Candidates were required explain whether two events were adjusting or non-adjusting (for part (i)) and then explain the auditor’s responsibility and actions that should be carried out on the two events (for part (ii)).

The question was worth 16 marks in total. For part (i) with 4 marks, there was clearly 2 marks for explaining whether each event was adjusting or non-adjusting. For part (ii) with 12 marks, again there was clearly 6 marks to explain actions and responsibilities. 2 marks were also available for stating general responsibilities of the auditor regarding subsequent events.

In part (i) candidates normally recognised which event was adjusting and which was not, although a small minority did swap the events around. Candidates were not always clear regarding the reason for the events being adjusting or not, and frequently mentioned non-adjusting events as simply taking place after the end of the reporting period, without reference to the event affecting conditions at that date

Answer comment (part (i))

“Event 2 is non-adjusting because it takes place after the year end and the amount of the claim has yet to be determined.”

Examiners assessment of comment
The answer is almost correct; however, reference must be made to the conditions at the year end to determine whether or not the event is non-adjusting, not the amount of the claim. Stating that the event did not affect conditions at the year-end would therefore be an appropriate comment.