Candidates studying Paper F8, Audit and Assurance, are required under the syllabus to: ‘Explain the components of audit risk and explain the risks of material misstatement in the financial statements’. Show This element of the syllabus has been examined in the last three sessions of Paper F8 – in June 2010, December 2010 and June 2011. However, the performance of candidates has on the whole been unsatisfactory. This article aims to identify the most common mistakes made by candidates as well as clarifying how audit risk questions should be tackled in order to maximise marks. An example question requirement relating to audit risks is as follows: Describe the audit risks and explain the auditor’s response to each risk in planning the audit of XYZ Co. Previously examined risk questions have carried a mark allocation of 10 marks. However, a significant majority of candidates have not passed this part of the question. Common mistakes made include:
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