The second requirement, for 8 marks, related specifically to the share- based payment plan and the leased asset, asking candidates to recommend the principal audit procedures to be performed in respect of the two items.

Specifically, procedures relating to the recognition and measurement of the share -based payment plan, and the classification of the lease were required. Unfortunately answers to this requirement were inadequate.

Most candidates could do little more than repeat the necessary accounting treatment, and then request a management representation that the correct treatment has been carried out. Some answers recommended a wider range of procedures, but some were often irrelevant to the specific requirement, e.g. not focussing on the classification of the lease.

The procedures recommended were often too vague to score credit, e.g. many candidates recommended that the lease document should be obtained, but did not say what the auditor should do with it, other than sometimes suggesting a “review”. Candidates should note that obtaining a document is not in itself an audit procedure.

There were 2 professional marks available in connection with requirement (a). Most candidates attempted an appropriate format by included an appropriate heading and introduction, and it was pleasing to see a reasonable proportion of answers including a conclusion as to the overall level of audit risk identified.

When producing figures as for the required analytical review, it is good practice to present the trends and ratios calculated in a tabular format, which can then be referred to in the main body of the answer. Candidates are reminded that resources are available on ACCA’s website providing guidance on the importance of professional marks.

The second task, in requirement (b), required candidates to comment on practice management and quality control issues raised by another audit manager’s suggestions to help the audit firm’s profitability, for 6 marks.

Most candidates scored well on this requirement, working through the manager’s suggestions and commented that each would impact on quality control in a detrimental way. There were fewer comments on practice management issues, but a lot of candidates at least mentioned that the suggestions could in fact lead to the audit firm losing audit clients rather than gaining new clients.

Many answers correctly made the link between quality control and ethical issues, but some took this too far, and almost exclusively discussed general ethical issues rather than the specifics of the question scenario.

It was encouraging to see that many candidates allocated their time well while answering Q1. It was rare to see requirement (b) not attempted, which allowed candidates to obtain some of the more straight forward marks on this question.