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Allhope Publications Limited is an old established publishing company owned by two brothers. Over the years, the company had made consistent progress both in sales and profitability.
Due to the quality of their work, the patronage of the company has grown to the extent that its working capital cannot accommodate the work on hand.
The Directors have approached their bankers, Owopo Bank Plc for a facility of N500m to procure essentially modern machinery and printing materials and also for running expenses, particularly salaries.
In support of its application for the bank facility, the company has prepared a profit forecast which is being presented to your firm for review.
Required:
As contained in ISAE 3400: “The Examination of Prospective Financial Information (PFI)”:
a. What will you take into consideration before accepting this assurance engagement? (5 Marks)
b. Enumerate the procedures to be adopted after you have agreed to take up the engagement:
i. As regards PFI assurance engagements generally.
ii. On the Profit forecast. (10 Marks)
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The following are examples of assurance engagement, EXCEPT
A. Reporting on environmental performance
B. Carrying out statutory audit
C. Reviewing of accounting and internal control system
D. Reporting on statements of accounting policies and goodwill
E. Reviewing of corporate governance within an entity
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An assignment in which the practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter is…………………………
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Which ONE of the following is NOT an example of assurance engagement?
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Adetutu Company Limited obtained a loan from a bank in the previous year. The bank has requested an independent review of the company’s compliance with the loan covenants, hence, the Finance Controller has contacted your partner and asked that your firm carry out this assurance engagement.
Required:
a. Discuss the elements of an assurance engagement. (10 Marks)
b. Explain the different levels of assurance. (4 Marks)
c. Explain the categories of threats to the professional ethics of an auditor. (6 Marks)
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In an assurance engagement, an “assurance firm” is engaged by one party to give an opinion on a piece of information that has been prepared by another party.
Required: a. Identify and explain FIVE elements contained in an assurance engagement performed by an auditor. (15 Marks)
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a) The shareholders of Store and Quary Ltd namely Obodai and Obosie are residing abroad. They appointed directors to see to the day-to-day running of the company. The directors produced the financial statements of the company, which show a true and fair view. Other relevant information regarding directors’ pay and benefits, going concern, and management of risk have been provided by the directors. In order to know the accuracy of the information provided, the shareholders engaged your firm, Standard and Co. Chartered Accountants, to perform an assurance engagement.
Required:
i. Explain an assurance engagement as provided by IAASB. (2 marks)
ii. Explain FOUR (4) elements of an assurance engagement. (4 marks)
iii. Describe the differences between reasonable assurance engagement and limited assurance engagements. (4 marks)
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You are a manager in Sustainability Ghana, an independent member of Sustainability International, a global firm of Chartered Certified Accountants. You are responsible for evaluating proposed engagements and for recommending to a team of partners whether or not an engagement should be accepted by your firm.
EnvironmentalCare Ghana, a listed company, is an existing audit client and is an international energy producing company, with a global network including 220 countries and 300,000 employees. The company offers electricity using renewable resources to individual and corporate customers, as well as storage and logistical services.
EnvironmentalCare Ghana takes its corporate social responsibility seriously, and publishes social and environmental key performance indicators (KPIs) in a Sustainability Report, which is published with the financial statements in the annual report. Partly in response to requests from shareholders and pressure groups, EnvironmentalCare Ghana’s management has decided that in the forthcoming annual report, the KPIs should be accompanied by an independent assurance report. An approach has been made to your firm to provide this report in addition to the audit.
To help in your evaluation of this potential engagement, you have been given an extract from the draft Sustainability Report, containing some of the KPIs published by EnvironmentalCare Ghana. In total, 25 environmental KPIs, and 50 social KPIs are disclosed.
| Extract from Sustainability Report | Year ended 31 December 2018 Draft | Year ended 31 December 2017 Actual |
|---|---|---|
| CO2 emissions (million tonnes) | 26.8 | 28.3 |
| Energy use (million kilowatt hours) | 4,895 | 5,250 |
| Charitable donations (GH¢ million) | 10.5 | 8.2 |
| Number of serious accidents in the workplace | 60 | 68 |
| Average annual expenditure on training per employee | GH¢180 | GH¢175 |
You have also had a meeting with Kofi Ghana, the manager responsible for the audit of EnvironmentalCare Ghana, and notes of the meeting are given below.
Notes from meeting with audit manager, Kofi Ghana
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K. O. and Associates, a firm of Chartered Accountants, has accepted a statutory audit engagement from Special Cream Ltd, a bookshop with many sales points across the country. In 2021, the company implemented a computerised system that has been networked to all sales points to the Head Office in Accra. In the middle of 2021, the company started accepting mobile money as a means of payment in addition to cash and cheque payment. Mobile money payments are confirmed with an accounts staff before books are supplied.
In planning the audit of Special Cream Ltd, the Audit Manager, Samuel Alhassan, identified risks associated with electronic processing systems which provide additional challenges for auditors.
Required: i) Discuss FOUR (4) challenges K. O. and Associates would encounter in performing an assurance engagement on the electronic processing system. (4 marks)
ii) Discuss FOUR (4) audit approaches K. O. and Associates should adopt in performing an assurance engagement on an electronic processing system. (6 marks)
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Find Related Questions by Tags, levels, etc.
Allhope Publications Limited is an old established publishing company owned by two brothers. Over the years, the company had made consistent progress both in sales and profitability.
