Statement (ii) is wrong as it reflects the common misconception that the shadow price is the maximum price which should be paid, rather than the maximum extra over the current purchase price.

Statement (iii) is wrong but could be thought to be correct if (ii) was wrongly assumed to be correct.

A is incorrect as internal auditors are not required to be members of any professional body. C is incorrect as external auditors report to shareholders rather than those charged with governance. D is incorrect as internal auditors can be independent of the company, if, for example, the internal audit function has been outsourced.

All of the statements are false except statement (iii).

Where there is a significant change in ownership of the company, ISA 210 Agreeing the Terms of Audit Engagements recommends that a new audit engagement letter is sent to avoid misunderstandings.

The learning rate was actually better than expected and only (i) could cause it to improve.