Audit Proposal – NBC Institute

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

Question

The Association of Builders is conducting a selection process for an external audit firm. Your firm has been invited to participate by submitting a proposal to render external audit services.

i. Terms of Reference: The terms of reference provide a scope of work and deliverables for external audit services for an initial three-year period from March 31, 2021, to March 31, 2023. Extension of the term by two years is subject to Council approval.

ii. Background: Established in 2014 and registered with the Corporate Affairs Commission, the Association of Builders is committed to public service and member guidance. It regulates the building profession, including registration, education, ethics, continuing professional development, and compliance with building standards.

iii. Objectives: The auditors will:

Express an independent opinion on the financial statements’ true and fair view according to IFRS and relevant laws.
Conduct the audit following International Standards on Auditing (ISAs) issued by IFAC.
Comply with the Financial Reporting Council Act.

iv. Scope of Work: The audit provider will:

Audit annual financial statements per IFRS and provide an audit opinion.
Ensure ISA compliance in all audits.
Collaborate with internal auditors to assess internal controls.
Communicate audit findings and implications to management.
Review and contribute to the annual report’s financial information.
Attend Audit and Risk Committee meetings if needed.

v. Mandatory Requirements: The audit firm must:

Be registered with a recognized accounting body and Financial Reporting Council.
Demonstrate experience and understanding of the construction industry.
Have the capacity for external audit services.

vi. Proposal Contents: Proposals must include:

Firm profile and relevant experience.
Information to evaluate competence.
Methodology for audit processes.
Description of similar past projects with fees.
CVs of the proposed project team, detailing qualifications and experience.

vii. Evaluation Process: Proposals submitted after the deadline are disqualified.

Your firm has included you as a team member for the audit proposal preparation.

Required:

a. Identify and explain briefly the rights of external auditors concerning Companies and Allied Matters Act (CAMA). (5 Marks)

b. State the responsibilities of management and those charged with governance in relation to the financial statements. (6 Marks)

c. Explain what auditors are required to do under International Standards on Auditing (ISA 200). (4 Marks)

Answer

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Tags: Audit Proposal, CAMA Compliance, Ethical Standards, External Audit Services, Terms of Reference
Level: Level 2

Topic: Audit of Public Sector Entities
Series: MAY 2023

AA – Nov 2019 – L2 – Q1 – Introduction to Auditing

Discuss the objectives of external audit services, eligibility for external auditors, rights and duties of external auditors, and management responsibilities.

Question

Boniface Bank Limited placed an advert in the national dailies requesting for proposals for external audit services.

You are provided with the following information:

Boniface Bank Limited was licensed as a commercial bank in 2018. The shareholders’ fund is N25 billion and the bank is mainly in the retail business. The bank is a national bank with presence in the state capitals of the six geopolitical zones in Nigeria. The bank is gaining recognition as an institution that finances small and medium scale enterprises in the country.

The policy of the bank is to have an auditor for a 10-year tenure and a partner rotation every five years.

Scope of work

In line with best practices, external auditors are expected to be independent and conduct the audit of the books of the bank in conformity with the International Financial Reporting Standards (IFRS) and the International Standards on Auditing (ISA). They are also expected to provide other services as the need arises that will not compromise their independence.

To be specific, the successful firm will be required to:

Conduct an audit and report on the state of affairs and operations of the bank for the year ended December 31, 2018;
Advise management on the treatment and disclosures of certain items in the financial statements as the need arises, for example, new and revised standards;
Make presentations to shareholders on the state of affairs and operations of the bank at the Annual General Meeting; and
Present the management letter on weaknesses identified during the audit.

Qualifications of the firm

The audit firm to be selected should have at least six partners with good quality control processes and robust audit software. In addition, the firm must have subject matter experts in the International Financial Reporting Standards.

The proposal should state the firm’s experience in bank audits, fee quote, the proposed engagement team, the audit approach, and relevant activities for smooth operation of the audit including steps necessary to conduct a hitch-free audit.

Independence

The proposal should indicate how the firm will ensure that it maintains its independence and avoids conflicts of interest throughout the period of appointment as auditors.

Submission

You are expected to submit your proposal not later than 5p.m. on December 13,
2018.
The shortlisted firms shall be invited for presentations as soon as possible and will
be finally contacted for follow up interviews if successful.
(For any further clarification, please contact Olaolu Aki on 0071562534.)
The partners of your firm are interested in the proposal of Boniface Bank Limited.
You have been requested to make input for the proposal as soon as possible.

