Question Tag: Audit Responsibilities

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AAA – Nov 2022 – L3 – SB – Q2 – Audit of Complex Entities

Evaluate auditors' responsibilities in fraud detection, financial misreporting, and appropriate audit procedures to mitigate misstatements.

Question

The Financial Controller (FC) of Poki Limited made an observation on the draft engagement letter sent by the external auditors to the company, an extract of which is as stated below:

“The responsibility for safeguarding the assets of the company and for the prevention and detection of fraud, error, and non-compliance with laws or regulations rests with the company’s directors. In accordance with auditing standards, we shall endeavor to plan our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements or accounting records (including any material misstatements resulting from fraud, error, or non-compliance with laws or regulations). However, because any internal control structure, no matter how effective, cannot eliminate the possibility that errors or irregularities may occur and remain undetected and because we use selective testing in our audit, we cannot guarantee that errors or irregularities, if present, will be detected. Accordingly, our audit should not be relied upon to disclose all such material misstatements or frauds, errors, or instances of non-compliance as may exist. The best safeguard against irregularities and fraud is a sound system of internal control.”

The FC accused the auditors of running away from their responsibilities of exposing to the owners of the company fraudulent financial reporting and misappropriation of assets. To him, what is the purpose of audit when fraud and errors could not be discovered? He has threatened to discuss with the Board of Directors and insists that the engagement letter will not be signed until those sections are removed. You are a senior member of the audit team.

Required:

a. Outline the objectives of auditors in relation to fraud. (6 Marks)

b. Explain fraudulent financial reporting and misappropriation of assets. (7 Marks)

c. State the procedures auditors should perform to identify the risks of material misstatement due to fraud. (7 Marks)

Answer

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Tags: Audit Responsibilities, Corporate Governance, Engagement letter, Fraud Detection, Misappropriation, Risk Identification
Level: Level 3

Topic: Audit of Complex Entities
Series: NOV 2022

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Question

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

Answer

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Tags: Audit Procedures, Audit Responsibilities, External Auditor, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AA – May 2016 – L2 – Q3c – Professional and Ethical Considerations

This question explores the different responsibilities of internal and external auditors in the prevention, detection, and reporting of fraud and error.

Question

(c) There are similarities and differences between the responsibilities of internal and external auditors. Both internal and external auditors have responsibilities relating to the prevention, detection, and reporting of fraud, for example, but their responsibilities are not the same.

Required:
Explain the difference between the responsibilities of internal auditors and external auditors for the prevention, detection, and reporting of fraud and error. (6 marks)

Answer

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Tags: Audit Responsibilities, External audit, Fraud Detection, Fraud Prevention, Internal Audit, Reporting Fraud
Level: Level 2

Topic: Professional and Ethical Considerations
Series: MAY 2016

AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

Question

c) Technolab has an internal audit department. The partner in charge of the audit is seeking clarification regarding how any deficiencies in internal control should be identified and communicated to management. The partner feels the report produced by the external auditors may duplicate the report produced by the internal audit function.

Required:
Explain how the purpose and content of an internal auditor’s report on internal control deficiencies differ from one prepared by the external auditor.
(7 marks)

Answer

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Tags: Audit Responsibilities, Going Concern, ISA 560, ISA 570, Subsequent Events
Level: Level 2

Topic: Audit and Assurance Risk Environment, Completion Procedures and Reporting
Series: NOV 2017

AA – Nov 2015 – L2 – Q2a and b – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

Question

You are an audit senior for an audit firm and are currently working on the audit of Technolab, a company that produces sophisticated electronic laboratory equipment. The company imports a high proportion of the components it uses from China. The equipment is used by some laboratories dealing with hazardous chemicals.

As the audit draws to a close, the partner in charge has asked you to ensure that all procedures relating to subsequent events and going concern are properly performed. You are to consider the audit work to be performed in relation to ISA 560 Subsequent Events and ISA 570 Going Concern.

Required:

a) Describe the auditor’s responsibilities for subsequent events occurring between:
i. The year-end date and the date the auditor’s report is signed.
ii. The date the auditor’s report is signed and the date the financial statements are issued.
(6 marks)

b) Going concern relates to the judgment that an entity will continue to trade for the foreseeable future.
i. Explain the responsibilities of directors and auditors in relation to going concern.
(3 marks)
ii. Explain the audit procedures that the auditor could carry out when conducting the going concern review of Technolab.
(4 marks)

Required:
Explain how the purpose and content of an internal auditor’s report on internal control deficiencies differ from one prepared by the external auditor.
(7 marks)

Total: 20 marks

Answer

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Tags: Audit Responsibilities, Going Concern, ISA 560, ISA 570, Subsequent Events
Level: Level 2

Topic: Audit and Assurance Risk Environment, Completion Procedures and Reporting
Series: NOV 2015

AA – May 2020 – L2 – Q4a – Audit and Assurance Evidence

Identify who is responsible for ensuring the going concern basis in preparing financial statements.

