Candidates were required to explain the term audit risk and then the three elements of risk that contribute to total audit risk.

The question was worth 4 marks. The question requirement was for 4 explanations, so 4 marks was 1 mark per explanation. Many candidates were uncertain of these concepts and did not manage to obtain the marks on offer.

Common errors included:
• Explaining audit risk in terms of errors in the financial statements rather than inappropriate audit reports.
• Omitting to explain that inherent risk is linked to the nature of the entity.
• Stating that control risk was the problem of not identifying the risk, rather than the error or fraud because the control system was inadequate.
• Explaining detection risk as the only risk that the auditor can amend rather than the auditor not detecting errors in the books, records, financial statements, etc.

The overall standard was therefore inadequate. Certainly an area to visit again at some stage.