- 8 Marks
AAA – May 2017 – L3 – Q4b – Assurance Engagements
Explain "value for money" and the 3Es of achieving it in assurance engagements.
Question
Alhaji Chukwudi is the Chairman and majority shareholder of Talking Drums Limited, a telecommunications company operating in Nigeria. The company had experienced considerable growth in the past. However, over the last three years, there has been noticeable increase in cost of operations which is slowing down the growth of the company. Management had explained that the increasing cost is a result of expansion of coverage area which management believes will lead to further expansion and growth of the company in the nearest future. Alhaji Chukwudi wants to get a certain level of assurance that there is value for the increased expansion costs the company was incurring. As a result, the Board of Directors resolved to engage a practitioner for a „value for money‟ evaluation of the coverage expansion costs.
Required:
i. Explain „value for money‟. (2 Marks)
ii. Explain the 3Es of achieving value for money. (6 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: and Economy, Audit of Efficiency, Effectiveness, Value for Money
- Level: Level 3
- Topic: Assurance Engagements