Question Tag: Audit risks

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  • 20 Marks

AAA – May 2023 – L3 – Q3 – Risk Management in Audits

Evaluate risks in PK Industries' scenario, discuss related party risk assessment per ISA 550, and provide audit guidelines based on ISA 600.

Messrs PK Industries Limited was incorporated and operates its business in Nigeria. The company has existed over the years. During most of this period, it imported some major components from China. Imports usually take some time to arrive after necessary forms have been completed and submitted to the bank.

Two of the directors have two other companies that supply fuel and other local resources needed by the company. The company’s directors are aware of this but prefer to do their business rather than patronize other suppliers.

In the last few years, the turnover of the company fluctuated between ₦500 million and ₦1 billion. The two other companies owned by the two directors are currently trading on loans granted by the company.

Following what was considered to be an increasingly harsh economic environment and high cost of power supply, the company registered a subsidiary company with a production outfit in Ghana while still maintaining its head office operations in Nigeria. Part of the raw materials needed in Ghana are procured in Nigeria and transported to Ghana through hired trailers. This process is being used until a suitable supplier is found in Ghana.

The company decided to hold the next Annual General Meeting (AGM) in the company’s premises in Ghana, with all the directors/shareholders traveling to Ghana on a direct flight from Abuja to Accra at the company’s expense. It was decided that this was an opportunity to evaluate the Ghanaian environment for further business decisions.

The audit of the Nigerian company and its Ghanaian company were done by different firms.

Required:

(a) Evaluate the risks involved in the scenario above. (5 Marks)

(b) Discuss the risk assessment procedures that the auditor of Messrs PK Industries Limited needs to adopt as required by ISA 550. (11 Marks)

(c) Prepare the key guidelines to the audit in accordance with ISA 600. (4 Marks)

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  • 20 Marks

AAA – Nov 2018 – L3 – Q2 – Regulatory Investigations and Disciplinary Actions

Assessment of joint audit advantages, agenda setup, and addressing regulatory issues in audit planning

Yusuf Olatunji & Co., (Chartered Accountants) have been auditors to XBC Bank Limited. There has been some regulatory and compliance issues for which the bank was sanctioned and paid penalties to both the Central Bank of Nigeria and the Financial Reporting Council of Nigeria. At the board of directors meeting to consider the last annual report audited by the firm, some of the problems caused by the auditors were raised. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm. To achieve their objective, a bigger firm that has international affiliation was considered to take a leading position in a joint audit arrangement and to ensure appropriate compliance.

Your firm has been approached for the appointment. A meeting was scheduled between your firm, Yusuf Olatunji & Co., and the executive management of the bank. In preparation for the meeting, you are informed that you will address the meeting on the advantages and disadvantages of joint audit, being an area some members of the management team have expressed concerns.

After the meeting, your firm was subsequently appointed, and the necessary formalities were properly followed. Your partner has directed that you liaise with Yusuf Olatunji & Co. to obtain the necessary materials for the preparation of the audit and that you review your firm’s audit manual with respect to the concerns of management on joint audit.

Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

  1. Part of the penalty was on improper disclosure relating to a material property, plant, and equipment (PPE) acquired during the previous year and a substantial loan above the limit authorised for a sector of the economy;
  2. The classification of unresolved transactions as debit balances in the statement of financial position, resulting in an increase in operating profit and the payment of higher taxes than projected;
  3. The IT operations of the bank had weak controls such that it was possible for some staff to over-ride some of them;
  4. The net current assets have continued to fall and, in the preceding year, have fallen below industry average despite an increase in gross earnings.

Required:

a. Evaluate the advantages and disadvantages of joint audit. (8 Marks)

b. Prepare an agenda for the scheduled meeting between the two audit firms. (4 Marks)

c. Develop the appropriate audit approach to address each of the issues identified from the review of the documents obtained from Yusuf Olatunji & Co. (8 Marks)

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  • 20 Marks

AAA – Nov 2017 – L3 – Q2 – Group Audits

Assess business risks for Chuks Zaka Limited post-acquisition, evaluate financial statement risks, and outline audit considerations.

