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Answers

Part 2 Examination – Paper 2.6(INT)


Audit and Internal Review (International Stream) December 2003 Answers

1 Risks Controls Tests of control


(a) Human Resources
There is a risk that All staff should be required to The auditor should:
staff without fill in proper application
proper experience forms and submit references – take a representative sample
or training are with them. References should of staff from the payroll and
employed (and be checked for all new staff inspect the relevant application
might cause employed. To the extent forms to ensure that they have
damage to client permitted by law, staff should been properly completed.
property). be asked to provide details of References should also be
criminal convictions. All inspected.
staff, particularly those
without experience, should
receive proper training.

Inappropriate staff, Systems for allocating staff to – for a sample of high risk
such as those with assignments should ensure clients, ensure that only
criminal that only appropriate staff are appropriately classified staff
convictions, allocated to high risk clients – have been utilised.
perhaps, might be by means of a staff
employed in high classification system.
security
environments.

Staff might There should be documentary – take a sample of entries in the


misappropriate controls over the movement documentation showing
company or client of cleaning materials and movements of materials and
property. reviews of the usage of ensure that appropriate entries
cleaning materials. in systems have been made.

The company should ask – review the overall usage of


clients regularly about the cleaning materials and
levels of satisfaction with the investigate any unusual
service provided (and have variations.
investigation and disciplinary
procedures in place where – review the result of client
allegations of satisfaction surveys and
misappropriation are made). establish if appropriate
management responses have
been made.
There is a risk that All normal payroll controls – for a representative sample of
staff are paid for such as the use of timesheets, entries in the payroll, re-
hours not worked, reconciliations and regular perform calculations to ensure
or that incorrect reviews of payroll costs that they are made correctly,
payroll deductions should be in place. Personnel ensure that appropriate
are made. controls should ensure that authorisation has been made
new staff can only be entered and review the overall level of
onto the payroll system with payroll cost, investigating
appropriate authorisation variations.
from an independent official.

A high turnover of Staff should receive feedback – inspect the documentary


staff increases all on their performance and be evidence of staff reviews,
of the risks noted rewarded for good review and assess the processes
above. performance and long by which good performance
service. and long service are rewarded,
and for a sample of staff with
good reviews and/or long
service records, determine
whether rewards have been
forthcoming.

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Risks Controls Tests of control
(b) Procurement
There is a risk of Authorisation controls should The auditor should:
fictitious or ensure that an appropriate,
excessive payment independent official – review a representative
to suppliers (i.e. authorises the acceptance of new sample of suppliers on the
fraudulent suppliers onto the system and system and inspect written
payments). that only authorised suppliers evidence of authorisation for
can be used. them.
There is a risk of Authorisation checks on – analytically review the level
inaccurate, delayed invoices should ensure that of payments for, and utilisation
or incorrect only goods that have been of, goods on a periodic basis
payments. received are paid for and that and investigate any significant
agreed prices are being paid. variations.
There is a risk that Controls over the purchase – review a representative
the company does ledger such as reconciliations sample of invoices, credit
not obtain the best with a purchase ledger notes and other documentation
value for money by control account and the (hard copy or electronic) for
using existing matching of documents evidence of matching to
suppliers. should be in place to ensure appropriate goods received
that discounts are obtained documentation and price lists.
for timely payment and that
good relations with suppliers
are maintained.
There should be regular, – review and critically assess
documented negotiations with the documentation and
existing suppliers and regularity of negotiations and
discussions with alternative discussions.
suppliers to ensure that value
for money is being obtained.
(c) Marketing
The third party The contract between The auditor should:
advertiser may be Cleanco and the advertising
in breach of company should require that – review the contract with the
advertising all advertising is in company, and the advertising
regulations. accordance with regulations material to ensure that it is in
and any best practice accordance with regulations
The type of guidance (Cleanco wishes to and any best practice guidance.
aggressive direct retain its high reputation). The auditor should ensure that
mail advertising There should be clauses in the appropriate legal advice was
may actually contract requiring the taken with regard to
damage the company to indemnify indemnities and other
reputation of Cleanco against any costs important elements in the
Cleanco which arising from such breaches. contract.
might result in a Cleanco should take legal
decrease in market advice on the wording of such – obtain documentary evidence
share. clauses.

