The second part of the requirement focused on the audit report implications. This was also answered unsatisfactorily. Candidates did not seem to understand that the question wanted two situations, unable to confirm the balances and if they contained misstatements.

Many confused the two or thought they were the same situation and so just gave a combined answer. Very few candidates understood that if the opening balances contained misstatements then they may materially impact the current year financial statements.

It was apparent that there were significant gaps in candidates’ technical knowledge on the area of opening balances and the audit report implications of them.