This was the most popular of the optional questions, and focussed on a forensic investigation into a fraud that had been uncovered at an audit client. One of the requirements focussed on ethical issues, probably explaining the popularity of this question.

Requirement (a), for 6 marks, required an assessment of the ethical and professional issues raised by the request from the audit client to investigate the fraudulent activity. Most answers were satisfactory, identifying the main ethical threats (advocacy, self-review etc) raised by the scenario and explaining them to an extent.

Some answers also discussed whether the audit firm would have the necessary skills and resources to perform such a specialist piece of work. Some answers however tended to focus on why the audit firm had not discovered the fraud during the previous audit, and the possibility of the audit firm being sued for negligence or the need to “discipline” the audit manager.

Some answers also contained irrelevant discussions of the responsibilities of management and auditors in relation to fraud, and other answers used the fundamental principles as a framework for their answer, probably as this had been set on a previous exam paper, but with a completely different question requirement.