Required:

Discuss the following:
a. Objectives of the external audit of Boniface Bank Limited. (4 Marks)
b. Eligibility for qualification as external auditor. (10 Marks)
c. Rights and duties of external auditors under the Companies and Allied
Matters Act CAP C20 LFN 2004. (10 Marks)
d. Responsibility of management and those charged with governance.
(10 Marks)
e. Requirements of auditors in relation to International Standards on Auditing
(ISA 200). (6 Marks)

Answer

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Tags: Audit Proposal, Boniface Bank, External audit, Independence
Level: Level 2

Topic: Introduction to Auditing

AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship

Proposes the establishment of an internal audit unit and explains the benefits of outsourcing the function to an external firm.

Question

b) Aggya Owusu & Co is a well-established audit firm licensed by the Institute of Chartered Accountants, Ghana (ICAG). The firm is a member of a global association of over 250 independent legal and accounting firms in more than 100 countries.

Aggya Owusu & Co has been the External Auditor of BetGhana Ltd (BetGhana) for about four years. BetGhana has recently been awarded a provisional license by the Gaming Commission of Ghana to operate an Online Sports betting operation. The provisional license requires BetGhana to establish a unit with sufficient independence from the day-to-day management and control to enable the effective review of the business and promote a compliance environment, undertake betting-customer due diligence with respect to money laundering and terrorist financing.

Required:
As the Audit Manager of Aggya Owusu & Co, write a proposal to the Directors of BetGhana explaining:
i) The need for an Internal Audit Unit. (5 marks)
ii) FOUR (4) benefits of outsourcing the Internal Audit function to Aggya Owusu & Co. (5 marks)

Answer

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Tags: Audit Proposal, Corporate Governance, Internal Audit, Outsourcing
Level: Level 2

Topic: Internal Audit and External Audit Relationship
Series: APR 2022

AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |

Discuss five factors to consider before developing an audit proposal for a multinational company facing financial challenges.

Question

Your firm has been approached to tender for an audit assignment by STK Ghana Ltd. The company is a multinational with its headquarters in Europe. STK Ghana Ltd is a manufacturing company that has operated in Ghana since 2010 and has made steady profits over the years. However, over the past few years, the company’s profits have been dwindling, and the group director in charge of Anglophone West Africa subsidiaries has charged the company to reduce its costs.

In a meeting with the country manager, you ascertained the following information:

Several creditors are pursuing the company for payment of their outstanding debt, including the previous auditor who is being owed for the past three years of audit work. The company has negotiated a payment plan for all its creditors.
Staff wages have been frozen, staff morale is very low, and several have left.
The company’s liquidity challenges commenced when the license of Glow Savings and Loans was revoked as part of the banking sector crisis with STK Ghana Ltd funds exceeding GH¢1 million locked up in short and long-term investments.

In the Terms of Reference (TOR) for the audit engagement, you are required to provide timelines for the overall audit and a financial proposal that is competitive. Upon receiving the TOR, a debate ensued among the partners on the relevance of submitting a proposal in response to the TOR.

Required:
Discuss FIVE (5) factors to be considered prior to developing a proposal for submission. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, Audit risks, Ethical Issues, Liquidity Challenges, Multinational Audit
Level: Level 3

Topic: Audit-related services, Planning, The audit approach
Series: JULY 2023

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

Question

The Association of Builders is conducting a selection process for an external audit firm. Your firm has been invited to participate by submitting a proposal to render external audit services.

iii. Objectives: The auditors will:

Express an independent opinion on the financial statements’ true and fair view according to IFRS and relevant laws.
Conduct the audit following International Standards on Auditing (ISAs) issued by IFAC.
Comply with the Financial Reporting Council Act.

iv. Scope of Work: The audit provider will:

Audit annual financial statements per IFRS and provide an audit opinion.
Ensure ISA compliance in all audits.
Collaborate with internal auditors to assess internal controls.
Communicate audit findings and implications to management.
Review and contribute to the annual report’s financial information.
Attend Audit and Risk Committee meetings if needed.

v. Mandatory Requirements: The audit firm must:

Be registered with a recognized accounting body and Financial Reporting Council.
Demonstrate experience and understanding of the construction industry.
Have the capacity for external audit services.

vi. Proposal Contents: Proposals must include:

Firm profile and relevant experience.
Information to evaluate competence.
Methodology for audit processes.
Description of similar past projects with fees.
CVs of the proposed project team, detailing qualifications and experience.

vii. Evaluation Process: Proposals submitted after the deadline are disqualified.

Your firm has included you as a team member for the audit proposal preparation.

