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Hello Sir, I need your clarification about the Q1 (audit/business risk) marking scheme. Although I have seen your answer for another post for a similar question but I still not understand it.
1.” Up to 3 marks for each audit risk EVALUATED unless otherwise indicated”
-How to get up to 3 marks for each audit risk evaluated? One mark for identified it,2 marks for a good explanation?2. “In addition, 1/2 mark for each relevant trend or calculation ….”
-Can I know where is the trend calculation in the Sep/Dec 2019 Q1?3.”Materiality calculations should be awarded 1 mark each (max 4 marks)”
-Is it mean the mark will be awarded for the materiality calculation only or need to write these below to get 1 mark? or the below its explanation point for 1. audit risk for full marks awarded?– What the risk/problem area is e.g. classification of intangibles as PPE, revenue expense capitalised, etc
– That it is material (if not material it wouldn’t be a significant risk) i.e. a relevant calculation of materiality
– Why it appears wrong/justification for alternative treatment
– What it means for the financial statements if uncorrected i.e. what is under/over-stated
– Any consequential effects e.g. for depreciation of PPE]Thank you.
There comes a point when I really think I can’t explain anything better than I have already explained it. As you have copied at the bottom of the post I have given an illustration of a possible 5 points that could contributed to up to 4 marks – including 1 mark for materiality. However, if 4 marks had already been awarded for materiality – there would be no credit for the materiality point. This answers point 1 & 3.
2. There doesn’t seem to be any – this could be an unintended wording from the M/J19 marking scheme – or it could have been intended to remind that if ratios/trends had been relevant, they would get marks in addition to the risk evaluation /materiality marks.
If you are asking in Q3 whether calculations of materiality %s alone should be included all together and/or earn 4 marks for the “numbers” – I would say NO to both. The requirement is the evaluation of the significant audit risks – for each risk, consideration of materiality should be part of that evaluation.
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