Question 5c
Examiners Report

Part (c) was for six marks and briefly outlined that Darren Co had included as a key performance indicator in its integrated report the percentage increase in profit before tax. Candidates were provided with the information to calculate that the indicator was incorrect.

It was unfortunate that a significant minority of candidates were unable to work out a simple percentage increase despite the information being clearly presented in the question scenario. Despite this, almost all answers identified that the stated key performance indicator was incorrect.

The best answers explained that management should be asked to amend the figure in the integrated report, and that if it remained uncorrected it would not impact on the audit opinion, but should lead to the inclusion of an Other Matter paragraph within the audit report.

Weaker answers suggested that the opinion should be modified due to material misstatement which is incorrect. Again, there were few suggestions of further action to be taken other than “discuss with management”.

The main weakness in answers to this question was a lack of specificity in the actions that had been recommended, and in many answers no actions were provided at all, severely limiting the marks that could be awarded.

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