This 20-mark question was based on Redsmith Co which produced printers. The question tested the areas of risk identification, planning and acceptance of new audit engagements.

Part (a) for 3 marks required the process an auditor would undertake for an assessment of whether the preconditions for an audit were present. This is a new topic from the revised ISA 210 Agreeing the Terms of Audit Engagements.

A large number of candidates did not attempt this question, and where it was attempted it was inadequately answered. Most candidates who provided an answer clearly did not know what the preconditions were and therefore proceeded to write down anything they knew about new audit engagements.

Most provided answers which covered ethical considerations for new engagements such as contacting the outgoing auditors, or ensuring that they had an adequately trained audit team and other client screening procedures, also many covered the contents of an engagement letter.

It was fairly apparent from the answers provided that many candidates had simply not studied the new syllabus area of preconditions and hence were unable to score any marks at all. In addition many candidates wrote at considerable length for a 3 mark requirement. This put them under significant time pressure for later questions.

Candidates must note the total number of available marks and provide an answer in line with this.