Chuks Roberts Plc (CRP) operates as an auto-parts manufacturing company in Nigeria with headquarters in Lagos. CRP plans to manufacture drones for parcel distribution across Africa and has acquired Zaka Roberts Limited (ZRL), a South African company based in Johannesburg, to bring this plan to fruition.

Zaka previously specialized in manufacturing computer-controlled equipment for laboratories and other industries in Africa and the Middle East. The company was owned by five directors/shareholders who accepted CRP’s offer on February 1, 2016, to purchase Zaka’s manufacturing equipment, technology (patent-protected), Cape Town factory, and Johannesburg head office for US$450 million, representing 75% of Zaka’s value.

Effective March 31, 2016, Zaka ceased manufacturing, making most employees redundant except for a select few in marketing, accounts, and administration, with one month’s notice. The restructured entity, now named Chuks Zaka Limited (CZL), will operate as a marketing arm selling CRP’s drones in the South African region, with CRP holding a 55% stake.

Your firm has been CRP’s external auditor and is now engaged to audit CZL.

Required:
a. Analyse and evaluate the business risks that would be assessed by the management of CZL. (6 Marks)
b. Analyse and evaluate the business risks that would be assessed by the directors of CRP.

(6 Marks)
c. Assess and advise on the financial statements’ risks to be considered in planning the audit of CZL for the year ended December 31, 2016.

(8 Marks)

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  • 40 Marks

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

Chukwuemeka & Co. (Chartered Accountants) has been auditors to GED Manufacturing Nigeria Plc. There have been some regulatory and compliance issues for which the company was sanctioned and paid penalties to the Financial Reporting Council of Nigeria.

At the board of directors meeting to consider the last annual report audited by the firm, some of the previous problems caused by the auditors were raised and discussed. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm.

To achieve their objective, a bigger firm that has international affiliation was considered to take a leading role in a joint audit arrangement and to ensure appropriate compliance. Your firm has been approached for the appointment. A meeting was scheduled between your firm, Chukwuemeka & Co., and the executive management of GED Manufacturing Nigeria Plc.

After the meeting, your firm was subsequently appointed, and the necessary formalities were properly followed. Your partner has directed that you liaise with Chukwuemeka & Co. to obtain the necessary materials for the preparation of the audit and that you review the prior year working papers to understand the issues. Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

(i) The work done on the process of dispatch of goods and invoicing was not considered sufficient and appropriate.

(ii) The IT operations of the company had weak controls such that it was possible for some staff to override some of the existing controls.

Required:

a. Explain the risks inherent in the dispatch of goods and invoicing. (10 Marks)

b. Discuss the control objectives and principal controls that are relevant to the process of dispatch of goods and invoicing. (10 Marks)

c. Explain the limitations of a joint audit. (5 Marks)

d. Discuss the benefits of audit carried out by an internationally affiliated audit firm. (10 Marks)

e. Explain briefly the importance of audit working papers. (5 Marks)

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  • 30 Marks

AA – May 2024 – L2 – SA – Q1 – Auditing in a Computerized Environment

This question examines audit risks, controls, and auditor considerations when auditing an online banking system like FinPay Financial Solutions Limited.

FINPAY FINANCIAL SOLUTIONS LIMITED

FinPay, an innovative payment service bank, operates from its office on Lagos Island, overseeing all financial transactions, customer interactions, and relationships nationwide. The bank streamlines its processes for customer convenience, embracing the digital age.

Customers’ bank accounts are linked to their GSM phone numbers, with the initial zero removed. All banking operations, from account creation and deposits to withdrawals and account closure, are conducted seamlessly through the bank’s mobile App, which can be easily downloaded from popular App stores.

Access to the bank’s mobile App is allowed using an account number and a private six-digit PIN. A prospective customer completes the onboarding process by uploading scanned passport photos, ID card, utility bill, alongside providing other essential personal information, like name, NIN, telephone number, email address, and residential address.

