Requirement (b) was for 6 marks and focussed on management’s decision not to report the accident to the regulatory authority, asking candidates to discuss the auditor’s responsibilities and recommend the actions to be taken by the auditor in respect of this. Most candidates had some basic knowledge of the auditor’s responsibilities in relation to law and regulations, but not many could capitalise on this knowledge through proper application to the scenario.

Many answers focussed on the lack of integrity of management, suggesting that the audit firm should “discipline” the company’s directors. Other answers were too vague and brief, simply suggesting without any real explanation that the auditor should report to the regulatory authority, and failing to justify this as an appropriate course of action. The best answers applied the requirements of the relevant ISA to the scenario and recommended an appropriate course of action.