Question Tag: Audit Obligations

a) You have commenced the audit of Atika Ltd, a company involved in the importation and sale of plumbing materials. As part of the audit, you have noticed the following:

1. Atika Ltd does not pay its suppliers in Germany through the bank. It relies mostly on the black market for the transfer of funds to its suppliers.
2. Atika only sells its goods in Ghana.
3. On 25 March within the audit year, there was a cash deposit of US$2,500,000.00 into the forex account of Atika Ltd.
4. On 30 March the company transferred the following:
   • US$499,999.99 to an unknown account in Cameroon
   • US$399,999.99 to an unknown account in Kenya
   • US$499,999.99 to an unknown account in Niger
   • US$250,000.00 to the personal account of the Managing Director
   • US$150,000.00 to an unknown company.
5. The company’s general ledger shows a revenue of GH¢1,560,000.00.
6. The import documentation shows purchases of GH¢36,000,000.00. There is no evidence of payment for the goods from Atika Ltd’s bank accounts.
7. The closing inventory amounted to GH¢2,145,200.00.

The Audit Manager has raised the issue of money laundering considering the nature of the transactions above.

Required:

i) Explain to the team members the various stages of money laundering and show how the above transactions confirm the client’s engagement in money laundering. (6 marks)

ii) What are the obligations on the firm for money laundering? (4 marks)