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Advanced Audit and Assurance (AAA) practice.

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A short question in the course’s own format, not ACCA’s: the exam itself is all written.

Question 1 · Course practice question · Planning and risk2 marks

Planning, materiality and risk

The draft figures of Penrith Co, a manufacturer, are below, in $000. Selling prices in its market were flat during 2026 and the cost of its main raw material rose by about 5%. There were no changes in product mix, suppliers or credit terms.

The audit firm measures gross margin on revenue, inventory and payables days on cost of sales, and receivables days on revenue, all on closing balances and a 365-day year.

Penrith Co: draft figures, years ended 31 December
$00020262025
Revenue45,62540,150
Cost of sales29,20028,105
Inventory7,2004,620
Trade receivables6,2505,500
Trade payables3,6003,465

Which risk of material misstatement is consistent with all of these figures? (2 marks)

Tick one

Syllabus areas A to G

  1. Regulatory environment
  2. Professional and ethical considerations
  3. Quality management
  4. Planning and conducting an audit of historical financial information
  5. Completion, review and reporting
  6. Other assignments
  7. Current issues and developments

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