This question contained four different issues with a common requirement to explain the ethical and professional matters relevant to each. This was the most popular of the Section B questions but performance varied tremendously.

Issue (a) focussed on business risk and risk of material misstatement, asking candidates to explain each and to explain how identifying business risk relates to risk of material misstatement. This was for four marks and most candidates could attempt the definitions, but some went into far too much detail for the marks available.

The relationship between the two types of risk was usually explained by way of example, which was acceptable, and many of the examples were appropriate. The most common mistake seen in answers here was to explain audit risk rather than risk of material misstatement.