Question

Your audit firm has almost completed the audit of SG Ltd. At the review stage, the audit manager assembled the engagement team and wanted to find out whether the audit evidence obtained shows that the company is a going concern.

Required:
i) Outline whose responsibility it is to ensure that the going concern basis used in the preparation of the financial statements is reasonable and acceptable.
(7 marks)

ii) Outline with examples the THREE (3) broad classifications of going concern indicators. (3 marks)

Answer

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Tags: Audit Responsibilities, Financial Statements, Going Concern, ISA 570
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAY 2020

AA – May 2019 – L2 – Q5b – Professional and Ethical Considerations

Explains the auditor's objectives and significant matters for communication with those charged with governance under ISA 260.

Question

b) Due to increased workload, your firm has just recruited a new junior audit staff member, George Ansong, who has joined the practice directly from University and so has no previous work experience. You have been assigned as his training manager.

George is now looking at summarised material given to him by the audit partner on ISA 260. ISA 260: Communication with those charged with governance deals with the auditor’s responsibility to communicate with those charged with governance in an audit of financial statements. It focuses primarily on communications from the auditor to those charged with governance.

George would like you to explain in more detail what he has read.

Required:
In relation to George’s request, detail the provisions set out in ISA 260 in relation to the following:
i) The main objectives of the auditor in communicating with those charged with governance.
(4 marks)
ii) SIX (6) significant matters the auditor should communicate with those charged with governance about the responsibilities of the auditor in relation to the audit of the financial statements.
(6 marks)

Answer

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Tags: Audit Responsibilities, Auditor-Governance Interaction, Communication, Governance, ISA 260
Level: Level 2

Topic: Professional and Ethical Considerations
Series: MAY 2019

AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations.

Question

b) Wassaman Company is a private company established in the Wassa District in the Western Region to produce plastic bags to supply to sachet water producers. The company has 10 outlets within the district through which distribution is made to water producers. Employees of the company have been complaining about management’s reluctance to provide the health and safety needs of the company. The chief of the area has also shown his dissatisfaction about the extent of compliance with environmental laws and regulations by the company.

Required:

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations. (10 marks)

Answer

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Tags: Audit Responsibilities, Compliance, Laws and regulations, Management responsibilities
Level: Level 3

Topic: Professional responsibility and liability, The regulatory environment
Series: NOV 2016

AAA – Nov 2022 – L3 – SB – Q2 – Audit of Complex Entities

Evaluate auditors' responsibilities in fraud detection, financial misreporting, and appropriate audit procedures to mitigate misstatements.

Question

The Financial Controller (FC) of Poki Limited made an observation on the draft engagement letter sent by the external auditors to the company, an extract of which is as stated below:

Required:

a. Outline the objectives of auditors in relation to fraud. (6 Marks)

b. Explain fraudulent financial reporting and misappropriation of assets. (7 Marks)

c. State the procedures auditors should perform to identify the risks of material misstatement due to fraud. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Corporate Governance, Engagement letter, Fraud Detection, Misappropriation, Risk Identification
Level: Level 3

Topic: Audit of Complex Entities
Series: NOV 2022

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Question

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Audit Responsibilities, External Auditor, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AA – May 2016 – L2 – Q3c – Professional and Ethical Considerations

This question explores the different responsibilities of internal and external auditors in the prevention, detection, and reporting of fraud and error.

Question

Required:
Explain the difference between the responsibilities of internal auditors and external auditors for the prevention, detection, and reporting of fraud and error. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, External audit, Fraud Detection, Fraud Prevention, Internal Audit, Reporting Fraud
Level: Level 2

Topic: Professional and Ethical Considerations
Series: MAY 2016

AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

Question

Required:
Explain how the purpose and content of an internal auditor’s report on internal control deficiencies differ from one prepared by the external auditor.
(7 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Going Concern, ISA 560, ISA 570, Subsequent Events
Level: Level 2

Topic: Audit and Assurance Risk Environment, Completion Procedures and Reporting
Series: NOV 2017

AA – Nov 2015 – L2 – Q2a and b – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

Question

Required:

Required:
Explain how the purpose and content of an internal auditor’s report on internal control deficiencies differ from one prepared by the external auditor.
(7 marks)

Total: 20 marks

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Going Concern, ISA 560, ISA 570, Subsequent Events
Level: Level 2

Topic: Audit and Assurance Risk Environment, Completion Procedures and Reporting
Series: NOV 2015

AA – May 2020 – L2 – Q4a – Audit and Assurance Evidence

Identify who is responsible for ensuring the going concern basis in preparing financial statements.