The third party should be – obtain documentary evidence


required to submit all to show that the advertising
advertising material to material has been approved at
Cleanco for approval, and an appropriate level within
Cleanco should have final Cleanco.
control over the design and
content of the advertising material.
There is a risk of There should be proper – review budgets and
extensive budgeting for advertising management accounts to
marketing costs, and a regular review of ensure that advertising costs
expenditure not such costs by comparison have been controlled and are
resulting in new with new business obtained. resulting in an appropriate
business. level of inceased business at
Cost controls should ensure appropriate prices.
that discounts offered are not
so great as to make contracts
unprofitable, after marketing
costs have been taken into account.

NB: There are several other issues that might be dealt with in the answer to this quesion, for example risks, controls and tests
relating to health and safety procedures.

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2 (a) (i) Internal control objectives
Control objectives include policies and procedures designed by management to:
1. Achieve the orderly and efficient running of the business including adherence to internal policies – this would
include the regular, accurate processing and recording of payroll payments.
2. Safeguard assets – this would include the physical safeguarding of cash and safeguarding money held in bank
accounts by means of other controls.
3. Prevent and detect fraud and error – fraud and error would include incorrect payments or deductions from the
payroll and payments of incorrect amounts for tax and social insurance, payments for work not performed and
payments to dummy employees, for example.
4. Achieve accuracy and completeness of the accounting records and timely preparation of reliable financial
information; this would include making correct payments and deductions from the payroll, correct payments for tax
and social insurance, and making payments for work performed only (not to dummy employees, for example), in
order that quarterly or half-yearly accounts can be prepared (possibly), but in any case in order that annual
accounts can be prepared within the time limits for small companies.

(ii) Internal control environment and control procedures


The control environment relates to:
1. Management’s overall style in encouraging awareness of the need for good controls, for example.
2. The existence of organisational controls such as review of the payroll by an independent person such as the
managing director, and the rotation of payroll duties amongst staff responsible for processing it – this helps achieve
all of the objectives set out above.
3. Segregation of duties and supervisory controls to avoid the misappropriation of cash (or allegations thereof) and to
avoid fraudulent collusion to create, for example, dummy employees or to make inflated payments – this prevents
the loss of assets and/or inaccurate records.
Internal control procedures include:
4. Limiting direct physical access to the cash, such as the use of a security firm to deliver cash, locking doors to areas
where cash is held, keeping cash in a fire-proof safe and the protection of the computer by password controls –
this will help safeguard assets and ensure the completeness and accuracy of the records and financial statements.
5. Controls over computerised applications, checking the arithmetical accuracy of documents and the maintenance of
control accounts – this can be achieved by, for example, the use of timesheets or clockcards, the use of reliable
software with programmed controls for the calculation of deductions, and the use of batch and hash totals for
information that is input into the computer system – this helps achieve the orderly and efficient running of the
business and the accuracy and completeness of records and financial statements.
6. Approval and control of documents, such as the authorisation of the payroll itself, and authorisation for the bank
to make transfers and to deliver cash.

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(b) Audit objectives, tests of control and substantive procedures

Objectives Tests of control and substantive procedures


Existence: of assets and Testing controls over the security of cash to ensure that
liabilities such as cash on they are operating effectively throughout the relevant
hand and in the bank, and period.
of the liability to pay staff
and the associated tax and Performing cash counts, with reconciliations to the
social insurance liabilities. records and observing cash payments to staff, ensuring
that appropriate signatures are obtained and that
unclaimed cash is promptly re-banked, for example.
Making checks on the physical existence of staff to
ensure that the related expenses and liabilities are genuine.
Checking after date payments to staff and for tax and
social insurance contributions.
Occurrence: payroll Performing cut-off tests to ensure that payroll costs
transactions occurred incurred during the period have been recorded during the
during the relevant period by examining entries in the payroll records just
accounting period. before and just after the period-end and checking back to
source documentation, such as timesheets or clock cards.
Completeness: there are Performing starters and leavers tests to ensure that staff
no unrecorded assets or are not paid before they join the company and are not
liabilities (such as those paid after they leave – this involves checking the payroll
noted under ‘existence’, for two separate periods and examining entries relating
above) or transactions to starters and leavers in the intervening period.
(such as payroll payments)
or undisclosed items (such Manually checking the accuracy of payroll calculations
as unrecorded payroll to ensure that correct payments and deductions are being
liabilities). made in accordance with approved pay rates and
approved deduction rates for tax and social insurance.
Reviewing evidence of authorisation controls to ensure
that the payroll has already been checked.
Measurement: transactions As for completeness, above, and checking to ensure that
such as payroll payments the payroll has been properly authorised and reviewed.
are recorded at the correct
amounts and are recorded Checking entries relating to hours or time worked in the
in the correct period. payroll to source documentation.
Presentation and Reviewing the financial statements with the aid of a
disclosure: an item is disclosure checklist to ensure that disclosure
disclosed and described in requirements have been met.
accordance with
accounting standards and Reviewing the overall presentation of payroll transactions
legislation. and balances.