Due to the quality of their work, the patronage of the company has grown to the extent that its working capital cannot accommodate the work on hand.
The Directors have approached their bankers, Owopo Bank Plc for a facility of N500m to procure essentially modern machinery and printing materials and also for running expenses, particularly salaries.
In support of its application for the bank facility, the company has prepared a profit forecast which is being presented to your firm for review.
Required:
As contained in ISAE 3400: “The Examination of Prospective Financial Information (PFI)”:
a. What will you take into consideration before accepting this assurance engagement? (5 Marks)
b. Enumerate the procedures to be adopted after you have agreed to take up the engagement:
i. As regards PFI assurance engagements generally.
ii. On the Profit forecast. (10 Marks)
Find Related Questions by Tags, levels, etc.
The following are examples of assurance engagement, EXCEPT
A. Reporting on environmental performance
B. Carrying out statutory audit
C. Reviewing of accounting and internal control system
D. Reporting on statements of accounting policies and goodwill
E. Reviewing of corporate governance within an entity
Find Related Questions by Tags, levels, etc.
An assignment in which the practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter is…………………………
Find Related Questions by Tags, levels, etc.
Which ONE of the following is NOT an example of assurance engagement?
Find Related Questions by Tags, levels, etc.
Adetutu Company Limited obtained a loan from a bank in the previous year. The bank has requested an independent review of the company’s compliance with the loan covenants, hence, the Finance Controller has contacted your partner and asked that your firm carry out this assurance engagement.
Required:
a. Discuss the elements of an assurance engagement. (10 Marks)
b. Explain the different levels of assurance. (4 Marks)
c. Explain the categories of threats to the professional ethics of an auditor. (6 Marks)
Find Related Questions by Tags, levels, etc.
In an assurance engagement, an “assurance firm” is engaged by one party to give an opinion on a piece of information that has been prepared by another party.
Required: a. Identify and explain FIVE elements contained in an assurance engagement performed by an auditor. (15 Marks)
Find Related Questions by Tags, levels, etc.
a) The shareholders of Store and Quary Ltd namely Obodai and Obosie are residing abroad. They appointed directors to see to the day-to-day running of the company. The directors produced the financial statements of the company, which show a true and fair view. Other relevant information regarding directors’ pay and benefits, going concern, and management of risk have been provided by the directors. In order to know the accuracy of the information provided, the shareholders engaged your firm, Standard and Co. Chartered Accountants, to perform an assurance engagement.
Required:
i. Explain an assurance engagement as provided by IAASB. (2 marks)
ii. Explain FOUR (4) elements of an assurance engagement. (4 marks)
iii. Describe the differences between reasonable assurance engagement and limited assurance engagements. (4 marks)
Find Related Questions by Tags, levels, etc.
You are a manager in Sustainability Ghana, an independent member of Sustainability International, a global firm of Chartered Certified Accountants. You are responsible for evaluating proposed engagements and for recommending to a team of partners whether or not an engagement should be accepted by your firm.
EnvironmentalCare Ghana, a listed company, is an existing audit client and is an international energy producing company, with a global network including 220 countries and 300,000 employees. The company offers electricity using renewable resources to individual and corporate customers, as well as storage and logistical services.
EnvironmentalCare Ghana takes its corporate social responsibility seriously, and publishes social and environmental key performance indicators (KPIs) in a Sustainability Report, which is published with the financial statements in the annual report. Partly in response to requests from shareholders and pressure groups, EnvironmentalCare Ghana’s management has decided that in the forthcoming annual report, the KPIs should be accompanied by an independent assurance report. An approach has been made to your firm to provide this report in addition to the audit.
To help in your evaluation of this potential engagement, you have been given an extract from the draft Sustainability Report, containing some of the KPIs published by EnvironmentalCare Ghana. In total, 25 environmental KPIs, and 50 social KPIs are disclosed.
| Extract from Sustainability Report | Year ended 31 December 2018 Draft | Year ended 31 December 2017 Actual |
|---|---|---|
| CO2 emissions (million tonnes) | 26.8 | 28.3 |
| Energy use (million kilowatt hours) | 4,895 | 5,250 |
| Charitable donations (GH¢ million) | 10.5 | 8.2 |
| Number of serious accidents in the workplace | 60 | 68 |
| Average annual expenditure on training per employee | GH¢180 | GH¢175 |
You have also had a meeting with Kofi Ghana, the manager responsible for the audit of EnvironmentalCare Ghana, and notes of the meeting are given below.
Notes from meeting with audit manager, Kofi Ghana
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K. O. and Associates, a firm of Chartered Accountants, has accepted a statutory audit engagement from Special Cream Ltd, a bookshop with many sales points across the country. In 2021, the company implemented a computerised system that has been networked to all sales points to the Head Office in Accra. In the middle of 2021, the company started accepting mobile money as a means of payment in addition to cash and cheque payment. Mobile money payments are confirmed with an accounts staff before books are supplied.
In planning the audit of Special Cream Ltd, the Audit Manager, Samuel Alhassan, identified risks associated with electronic processing systems which provide additional challenges for auditors.
Required: i) Discuss FOUR (4) challenges K. O. and Associates would encounter in performing an assurance engagement on the electronic processing system. (4 marks)
ii) Discuss FOUR (4) audit approaches K. O. and Associates should adopt in performing an assurance engagement on an electronic processing system. (6 marks)
Find Related Questions by Tags, levels, etc.
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