Part (c) for 7 marks required substantive procedures for verifying a company’s bank balance. It presented difficulties for many candidates.

Common errors included:

• Writing at length about the steps involved in obtaining a bank confirmation, even though this was not the requirement. 
• Focusing on testing transactions which would go through the bank account over the year as opposed to focusing on the year-end bank reconciliation. 
• Providing tests of controls over bank, this yet again demonstrated the confusion over substantive versus tests of control.

Those candidates who did understand the requirement often failed to focus enough on the auditing of the year-end bank reconciliation and hence lost out on marks in relation to such items as unpresented cheques and outstanding lodgements.

Substantive procedures over the key categories of assets and liabilities is a core part of the syllabus and future candidates must ensure that they devote adequate exam preparation time to this critical area.