Question 1a
Marking Guide

(a) Audit risk evaluation

Up to 3 marks for each audit risk, (unless indicated otherwise). Marks may be awarded for other, relevant audit risks not included in the marking guide.

In addition, ½ mark for relevant trends or calculations which form part of the evaluation of audit risk (max 3 marks).

Materiality calculations should be awarded 1 mark each (max 4 marks).
 – New audit client (2 marks)
 – Upgrade and maintenance costs
 – Component depreciation
 – Related party transaction disclosure
 – Borrowing costs
 – Operating licences
 – Revenue and profit trends
 – On-board sales
 – Revenue recognition
 – Cyber-security breach (control risk, corporate governance weakness, data corruption, financial statement implications – max 5 marks)

Maximum marks 26