Requirement (b), for 6 marks contained two short requirements concerning the auditor’s report. The first issue concerned whether the auditor’s report should be issued prior to receiving written representations from management, and the second dealt with whether an auditor’s report should refer to a matter in the previous year’s financial statements, which caused a modification of the previous year’s auditor’s opinion, but which had since been resolved.

Candidates were more comfortable with the first issue, usually correctly identifying that the written representation is a necessary piece of audit evidence, and that a verbal confirmation is not sufficient. On the second issue many answers were just too brief – often little more than a few words – usually saying that no reference need be made. These requirements were fairly knowledge based, and it was apparent that a lot of candidates who chose to attempt question 5 did so on the basis of requirement (a) and not requirement (b).