To facilitate transactions, a four-digit PIN linked to the customer’s debit card is activated at Automated Teller Machines (ATMs). Additionally, customers can leverage USSD codes for payments. Customers are required to use their registered phone numbers on their smartphones when transacting businesses with the bank.

In the event of a declined transaction, swift resolution is a priority. Debits are promptly reversed, ensuring customer satisfaction. Customers can report issues directly through the mobile App or via email, and FinPay’s responsive support team resolves matters without necessitating a visit to the bank’s physical office. This efficiency cements FinPay’s reputation as a leading online bank in Nigeria.

FinPay expedites the delivery of debit cards to customers, ensuring they reach their designated addresses within 48 hours of account creation. Furthermore, a proactive follow-up call is made just 24 hours after opening an account, enhancing the overall customer experience.

With a focus on catering for tech-savvy Nigerian youths, FinPay is steadily expanding its customer base. The bank even offers small, easily accessible loans over a six-month period, further attracting and retaining a young clientele. Some customers instruct FinPay to pay monthly DStv subscriptions or send amounts to third parties on a regular basis by activating a prompt on the mobile App.

For added convenience, FinPay features a responsive chatbot, named Bobo. Customers can engage with Bobo through the bank’s mobile App, website, and social media channels, providing another layer of support and accessibility. This comprehensive approach positions FinPay as a forward-thinking financial institution at the forefront of digital banking in Nigeria.

Required:

a. Highlight four benefits an online system offers to FinPay and its customers. (8 Marks)

b. Identify and explain five General controls and five Application controls embedded in FinPay’s system. (10 Marks)

c. Explain three areas the auditors will give special considerations because of the audit risks associated with the online real-time system that dominates FinPay’s operations. (12 Marks)

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  • 15 Marks

AA – May 2018 – L2 – Q5 – Auditing in a Computerized Environment

Discusses controls and potential problems in Electronic Data Interchange (EDI) systems.

Electronic Data Interchange (EDI) systems allow electronic transmission of business documents, such as purchase orders, invoices, payroll information, etc.

Required: a. Explain FOUR major controls to be put in place to minimize the risks inherent in EDI systems. (8 Marks) b. Discuss THREE features of EDI Systems that may create additional problems for the auditor. (7 Marks)

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  • 10 Marks

AA – Nov 2023 – L2 – Q1b – Planning and Approach for Audit and Assurance Engagements

Identify and explain five risks that should be considered when planning an audit for Akanji Ltd.

Your firm has been appointed as Auditor for Akanji Ltd for the year ended 31 December 2022. Akanji Ltd designs, manufactures, and retails traditional fabrics. In trying to understand Akanji Ltd’s business, you observed the following:

  • Inventory is held at the warehouse and at retail shops in three different locations.
  • Customers place orders online and review the designs before sales are made.
  • There was a sharp fall in revenue due to the influx of “pirated fabric” and the directors are uncertain whether this trend will stop.
  • One retail shop was closed during the year and the premises are still available for sale.
  • The Internal Auditor was dismissed in the course of the year and is pursuing a claim for unfair dismissal. The Finance Director currently doubles as the Internal Auditor.
  • The Managing Director is due to retire next year and is likely to request repayment of loans he advanced to the business. Negotiations with the bank in respect of a loan to repay the Managing Director have started.

Required:
Identify and explain FIVE (5) risks arising from the above that should be considered when planning the audit of Akanji Ltd.
(10 marks)

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  • 20 Marks

AA – May 2021 – L2 – Q3 – Audit and Assurance Evidence

Identify substantive tests using audit software, potential problems with audit software, and explain auditing around the computer.

Expert Ltd (Expert) is a wholesaler of furniture (such as chairs, tables, and cupboards). Expert buys the furniture from six major manufacturers and sells them to over 1,000 customers ranging from large retail chain stores to smaller owner-controlled businesses. The receivables balance includes customers owing up to GHȼ200,000 to smaller balances of about GHȼ20,000, all with different due dates for payments and credit limits. All information is stored on Expert’s computer systems, although previous audits have adopted an ‘audit around the computer’ approach.

