Part (b) for 3 marks required an explanation of the auditors and management’s responsibilities regarding going concern. This was answered satisfactorily by many candidates.

Many candidates were able to suggest that “directors needed to prepare the financial statements on the correct basis” and that “auditors need to gain evidence over the going concern basis”. However, some candidates wasted time by listing definitions of going concern and providing audit procedures to test going concern. Candidates must focus on only answering the question set, as opposed to listing all they know about the topic area.