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For risk question (Q1), is it okay to only referring the risks from the text without and less using the financial information given such as an extract financial statement?
What I noticed from the past year question, there are many question that risk indicated in the text is far enough to score full mark, provided depth enough of application of professional skepticism and explanation, without using the financial information.
I am wondering will the examiner appreciate the answer which did not fully utilize the information given and without performing analytical procedure, since it is time consuming.
It really depends upon which risk you are being asked about
If it’s a financial risk, sure you must bring out information from the financial statements (if they are given within the question)
If it’s a business risk that is being asked about, the questions are normally loaded with snippets for you to work with (overseas activities, inexperienced management, new ventures, heavy investment in uncertain projects, non-politically correct products, insensitive board …)
If it’s audit risk that you’re looking for, you need to consider the aspects from the financial statements for risk of material misstatement as well as the controls aspects to determine probability of error arising through inadequate controls
Does that answer you?
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