Mar/Jun 2018 Q1 (a) audit risk

1. I think it is just the translation of income and expenses that is problematical because, in practice, translating every transaction at an actual rate is not practical and an average rate for the period would be used. However, IAS 21 says that an average rate is inappropriate if exchange rates fluctuate significantly. 2. Yes I think this is relevant as an aspect of the last para to this part of the solution (that the intercompany transaction should be eliminated).