Question

Required:
i) Outline whose responsibility it is to ensure that the going concern basis used in the preparation of the financial statements is reasonable and acceptable.
(7 marks)

ii) Outline with examples the THREE (3) broad classifications of going concern indicators. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Financial Statements, Going Concern, ISA 570
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAY 2020

AA – May 2019 – L2 – Q5b – Professional and Ethical Considerations

Explains the auditor's objectives and significant matters for communication with those charged with governance under ISA 260.

Question

George would like you to explain in more detail what he has read.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Auditor-Governance Interaction, Communication, Governance, ISA 260
Level: Level 2

Topic: Professional and Ethical Considerations
Series: MAY 2019

AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations.

Question

Required:

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Compliance, Laws and regulations, Management responsibilities
Level: Level 3

Topic: Professional responsibility and liability, The regulatory environment
Series: NOV 2016

Question Tag: Audit Responsibilities

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AAA – Nov 2022 – L3 – SB – Q2 – Audit of Complex Entities

Evaluate auditors' responsibilities in fraud detection, financial misreporting, and appropriate audit procedures to mitigate misstatements.

You're reporting an error for "AAA – Nov 2022 – L3 – SB – Q2 – Audit of Complex Entities"

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

You're reporting an error for "AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting"

AA – May 2016 – L2 – Q3c – Professional and Ethical Considerations

This question explores the different responsibilities of internal and external auditors in the prevention, detection, and reporting of fraud and error.

You're reporting an error for "AA – May 2016 – L2 – Q3c – Professional and Ethical Considerations"

AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

You're reporting an error for "AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting"

AA – Nov 2015 – L2 – Q2a and b – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

You're reporting an error for "AA – Nov 2015 – L2 – Q2a and b – Audit and Assurance Risk Environment, Completion Procedures and Reporting"

AA – May 2020 – L2 – Q4a – Audit and Assurance Evidence

Identify who is responsible for ensuring the going concern basis in preparing financial statements.

You're reporting an error for "AA – May 2020 – L2 – Q4a – Audit and Assurance Evidence"

AA – May 2019 – L2 – Q5b – Professional and Ethical Considerations

Explains the auditor's objectives and significant matters for communication with those charged with governance under ISA 260.

You're reporting an error for "AA – May 2019 – L2 – Q5b – Professional and Ethical Considerations"

AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations.

You're reporting an error for "AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment"

AAA – Nov 2022 – L3 – SB – Q2 – Audit of Complex Entities

Evaluate auditors' responsibilities in fraud detection, financial misreporting, and appropriate audit procedures to mitigate misstatements.

You're reporting an error for "AAA – Nov 2022 – L3 – SB – Q2 – Audit of Complex Entities"

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

You're reporting an error for "AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting"

AA – May 2016 – L2 – Q3c – Professional and Ethical Considerations

This question explores the different responsibilities of internal and external auditors in the prevention, detection, and reporting of fraud and error.

You're reporting an error for "AA – May 2016 – L2 – Q3c – Professional and Ethical Considerations"

AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

You're reporting an error for "AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting"

AA – Nov 2015 – L2 – Q2a and b – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

You're reporting an error for "AA – Nov 2015 – L2 – Q2a and b – Audit and Assurance Risk Environment, Completion Procedures and Reporting"

AA – May 2020 – L2 – Q4a – Audit and Assurance Evidence

Identify who is responsible for ensuring the going concern basis in preparing financial statements.

You're reporting an error for "AA – May 2020 – L2 – Q4a – Audit and Assurance Evidence"

AA – May 2019 – L2 – Q5b – Professional and Ethical Considerations

Explains the auditor's objectives and significant matters for communication with those charged with governance under ISA 260.

You're reporting an error for "AA – May 2019 – L2 – Q5b – Professional and Ethical Considerations"

AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations.

You're reporting an error for "AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment"

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