You are the Audit Senior in charge of the audit of the receivables balance. For the first time with this client, you have decided to use audit software to assist with the audit of the receivables balance. IT staff at Expert are happy to help you, the Auditor. However, they cannot confirm the completeness of systems documentation and warn that the systems have very old operating systems, limiting file compatibility with modern programs.

To limit the possibility of damage to Expert’s computer files, a copy of the files will be provided by Expert’s IT staff for the Auditor to use with their own audit software.

Required:
a) State SIX (6) substantive tests that should be carried out using audit software on the receivables balance of Expert Ltd. (9 marks)

b) Identify FOUR (4) potential problems of using audit software at Expert Ltd. For each problem, explain how it can be resolved. (8 marks)

c) Explain the concept of “auditing around the computer” and discuss why this increases audit risk for the Auditor. (3 marks)

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  • 5 Marks

AA – Nov 2021 – L2 – Q2a – Audit and Assurance Risk Environment

Explains audit risks auditors should consider when gathering evidence in the healthcare sector.

Hamosa Manu Hospital (HMH) is one of the government hospitals in Ghana where healthcare is free due to the National Health Insurance Scheme, as taxpayers fund healthcare by contributing an indirect tax of 2.5% on consumption.

All purchase requisition forms for medical supplies are forwarded to a centralized procurement department. Upon receipt, the procurement team will research the lowest price from suppliers and raise a purchase order. This is then passed to the Procurement Manager, who authorizes all orders. The small procurement team receives in excess of 300 forms a day.

Due to the government’s announcement of free Covid-19 testing in public hospitals, the hospital has invested heavily in new equipment, which, although very expensive, has meant that more testing could be performed and patient recovery rates would be faster. Currently, there is a shortage of appropriately trained medical staff. As a result, a capital expenditure committee has been established, made up of senior managers, and they plan and authorize any significant capital expenditure items.

Required:
Explain audit risks that auditors of HMH should consider during evidence gathering.

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  • 20 Marks

AA – Nov 2018 – L2 – Q3a, b & c – Audit and Assurance Risk Environment

Identifies audit risks at International Training Center and outlines appropriate auditor responses.

International Training Center (ITC) is a large company limited by shares that operates a network of teaching centers in countries across West Africa. The Company was incorporated under the requirements of the Companies Act, 1963 (Act 179), on 19 January 1990 and domiciled in Ghana. Students who register with the Center pay 30% during initial registration and the remaining 70% over the course period. You are the senior Associate of Add Consult. ITC is a new client, and you are currently planning the audit with the audit manager to audit the company for the year ended 31 December 2017.

You have been provided with the following planning notes from the audit partner following his meeting with the Finance Director.

  • ITC purchases stationery from a supplier in China, and these goods are shipped to the company’s central warehouse. The goods are usually in transit for a fortnight, and the company correctly records the goods when received. ITC does not undertake a year-end inventory count but carries out monthly continuous (perpetual) inventory counts, and any errors identified are adjusted in the inventory system for that month.
  • During the year, the directors of the Company have each been paid a significant bonus, and they have included this in wages and salaries expenses. Separate disclosure of the bonus is required by the Companies Act.
  • ITC has a policy of revaluing its land and buildings, and this year has updated the valuations of all land and buildings.
  • During the year, the company introduced a bonus-based scheme on sales for its salespersons. The bonus target was based on increasing the number of students signing up for 6-month courses by the school for individuals running accountancy examinations. This has been successful, and revenue has increased by 25%, especially in the last few months of the year. The level of receivables is considerably higher than last year, and there are concerns about the creditworthiness of some students.

Required:
a. Describe FIVE (5) audit risks, and explain the auditor’s response to each risk, in planning the audit of International Training Center. (10 marks)

b. Identify FIVE (5) audit procedures Add Consult should perform in order to place reliance on the continuous (perpetual) counts for year-end inventory. (5 marks)

c. Describe substantive procedures Add Consult should perform to confirm the directors’ bonus payments included in the financial statements. (5 marks)

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  • 10 Marks

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.

