Question 1 - Part b

In this lesson

1. 0:00 Introduction to Part B requirements
2. 0:28 Understanding examiner expectations
3. 2:02 Materiality threshold and mark allocation
4. 4:02 Strategic approach to risk selection
5. 6:02 Identifying risks from exhibits
6. 14:15 Distinguishing accounting from business risks
7. 17:20 Calculating materiality level
8. 20:03 Prioritisation framework
9. 21:10 Risk one: Exceptional items classification
10. 25:02 Risk two: Capitalisation of enhancement costs
11. 29:51 Risk three: Ladder Co subsidiary classification
12. 32:03 Risk four: IFRS accounting policy adjustment
13. 34:28 Risk five: Goodwill and fair value measurement
14. 37:00 Risk six: Inventory valuation
15. 39:02 Applying prioritisation to risks
16. 42:57 Summary and exam technique

About this lesson

This is a high-mark requirement (typically 16 marks) that demands depth over breadth: the examiner expects you to discuss fewer risks thoroughly rather than list many superficially. You'll discover how to structure your answer by starting with materiality calculations, identifying 4–5 material risks with full accounting explanations, and finishing with a clear prioritisation based on magnitude and likelihood. The key is connecting each risk to specific financial statement line items, explaining what could be overstated or understated, and showing professional scepticism—especially where management incentives (like bonus schemes) might create bias. This video walks through a complete worked example using a group consolidation scenario with multiple audit risks: subsidiary classification and control issues, accounting policy alignment in foreign acquisitions, capitalisation versus revenue expenditure decisions, exceptional item classification, and inventory valuation under IFRS. You'll see how to apply accounting standards correctly, relate theoretical knowledge to the scenario details, and earn both technical and professional marks by demonstrating judgement and scepticism throughout. By the end, you'll have a clear framework for structuring high-scoring answers to this critical exam requirement.

Duration: 44m