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3 (a) External auditor responsibilities – going concern
ISA 570 Going Concern deals with this issue.
(i) Auditors are required to consider the going concern status of companies and any disclosures regarding going concern in
forming their audit opinion. Companies that are listed on stock exchanges may be required to make additional
disclosures in relation to going concern issues.
(ii) Auditors are required to assess the adequacy of the means (the processes) by which directors have satisfied themselves
that the going concern basis is appropriate and that adequate disclosures have been made. Auditors conduct an initial
analysis at the planning stage of the audit as well as assessments at later stages.
(iii) Auditors should make enquiries of the directors and examine appropriate documentation supporting the company’s going
concern status such as budgets and cash flow forecasts.
(iv) Auditors consider whether the period to which directors have paid particular attention is adequate. This should normally
be at least 12 months from the balance sheet date. Auditors also enquire of management as to their knowledge of events
or conditions beyond this period that may cast significant doubt on the entity’s ability to continue as a going concern.
(v) Auditors need to consider the appropriateness of assumptions which directors have made, the sensitivity of assumptions
to external and internal changes, any obligations, guarantees or undertakings arranged with other entities, the existence
and adequacy of borrowing facilities and the directors’ plans to deal with any going concern problems.
(vi) Auditors are required to document the extent of any concerns, taking account of matters that have come to their attention
during the course of the audit and in particular, financial, operational, or other indicators of going concern problems that
are present.
(vii) Indicators of going concern issues would include trading losses, impairment of assets, net liabilities, defaults on loans,
liquidity problems, an inability to refinance loans where necessary, fundamental changes in the markets or technology
having an adverse effect on the company, loss of management, staff, customers or suppliers, or major litigation, for
example.
(viii) Auditors should consider the need to obtain written management representations.
(ix) Auditors should consider the adequacy of any disclosures in the financial statements.

(b) Possible audit reports and circumstances


(i) Where the auditors consider that there is a significant level of concern about the entity’s ability to continue as a going
concern (but do not disagree with the going concern basis), and where adequate disclosures of the situation are made,
they modify (but do not qualify) their opinion by including an ‘emphasis of matter’ paragraph highlighting the existence
of a material uncertainty as to the going concern status of the entity and drawing attention to the relevant note in the
financial statements. Where adequate disclosures are not made, a qualified or adverse opinion will be issued.
(ii) Where the period to which directors have paid particular attention is less than 12 months from the balance sheet date,
the auditors should consider the need to modify the audit report as a result of a limitation in the scope of the audit.
(iii) Where the auditors disagree with the preparation of the financial statements on the going concern basis, they should
issue an adverse opinion. This is very rare because auditors rarely have sufficient evidence to be sure.
(iv) If the auditors are unable to form an opinion on the going concern status of a company because of a limitation in the
scope of the audit, they will issue an ‘except for’ opinion, or ‘disclaimer of’ opinion – but this is unusual.

(c) Report issued to Corsco


(i) In the case of Corsco, there are some indicators of going concern problems. However, the company may still be a going
concern and the fact that the company has been approached by take-over bidders does not necessarily mean that there
is a going concern problem (possibly quite the opposite).
(ii) The audit opinion issued on Corsco in the current year is not likely to make reference to the going concern status of the
company, as in previous years. The situation has not deteriorated significantly in the current year and it will be difficult
for auditors to justify any change in their opinion from previous years.

(d) Difficulties associated with reporting on going concern


(i) If the auditors of Corsco were to report on a going concern problem, the mere act of reporting might of itself create a
going concern problem (a ‘self-fulfilling prophecy’). This is particularly the case with large ‘blue-chip’ companies where
the issue of an audit report that is modified in any way is unusual and might well cause the company’s share price to
drop, thus precipitating a going concern problem.
(ii) This means that it is very difficult for companies such as Corsco and their auditors to send out any clear signal to the
markets without running the risk of creating a panic.
(iii) However, recent events show that the consequences of companies and auditors failing to report where severe financial
difficulties are encountered can be disastrous for both the company (its employees and shareholders) and auditors alike.

