This question was based on a sales and despatch system, with the latter parts focusing on the audit of debtors/receivables. Of the various requirements, candidates were expected to use the scenario to provide relevant points in part (b), while the scenario also provided some support and ideas for other sections of the question. The use of CAATs was specifically excluded from this question to ensure that candidates focused on the manual elements of the various systems.

Candidates were required to explain the steps necessary to check the accuracy of the previous year’s control questionnaires. To be clear, the question requirement was checking the accuracy of, not the specific content or production of the control questionnaires.

Most candidates recognised this distinction and provided some appropriate content on verifying that documentation. A minority of candidates proceeded to explain how the whole despatch and sales system could be audited. This approach was inappropriate for two reasons:

• Firstly, with only 4 marks available for the question, explaining how to audit an entire system would take much more than 4 marks.
• Secondly, explaining how to audit a system was not relevant to the question requirement of checking the accuracy of some documentation. Agreed, comparing the documentation to the actual systems was a valid point, but not a full repeat audit of that system.

The question was worth 4 marks. Most candidates provided between 2 and 4 points in their answers, with some candidates correctly explaining basic procedures like asking management for any changes in the systems and carrying out observation tests.

Example comments provided and reasons why those comments did not obtain a pass standard are noted below:

Answer comment
“The questionnaire does not need to be reviewed because systems have not changed”

Examiners assessment of comment
The scenario actually stated “as far as you are aware” the systems have not changed, indicating some uncertainty. Furthermore, just accepting prior year documentation without some basic checking to determine its accuracy is inappropriate as reliance would be being placed on essentially untested material.

Answer comment
“The most cost effective method of checking systems is the use of CAATs”.

Examiners assessment of comment
There may be some merit in the comment. However, as the scenario specifically ruled out the use of CAATs, the comment was not appropriate for this particular client.

Other common errors included:

• In a minority of situations, assuming that the client would produce and review the questionnaires. As with any audit documentation, it is the auditor who will obtain evidence on that item, not simply relying on the ability of the client.

This may not have appeared to be one of easiest introductory questions to an examination. The overall standard was just below the pass standard. Candidates are recommended where possible to use their basic auditing knowledge on verifying something to obtain marks in this type of question.