Requirement (c) was for eight marks, asking candidates to recommend audit procedures to be performed on the portfolio of short term investments and on the EPS figure. Some candidates proved able to provide a good list of recommendations, but this was the minority.

Answers tended to be better in relation to the investment portfolio, with many candidates appreciating that determining the short-term nature of the investments was an important issue and that the fair value of the shares at the year end could be agreed to stock market listings.

However, most candidates could only provide vague suggestions such as “discuss with the board” or “agree to supporting documentation”, and in relation to the fair value of the share many candidates could only suggest to “rely on an expert” which was not necessary given that the investment relates to the shares of listed companies.

Some candidates tried to make the recommended procedures much too complicated, not fully appreciating that traded equity shares can be easily valued and documented.