Part (c) for 6 marks required an explanation of the ethical threats with respect to the audit of Goofy Co and how these threats may be reduced. This question was answered well by most candidates, and many scored full marks. Candidates were able to clearly identify from the scenario the ethical issues impacting the audit of Goofy Co.

Some candidates did not explain the threats in sufficient detail, sometimes just identifying the issue and not explaining how this was an ethical threat. For example, many identified the issue of the engagement partner having been in place for six years, however if they did not then go on to explain that this was a familiarity threat, or they gave an incorrect threat such as self interest, they would have only gained ½ rather than 1 mark.

The second part of this question required methods for reducing the threats. Candidates’ performance was generally satisfactory although some answers tended to be quite brief. In addition some candidates confused the issue of contingent fees with undue fee dependence and so focused on ways to reduce the proportion of fees from Goofy Co.

In addition many candidates provided more points than were necessary. The requirement was for six marks and had two elements to it: the marking guide awarded 1 mark per threat and 1 per method for reducing risk, hence 3 threats and methods were required for full marks. Yet some candidates listed up to five threats and methods, this then put them under time pressure and led to later questions being impacted.