer trying to work out whether the price is right and what they are inheriting. Every procedure has to serve that decision.
What the warranty detail was actually telling you
Bright Co, the target company, sold a seven-year warranty with its vehicles, and the scenario stated this was not accounted for as a separate performance obligation under IFRS 15. That detail was there to tell you the warranty type: an assurance-type warranty, accounted for under IAS 37, which on a seven-year term means a very large liability sitting in the target's balance sheet.
The requirement asked why due diligence would focus on that area. Many candidates instead set out the IFRS 15 rules for when warranties do qualify as separate performance obligations — arguing with an accounting treatment the question had already settled. The examiner: "Providing the accounting rules or guidelines does not answer a requirement which asks why the due diligence assignment would focus on this area." Others challenged whether offering a seven-year warranty was commercially sensible at all, which is not the auditor's call.
What scored was scepticism about the estimate. A seven-year warranty period makes the assumptions harder and more subjective — and Bright Co's management have an incentive to keep the liability low, because a smaller provision means a higher selling price.
Worked example: two sets of procedures
The requirement asked for due diligence procedures on the warranty provision.
Scored no credit: "Review the warranty disclosure in the financial statements for completeness. Obtain a written representation from management confirming the provision is complete. Review board minutes for approval of the seven-year warranty period. Confirm revenue has been recognised in line with IFRS 15."
Scored: "Inspect the warranty agreement to establish exactly what the seven-year term covers and what is excluded. Obtain management's calculation of the provision and challenge the claim rate and average repair cost assumptions against actual historical claims. Perform analytical procedures on the movement in the warranty liability over recent years, and analyse claims by vehicle model and by age of vehicle to see whether particular models or later years of the warranty period drive disproportionate cost."
Same balance, same scenario. The first list is an audit programme aimed at an opinion nobody asked for. The second gives the buyer a defensible view of a liability they are about to own.
Three fixes before September
1. Write the client's decision at the top of your answer. One line: "Kerr Co needs to know whether the warranty liability is understated before agreeing a price." Then check each procedure against it. Anything that only supports an audit opinion gets cut.
2. Ban four phrases from non-audit requirements. Written representation, review the disclosure, tests of controls, and completeness of the assertion. All legitimate in an audit; all worth zero in due diligence.
3. Stop paying for facts you were given. On the acceptance requirement, candidates spent marks questioning whether the firm was competent — the scenario said it had a specialised transaction advisory team — and recommending a separate team, which the scenario had already stated. The examiner also warns that earning a fee is not itself a self-interest threat: "income must be generated for all work performed."
The bottom line
AAA has run at 38% in December 2025, 42% in March 2026 and 39% in June 2026. Section B is two compulsory 25-mark questions, so half the paper sits outside the familiar planning scenario — and that is where the examiner keeps finding audit answers to non-audit requirements.
Read the engagement before you read the numbers. It changes every procedure you write.