- 15 Marks
AA – May 2016 – L2 – Q5 – The Role and Responsibilities of Auditors
Steps for auditor replacement when incumbent auditors do not wish to resign, and brief overview of audit documentation.
Question
Alhaji Abubakar Yusuf is the managing director of Nasara Tech Limited, a private company. Nasara Tech is currently audited by Mike and Co. Alhaji Abubakar has informed you that the directors of Nasara Tech wish to appoint your firm, Adewuyi Adeyemi and Co., as auditors in place of Mike and Co., but they consider that Mike and Co. will not be willing to resign.
Required:
a. Assuming that Mike and Co. are not willing to resign, set out the statutory and other procedures which will have to be followed by Nasara Tech Limited, your firm, and which may be adopted by Mike and Co. in connection with this proposed appointment. You should assume that Adewuyi Adeyemi and Co. have adequate resources to take on the audit of Nasara Tech Limited and that there are no issues surrounding independence or client integrity. (6 Marks)
b. Assuming that Mike and Co. are willing to resign part way through their term of office, set out the procedures to be followed by Mike and Co. and Nasara Tech Limited in order to effect the resignations. (4 Marks)
Your office has recently taken on a new trainee, John. You have been asked to explain to John what information is recorded in the audit process and where.
c. Set out a brief explanation for John. (5 Marks)
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