Part (c) centred on the fact that the former finance director of Wire Co had joined the audit firm as an audit partner, and while he was not involved with the audit, he had discussed Wire Co with the audit engagement partner.

Most candidates realised that the former finance director could have influenced the partner and had motivation to do so given that he held shares in Wire Co for a period of time after joining the audit firm.

Stronger candidates were able to clearly explain the specific ethical threats that arose from the scenario, provided sensible recommendations, and also commented on the audit firm needing stronger firm-wide policies in the event of recruiting new audit partners from audit clients.

The scenario also stated that audit team members were being encouraged to cross-sell non-audit services to audit clients and that they would be appraised on this. The answers here tended not to focus on the problems caused by appraising staff on their success in selling services to audit clients but instead discussed generally the ethical problems of providing non-audit services to audit clients.

While not irrelevant, these discussions tended to be very general and not applied to the information in the scenario, resulting in answers that lacked focus. Generally, when candidates are discussing ethical threats they must take care to explain why a threat has arisen.

Many answers simply stated that a threat existed, for example by saying “holding shares in a client is a selfinterest threat” but did not develop the point further. This limits the amount of marks which can be awarded.

It was also clear that many candidates were not guided by the mark allocation for the various parts of the question, and a significant number of answers to part (c) were the same length as the answer to part (a).

As mentioned earlier, candidates should bear the mark allocation in mind, and use it to determine how long to spend in answering each part of the question.