Part (e) for 4 marks required an explanation of the factors an external auditor should consider prior to placing reliance on a company’s internal audit department. Candidates performed well on this question, with many attaining full marks.

Most candidates easily identified the areas of independence and competence. Many then identified professional care and skill or scope of the work performed, least popular was communication between internal and external audit.

Where some candidates did not score fully this was due to a failure to adequately explain the factors, some just stated “independence of the auditors”; this was not sufficient for 1 mark. Also some gave answers such as “Independence of internal auditors – we would consider the independence of the auditors”, whilst longer than the first point it still does not actually explain what is meant by independence of the internal auditors. In addition some candidates repeated their points on competence and independence, this simply wasted time.