Required:

a. Identify and explain briefly the rights of external auditors concerning Companies and Allied Matters Act (CAMA). (5 Marks)

b. State the responsibilities of management and those charged with governance in relation to the financial statements. (6 Marks)

c. Explain what auditors are required to do under International Standards on Auditing (ISA 200). (4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, CAMA Compliance, Ethical Standards, External Audit Services, Terms of Reference
Level: Level 2

Topic: Audit of Public Sector Entities
Series: MAY 2023

AA – Nov 2019 – L2 – Q1 – Introduction to Auditing

Discuss the objectives of external audit services, eligibility for external auditors, rights and duties of external auditors, and management responsibilities.

Question

Boniface Bank Limited placed an advert in the national dailies requesting for proposals for external audit services.

You are provided with the following information:

The policy of the bank is to have an auditor for a 10-year tenure and a partner rotation every five years.

Scope of work

To be specific, the successful firm will be required to:

Conduct an audit and report on the state of affairs and operations of the bank for the year ended December 31, 2018;
Advise management on the treatment and disclosures of certain items in the financial statements as the need arises, for example, new and revised standards;
Make presentations to shareholders on the state of affairs and operations of the bank at the Annual General Meeting; and
Present the management letter on weaknesses identified during the audit.

Qualifications of the firm

Independence

The proposal should indicate how the firm will ensure that it maintains its independence and avoids conflicts of interest throughout the period of appointment as auditors.

Submission

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, Boniface Bank, External audit, Independence
Level: Level 2

Topic: Introduction to Auditing

AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship

Proposes the establishment of an internal audit unit and explains the benefits of outsourcing the function to an external firm.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, Corporate Governance, Internal Audit, Outsourcing
Level: Level 2

Topic: Internal Audit and External Audit Relationship
Series: APR 2022

AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |

Discuss five factors to consider before developing an audit proposal for a multinational company facing financial challenges.

Question

In a meeting with the country manager, you ascertained the following information:

Several creditors are pursuing the company for payment of their outstanding debt, including the previous auditor who is being owed for the past three years of audit work. The company has negotiated a payment plan for all its creditors.
Staff wages have been frozen, staff morale is very low, and several have left.
The company’s liquidity challenges commenced when the license of Glow Savings and Loans was revoked as part of the banking sector crisis with STK Ghana Ltd funds exceeding GH¢1 million locked up in short and long-term investments.

Required:
Discuss FIVE (5) factors to be considered prior to developing a proposal for submission. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, Audit risks, Ethical Issues, Liquidity Challenges, Multinational Audit
Level: Level 3

Topic: Audit-related services, Planning, The audit approach
Series: JULY 2023

Question Tag: Audit Proposal

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AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

AA – Nov 2019 – L2 – Q1 – Introduction to Auditing

Discuss the objectives of external audit services, eligibility for external auditors, rights and duties of external auditors, and management responsibilities.

AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship

Proposes the establishment of an internal audit unit and explains the benefits of outsourcing the function to an external firm.

AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |

Discuss five factors to consider before developing an audit proposal for a multinational company facing financial challenges.

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

AA – Nov 2019 – L2 – Q1 – Introduction to Auditing

Discuss the objectives of external audit services, eligibility for external auditors, rights and duties of external auditors, and management responsibilities.

AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship

Proposes the establishment of an internal audit unit and explains the benefits of outsourcing the function to an external firm.

AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |

Discuss five factors to consider before developing an audit proposal for a multinational company facing financial challenges.

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Question Tag: Audit Proposal

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AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

You're reporting an error for "AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities"

AA – Nov 2019 – L2 – Q1 – Introduction to Auditing

Discuss the objectives of external audit services, eligibility for external auditors, rights and duties of external auditors, and management responsibilities.

You're reporting an error for "AA – Nov 2019 – L2 – Q1 – Introduction to Auditing"

AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship

Proposes the establishment of an internal audit unit and explains the benefits of outsourcing the function to an external firm.

You're reporting an error for "AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship"

AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |

Discuss five factors to consider before developing an audit proposal for a multinational company facing financial challenges.

You're reporting an error for "AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |"

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

You're reporting an error for "AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities"

AA – Nov 2019 – L2 – Q1 – Introduction to Auditing

Discuss the objectives of external audit services, eligibility for external auditors, rights and duties of external auditors, and management responsibilities.

You're reporting an error for "AA – Nov 2019 – L2 – Q1 – Introduction to Auditing"

AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship

Proposes the establishment of an internal audit unit and explains the benefits of outsourcing the function to an external firm.

You're reporting an error for "AA – April 2022 – L2 – Q4b – Internal Audit and External Audit Relationship"

AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |

Discuss five factors to consider before developing an audit proposal for a multinational company facing financial challenges.

You're reporting an error for "AAA – July 2023 – L3 – Q1a – The audit approach | Audit-related services Planning |"

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