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(iv) Auditors are failing in their professional duties if they do not report on going concern problems of which they are aware;
however, situations involving large companies are rarely clear cut and auditors who propose to make any changes at all
to the audit report are likely to encounter fierce resistance from management who may genuinely believe that to make
such a report would be wrong.
(v) In the company’s annual financial statements, it is not the place of the auditor of Corsco to substitute his judgement for
that of directors. However, where large companies involved in complex financing arrangements are concerned, auditors
may have to fight hard against vested and powerful interests if they disagree with the directors’ judgements and decide
to make reference to the matter in the auditor’s report. An auditor making reference to going concern issues in an audit
report in such circumstances may lose the audit (and any other work) and may run a significant risk of litigation.

4 (a) (i) Objectives and how they are met: overall review of financial statements
1. The objective of a review of financial statements is to provide the auditor with sufficient audit evidence, when taken
together with the conclusions drawn from the other audit work, to form an opinion on the financial statements.
This includes determining whether the information in the financial statements is properly presented and disclosed
in accordance with accounting standards, legislation and other regulatory requirements. Calva is a listed company
and will therefore have to comply with stock exchange disclosure requirements. The usual means of achieving this
is by the completion of a disclosure checklist.
2. Auditors should consider the appropriateness of accounting policies in particular and whether they have been
consistently applied, particularly where changes have been made. There is no indication that any such changes
have been made.
3. Auditors should also consider whether the financial statements as a whole are consistent with the auditor’s
knowledge of the business. This involves consideration of the aggregate effect of uncorrected misstatements, any
overall bias in presentation and will normally involve analytical procedures on the final financial statements. This
exercise involves the application of professional judgement and, in the case of Calva, it is likely to be carried out
by the senior manager and/or the audit engagement partner with the assistance of the audit manager.
(ii) Objectives and how they are met: review of working papers
1. The objective of a review of working papers is to ensure that all work has been properly planned, executed and
recorded and that all outstanding matters have been followed up.
2. In the case of Calva, it is likely that some work will have already been reviewed. It is common for audit seniors
and audit managers to review the work of audit juniors, and for senior managers and partners to review the work
of managers and seniors. There will also be a final partner review of the file.
3. Where working papers are prepared manually, staff normally evidence review of working papers by initialling the
working paper. Review comments are often written in red and referred to the person preparing the working paper
or to the partner where significant matters of judgement are concerned. Where papers are prepared electronically,
electronic ‘signatures’ can be used.
4. It is important that a detailed review of working papers takes place in areas that are critical to the audit. In this
case, critical areas are likely to include inventory (despite the fact that it is well-controlled, it is still a material item),
cash and non-current assets.
5. It is also important during the final stages of the audit of Calva that all outstanding areas (i.e. the substantive areas)
are completed, reviewed and any issues arising followed up. It is very easy for apparently insignificant matters to
‘slip through the net’ at this stage where both auditors and client are under pressure.

(b) (i) Responsibilities


ISA 560 Subsequent Events deals with this issue.
1. Auditors should perform procedures designed to obtain sufficient appropriate audit evidence that all material
subsequent events up to the date of the audit report which require adjustment or disclosure in the financial
statements have been properly made.
2. If matters requiring adjustment or disclosure are discovered after the date of the audit report but before the financial
statements are issued, or even after they have been presented, auditors should ascertain whether and how any
necessary changes are to be made to the financial statements.
3. The decision as to whether financial statements should be changed is that of the directors. Auditors cannot ‘change
their minds’ once the audit report has been signed but if new financial statements are issued they can issue a new
audit report which should make reference to the previous financial statements and audit report.
4. If auditors consider that the financial statements contain material errors or are misleading, they may exercise any
right to speak at general meetings and to make written representations to members.
5. If matters are discovered long after the financial statements have been issued, it is common to deal with the matter
as a prior period adjustment in the subsequent financial statements.

