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Is it compulsory to make a explanation of risk relating to results of analytical procedures (Ratio & Trends) in the Q1?
There is no point in, for example, saying that receivables collection period has increased from 35 days to 60 days without clearly stating why this might be of concern and, if required by the question, how you would respond to the risk of, say, irrecoverable debts.
If you do not respond to the anaytical procedure results there is no point in calculating them.
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When I look at the Sep 2018 marking scheme i see the following,
1)1 mark for relevant ratios and ½ mark for relevant trends which form part of analytical
review (max 5 marks)
2)Up to 3 marks for each audit risk identified and explainedDoes this mean,
1)If I only calculate 3 ratios & 4 trends without explanation I will be awarded 5 marks? As the marking scheme does not say about explanation of ratio rather it says ‘relevant ratios and relevant trends’
2)Identity & explain 5 audit risk using the other information in the scenario I will be awarded 15 marks?Please help as it makes me little confused
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