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)

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  • 20 Marks

AAA – Nov 2016 – L3 – Q3 – Planning | Audit Evidence

Identify and explain audit risks, procedures, and evidence related to Kpandu Sika Ltd. for the year ended 31 December 2015.

You are a manager in Amable & Co, a firm of Chartered Accountants, responsible for the audit of Kpandu Sika Limited for the year ended 31 December 2015. Kpandu Sika Limited is a company listed on the Ghana Stock Exchange (GSE) which has been a client of your firm in the past three years. The company manufactures consumer electronic appliances which are then sold to major retail organizations. You are aware that during the last year, Kpandu Sika Limited lost several customer contracts due to cheap imports. However, a new division has been created to sell its products directly to individual customers in Ghana and worldwide via a new website, which was launched on 1 December 2015.

Financial information provided by the Finance Manager is shown below:

STATEMENT OF PROFIT OR LOSS

 

STATEMENT OF FINANCIAL POSITION AS AT

 

EQUITY AND LIABILITIES

NOTES:
i) Kpandu Sika Limited established an equity-settled share-based payment plan for its executives on 1 January 2015. 250 executives and senior managers have received 100 share options each, which vest on 31 December 2015 if the executive remains in employment at that date and if Kpandu Sika Limited’s share price increases by 10% per annum. No expense has been recognized this year as Kpandu Sika Limited’s share price has fallen by 5% in the last six months, and so it is felt that the condition relating to the share price will not be met this year-end.
ii) On 1 July 2015, Kpandu Sika Limited entered into a lease which has been accounted for as a finance lease and capitalized at GH¢19 million. The leased property is used as the head office for Kpandu Sika Limited’s new website development and sales division. The lease term is for five years and the fair value of the property at the inception of the lease was GH¢76 million.
iii) On 30 June 2015 Kpandu Sika Limited’s properties were revalued by an independent expert.
iv) A significant amount has been invested in the new website, which is seen as a major strategic development for the company. The website has generated minimal sales since its launch last month, and advertising campaigns are currently being conducted to promote the site.
v) The long-term borrowings are due to be repaid in two equal installments on 30 September 2016 and 2017. Kpandu Sika Limited is in the process of renegotiating the loan, to extend the repayment dates, and to increase the amount of the loan.
vi) The provision relates to product warranties offered by the company.
vii) The overdraft limit agreed with Kpandu Sika Limited’s bank is GH¢5.7 million.

Required:
a) Using the information provided by the Finance Manager, identify and explain the principal audit risks to be considered in planning the final audit.
(10 marks)

b) State the principal audit procedures which should be performed in respect of the provision for the product warranties offered by the company.
(6 marks)

c) State the principal audit evidence which you would expect to find in respect of the classification of the new lease in terms of IAS 17 Leases (Do not consider the application of the new leasing standard IFRS 16 Leases).
(4 marks)

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  • 10 Marks

AAA – Nov 2016 – L3 – Q2a – Practice management | The audit approach

Discuss the quality control issues in an audit firm when key personnel changes occur and there are challenges in handling a major client.

a)

Nii Adjei & Associates is a firm of Chartered Accountants that provides various services (including Audit, Assurance, Tax, and Advisory services) to clients undertaking various services. Nii Adjei & Associates has offices in Accra, Tema, Koforidua, and Kumasi.

Owusu Mensah was the quality control partner of Nii Adjei & Associates. Owusu Mensah had started the implementation of an ethical compliance system for the assurance staff when he was involved in an accident on the Tema motorway on his way home and died. The said system required that staff should confirm in writing their compliance with the code of ethics of The Institute of Chartered Accountants (Ghana). Arrangement to get a replacement for Owusu Mensah had not been completed.

Osei Acquah was the engagement partner in charge of C. Kokuvi Ltd. (a major client that Nii Adjei & Associates provides audit service, preparation of tax computations, and other advisory services). Osei Acquah had an attack on his brain which resulted in a stroke. This forced Nii Adjei & Associates to engage Thomas Essien as the new engagement partner to take charge of the audit of C. Kokuvi Ltd. C. Kokuvi Ltd is not prepared to increase the audit fees from that of the previous year despite the fact that additional work has to be performed as a result of the introduction of a new computer system.

