This 20-mark question was based on Bush-Baby Hotels Co (Bush-Baby) and tested candidates’ knowledge of procedures for obtaining evidence, internal audit and fraud.

Part (a) for 10 marks required a description of five procedures for obtaining audit evidence and an example for each procedure relevant to the audit of property, plant and equipment (PPE). This question was unrelated to the scenario, was knowledge based and candidates’ performed well.

Candidates were able to comfortably identify a procedure, such as inspection, describe what this meant, and then provide a well described PPE test for inspection. Those candidates who structured their answers with procedure followed by example PPE test tended to provide tailored relevant answers.

The types of procedures which tended to cause most difficulty were “observation” as candidates seemed to struggle with producing valid observation tests. Recalculation and reperformance were used interchangeably, but these are different types of procedures, a common incorrect answer for re-performance was “to reperform the depreciation calculation” this is a recalculation and not a reperfromance test.

Some candidates only identified the types of procedures rather than describing them, or the description was inadequate such as “inspection means to inspect an invoice” this is not an adequate description. In addition some candidates did not link the PPE test to the relevant type of procedure. Some candidates misunderstood what was required and gave financial statement assertions rather than types of procedures.

It was satisfactory that on the whole candidates provided tests relevant to PPE rather than for other statement of financial position areas.