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(ii) Subsequent events review procedures
1. These include making enquiries of management as to how they have ensured that subsequent events have been
identified, although it is likely that in this case the company will rely on the audit firm to help them with this.
2. Auditors will read the minutes of management, shareholders and other meetings and review relevant accounting
records. In this case, they are likely to review any budgets or cash flow forecasts. It is likely that these will have
been prepared as a result of the negotiations with the bank.
3. In the case of Calva, the auditors are likely to enquire as to the possibility of any new share or loan issue to fund
the expansion which may require disclosure. They may also enquire as to any significant changes in the property
market that might (if the supermarket properties are carried at valuation) require either disclosure or adjustment in
the accounts.
4. Auditors will also consider the need for disclosure of significant leasing transactions occurring early in the following
year.

5 (a) Risks and implications for audit risk


Inherent and control risks
(i) Charities can be viewed as inherently risky because they are often managed by non-professionals and are susceptible
to fraud, although many charities and the volunteers that run them are people of the highest integrity who take a great
deal of care over their work. The assessment of this aspect of inherent risk depends on each individual charity and the
areas in which it operates.
(ii) Charities are also at risk of being in violation of their constitutions which is important where funds are raised from public
or private donors who may well object strongly if funds are not applied in the manner expected. Other charities and
regulatory bodies supervising charities may also object. Again, the auditors will assess the level of risk. The involvement
of a recently retired Chartered Certified Accountant in the preparation of accounts in the past may lower the auditor’s
assessed inherent risk to an extent.
(iii) Most small charities have a high level of control risk because formal internal controls are expensive and are not often in
place. This means that donations are susceptible to misappropriation. Charities rely on the trustworthiness of volunteers.
The auditors will assess the level of risk.
Detection risk
(iv) Detection risk comprises sampling risk and non-sampling risk. It is possible in this case that all transactions will be
tested and therefore sampling risk (the risk that samples are unrepresentative of the populations from which they are
drawn) is not present.
(v) Non-sampling risk is the risk that auditors will draw incorrect conclusions because, for example, mistakes are made, or
errors of judgement are made in interpreting results, or because the auditors are unfamiliar with the client, as is the case
here.
Audit risk
(vi) Audit risk is the product of inherent risk, control risk and detection risk and is the risk that the auditors will issue an
inappropriate audit opinion. This risk can be managed by decreasing detection risk by altering the nature, timing and
extent of audit procedures applied. Where inherent risk is high and controls are weak (as may be the case here) more
audit work will be performed in appropriate areas in order to reduce audit risk to an acceptable level.

(b) Audit tests – fund raising events


(i) Attend fund raising events and observe the procedures employed in collecting, counting, banking and recording the cash.
This will help provide audit evidence that funds have not been misappropriated and that all income from such events
has been recorded. Sealed boxes or tins that are opened in the presence of two volunteers are often used for these
purposes.
(ii) Perform cash counts at the events to provide evidence that cash has been counted correctly and that there is no collusion
between volunteers to misappropriate funds.
(iii) Examine bank paying in slips, bank statements and bank reconciliations and ensure that these agree with records made
at events. This also provides evidence as to the completeness of income.
(iv) Examine the records of expenditure for fund raising events (hire of equipment, entertainers, purchase of refreshments.
etc.) and ensure that these have been properly authorised (where appropriate) and that receipts have been obtained for
all expenditure. This provides evidence as to the completeness and accuracy of expenditure.
(v) Review the income and expenditure of fund raising events against any budgets that have been prepared and investigate
any significant discrepancies.
(vi) Ensure that all necessary licences (such as public entertainment licences) have been obtained by the trustees for such
events in order to ensure that no action is likely to be taken against the charity or volunteers.
(vii) Obtain representations from the trustees to the effect that there are no outstanding unrecorded liabilities for such events
– again for completeness of expenditure and liabilities.
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6 (a) Disclosure of information relating to clients to third parties
(i) Auditors are permitted or required to disclose information about their clients to third parties without their knowledge or
consent in very limited circumstances.
(ii) Generally, auditors can be required to, or are permitted to, disclose information to certain regulatory bodies, including
certain specialist units within police forces under legislation. Such legislation in many countries includes financial
services legislation, legislation concerning banks and insurance companies, legislation concerning money laundering
and legislation concerning the investigation of serious fraud or tax evasion.
(iii) Auditors are also permitted or required to disclose information where they are personally involved in litigation, including
litigation that involves the recovery of fees from clients, or where they are subject to disciplinary proceedings brought by
ACCA or similar professional bodies.
(iv) Auditors are also permitted to disclose information where they consider it to be in the ‘public interest’ or in the interests
of national security. Factors to take into account include the seriousness of the matter, the likelihood of repetition and
the extent to which the public is involved. This right is rarely used in practice.