In addition, the starting date of the audit has been delayed as a result of problems with the new system.

Required:

Discuss any quality control issues identified in the above scenarios and recommend the action which should be taken by Nii Adjei and Associates. (10 marks)

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  • 10 Marks

AAA – May 2019 – L3 – Q3a – Audit evidence

Discuss the risks encountered in the audit of a company involved in possible money laundering activities, specifying the risk format and actions required.

Musah Diara is a Malian resident in Ghana. He has established Tagoe Company Ltd (Tagoe) which engages in trading in West African countries; Ghana, Nigeria, and Mali. Musah is always funded by his brother who is also a resident in Ghana. Musah’s brother does not have a bank account in Ghana. He always gives huge cash to Musah who buys goods in Ghana and sells it in Nigeria or Mali. He pays the profit into Tagoe’s account in Ghana and bank the amount given to him by his brother into his brother’s account in Mali.

Required:
You have been engaged to audit Tagoe. Discuss the risk you are likely to encounter in this audit, specifying your expectation of the risk format and the action you have to take.

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  • 10 Marks

AAA – April 2022 – L3 – Q1c – Audit evidence, Assurance services

Discuss the challenges and audit approaches in performing an assurance engagement on an electronic processing system.

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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  • 20 Marks

AAA – Nov 2015 – L3 – Q4 – The audit approach, Audit evidence, Planning, Professional responsibility and liability

his question addresses the specific considerations for initial audit engagements and evaluates the audit risks in planning the audit of a newly listed company.

You are a manager in the audit department of Yao Asaglo & Co, a firm of Chartered Certified Accountants, and you have just been assigned to the audit of High-Tec Limited, a new audit client of your firm, with a financial year ended 31 May 2015. High-Tec Limited, has just been listed on the Ghana Stock Exchange (GSE). It is an e-commerce facilitator and has grown rapidly in the last few years.

High-Tec Limited was formed ten years ago by Ms. Ama Tawiah, a graduate in e-commerce from Ashesi University. The company designs, develops software for e-commerce with high security features which have won industry awards. In the last two years, the company invested GHS400m in creating new software to appeal to a large number of multinational companies, and sales are now made in over 10 countries. The software is developed in this country, but the manufacture of the security features, for the obvious reason, takes place overseas.

The software is largely sold through retail outlets, but approximately 30% of High-Tec Limited’s revenue is generated through sales made on the company’s website.

In some countries, High-Tec Limited’s products are distributed under a franchise agreement which gives the franchise holder the exclusive right to sell the products in that country. The cost of each franchise to the distributor depends on the estimated sales in the country to which it relates, and the franchise lasts for an average of five years. The income which High-Tec Limited receives from the sale of a franchise is deferred over the period of the franchise. At 31 May 2015, the total amount of deferred income recognized in High-Tec Limited’s statement of financial position is GHS72 million.

As part of a five-year strategic plan, High-Tec Limited obtained a GSE listing in December 2014. The listing and related share issue raised a significant amount of finance, and many shares are held by institutional investors. Ama Tawiah retains a 20% equity shareholding, and a further 10% of the company’s shares are held by her family members.

Despite being listed, the company does not have an internal audit department, and there is only one non-executive director on the board.

a) Comment on the matters that you should consider specific to initial audit engagement when developing the audit strategy for High-Tec Limited. (6 marks)

b) Evaluate the audit risks to be considered in planning the audit of High-Tec Limited. (14 marks)

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  • 15 Marks

AAA – Nov 2020 – L3 – Q2a – Planning | Audit Evidence | Evaluation and Review

Identify and explain significant audit risks and other matters when planning the final audit for Manuf Co. for the year ended 31 March 2019.

Using the information provided, identify and explain the significant audit risks, and any other matters to be considered when planning the final audit for Manuf Co. for the year ended 31 March 2019. (15 marks)

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