(b) Response to requests


(i) It is not unusual in practice for various bodies to request information from auditors ‘informally’ because it relieves them
of the obligation to obtain the necessary statutory authorities which may be time consuming or difficult.
(ii) Auditors must not disclose information without the consent of the client or unless the necessary statutory documentation
is provided by the person(s) requesting the information.
(iii) Unless the auditor has reason to believe that there is a statutory duty not to inform the client that an approach has been
made, the client should first be approached to see if consent can be obtained, and to see if the client is aware of the
investigations, as should normally be the case. The auditor should ensure that the client is aware of the fact that
voluntary disclosure may work in the client’s favour in the long run, but if the client refuses, the auditor should inform
the client if the auditor has a statutory duty of disclosure.
(iv) Auditors should consider taking legal advice in all of the cases described.
(v) Where auditors are made aware of potential actions against the client that may have an effect on the financial
statements, they must consider the effect on the audit report. If the client is aware of the investigation, auditors will be
able to seek audit evidence to support any necessary provisions or disclosures in the financial statements.
(vi) The auditors should consider whether the suspected fraud relating to the managing director relates to the company and
affects the financial statements.
(vii) Auditors will be in a very difficult situation if they become aware of an action that may materially affect the financial
statements, but where the client is not, and where auditors are under a statutory duty not to inform the client. This
situation will not be improved by the resignation of auditors as they may be obliged to make a statement on resignation.
This puts auditors in a very difficult position and legal advice is essential in such circumstances.
(viii) Tax authorities normally have powers to ask clients to disclose information voluntarily. Such voluntary disclosure is often
looked on favourably by the tax authorities and the courts. Tax authorities normally also have statutory powers to demand
information from both clients and auditors. The same is generally true of environmental and health and safety inspectors.
(ix) The power of the police to demand information is sometimes less clear and auditors and clients should take care to
ensure that the appropriate authorities are in place. Those sections of the police investigating serious frauds usually have
more powers than the general police. It is unlikely that trade union representatives have any statutory powers to demand
information.

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Part 2 Examination – Paper 2.6(INT)
Audit and Internal Review (International Stream) December 2003 Marking Scheme

Marks
1 (i) Human Resources
Up to 1 mark per point to a maximum of 8
(maximum 3 marks for risk, controls and tests, respectively)

(ii) Procurement
Up to 1 mark per point to a maximum of 6
(maximum 2·5 marks for risk, controls and tests, respectively)

(iii) Marketing
Up to 1 mark per point to a maximum of 6
(maximum 2·5 marks for risk, controls and tests, respectively)
––––
Total 20
––––

2 (a) (i) Internal control objectives


Up to 1 mark per point to a maximum of 4
(ii) Internal control environment and control procedures
Up to 1 mark per point to a maximum of 6
(maximum 3 marks for environment and procedures respectively)

(b) (i) Audit objectives


Up to 1 mark per point to a maximum of 4
(ii) Tests of control and substantive procedures
Up to 1 mark per point to a maximum of 6
––––
Total 20
––––

3 (a) External auditor responsibilities – going concern


Up to 1 mark per point to a maximum of 5

(b) Possible audit reports and circumstances


Up to 1·5 marks per point to a maximum of 5

(c) Report issued to Corsco


Up to 2 marks per point to a maximum of 4

(d) Difficulties associated with reporting on going concern


Up to 1·5 marks per point to a maximum of 6
––––
Total 20
––––

4 (a) (i) Objectives and how they are met: overall review of financial statements
Up to 2 marks per point to a maximum of 4
(ii) Objectives and how they are met: review of working papers
Up to 2 marks per point to a maximum of 6

(b) (i) Responsibilities


Up to 2 marks per point to a maximum of 6
(ii) Subsequent events review procedures
Up to 2 marks per point to a maximum of 4
––––
Total 20
––––

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Marks
5 (a) Risks and implications for audit risk
Up to 2 marks per point to a maximum of 10

(b) Audit tests – fund raising events


Up to 2 marks per point to a maximum of 10
––––
Total 20
––––

6 (a) Disclosure of information relating to clients to third parties


Up to 2 marks per point to a maximum of 8

(b) Response to requests


Up to 2 marks per point to a maximum of 12
––––
Total 20
––––

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