Question Tag: Auditor Responsibility

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AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors

Examines responsibilities in fraud prevention, asset ownership verification, depreciation rates, asset register contents, and revaluation effects.

Question

You are an employee of Ben, Tai & Co., a firm of Chartered Accountants. One of the firm’s clients is Keke Limited, a car rental company whose shares are not traded on a stock exchange. The company has a large fleet of vehicles which it hires out on a contract basis.

The duration of a contract varies from one day to three months. Anybody wishing to hire a car must possess a valid driver’s license. In addition, they must take out insurance with Keke Limited.

You are involved in the audit of non-current assets for the year ended December 31, 2015.

The company’s main non-current assets are:

Freehold land and buildings
Office equipment (mainly computers)
Motor vehicles

The company was formed ten years ago, and all non-current assets (except for land and buildings) are maintained in a non-current assets register. The company depreciates non-current assets at the following rates:

Freehold land and buildings: 2% on cost
Office equipment: 20% on cost
Motor vehicles: 50% on cost

The company has recently revalued its buildings upwards by N200 million. The directors believe that they have fallen victim to a fraudster who has disappeared with a number of the company’s vehicles.

Required:

a. What is the difference between the responsibilities of management and the auditor for the prevention and the detection of fraud? Explain how these responsibilities are carried out. (6 marks)

b. Describe how you would verify the ownership of:
i. Freehold land and buildings
ii. Computers
iii. Motor vehicles
(6 marks)

c. Comment on the appropriateness of the depreciation rates of the non-current assets and their respective effect on the income statement. (6 marks)

d. List the contents of a non-current asset register and describe its usefulness for Keke Limited. (6 marks)

e. Explain the accounting effect of the revaluation of the buildings to the financial statements and the audit work you would perform in this matter. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Verification, Auditor Responsibility, Depreciation, Fraud Detection, Non-current Assets, Revaluation
Level: Level 2

Topic: The Role and Responsibilities of Auditors
Series: MAY 2016

AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting

Discusses authoritative sources for the auditor’s report and explains the importance of management and auditor responsibility paragraphs.

Question

The basic objective of an audit is to form and express an opinion on the financial statements. The tangible means by which the auditor achieves this objective is the Auditors Report that is issued to members of the company after the completion of the audit.

Required:
i) Discuss TWO (2) authoritative sources which govern the form and content of the auditor’s report to members. (4 marks)
ii) Explain the essence or importance of Management Responsibility and Auditor’s Responsibility paragraphs in the auditor’s report. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit opinion, Auditor Responsibility, Auditor's Report, ISA 700, ISA 701, Management Responsibility
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2019

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

Question

According to ISA 240: The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements, the term “Fraud” refers to an intentional act by one or more individuals among management, those charged with governance, employees, or third parties involving the use of deception to obtain an unjust or illegal advantage.

Required:
i) State the TWO (2) types of fraud as identified by ISA 240.
ii) For each type of fraud, list THREE (3) examples.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Misappropriation, Auditor Responsibility, Financial Statements, Fraud, Fraudulent Reporting, ISA 240
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: DEC 2022

AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting

Discuss the auditor's responsibility for fraud detection and the validity of a client withholding audit fees due to undetected fraud.

Question

Stevens and Associates have completed the audit of the accounts of Eno Serwah & Co. Ltd for the year ended 31 December 2015. The auditor’s opinion on the financial statement has been favorable to Eno Serwah & Co Ltd. Internal check procedures after the audit revealed a shortage of cash of Two Million Ghana cedis (GH¢2m). The Directors of Eno Serwah & Co Ltd. put a freeze on the payment of the audit fees on the grounds that the audit could not detect the shortage.

Required:

Discuss the stand taken by the Directors of the company.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Fees, Auditor Responsibility, Fraud Detection, Legal Dispute
Level: Level 3

Topic: Professional responsibility and liability, Reporting
Series: MAY 2017

AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability

Discusses the potential for audit failures to undermine the credibility of external audits and the responses the accountancy profession can implement.

Question

Recent cases of bank failures have called into question the professional competence and integrity of external auditors. Some have explained that an auditor might be misled about the existence of account balances that do not exist. Companies being audited might have furnished the auditor with a document confirming the account’s existence and balance as at the reporting date. Unfortunately, according to allegations, such balances turn out to be either an overstatement or an understatement and the auditor failed to detect a material overstatement of both assets and revenues. Such cases undermine the credibility of auditors and external audit generally in the eyes of users of audited financial statements.

Required:
Explain whether you believe it is possible for such events as the one described above to completely undermine the credibility of external audit. Your explanation should consider the responses that the accountancy profession can put in place in response to such criticisms. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit credibility, Audit failures, Auditor Responsibility, External audit, Professional competence
Level: Level 3

Topic: Current issues, Professional responsibility and liability, Reporting
Series: MAY 2018

AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting

Discusses the auditor’s responsibilities in relation to laws and regulations, non-compliance issues, and policies for prevention and detection of non-compliance.

Question

a) At a final meeting with the client, DMS Ltd, one of the Audit Partners of DTR & Co Chartered Accountants had an argument with the Finance Director of DMS Ltd on an issue that borders on compliance with a relevant law. The Environmental Protection Authority had sanctioned DMS Ltd for environmental regulation breaches for the year 2016. The Finance Director was of the view that the external auditors are to be blamed for negligently failing to plan their audit to detect such non-compliance with environmental regulations.

Required:
i) Explain the responsibility of external auditors in considering laws and regulations in an audit of financial statements. (2 marks)

ii) Explain the issue of non-compliance in relation to laws and regulations in an audit. (2 marks)

iii) Explain the policies and procedures which may be implemented to assist management in the prevention and detection of non-compliance with laws and regulations. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Responsibility, Internal Controls, Laws and regulations, Management responsibilities, Non-compliance
Level: Level 3

Topic: Audit evidence, Reporting, The audit approach
Series: MAY 2018

: AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability

Identify and comment on the ethical and professional issues related to client engagements for Pen Co and the Scot family, and suggest actions MM & Co should take.

Question

b) You are senior manager in MM & Co, a firm of Chartered Accountants. Recently, you have been assigned specific responsibility for undertaking annual reviews of existing clients. The following situation has arisen in connection with two clients.

i) MM & Co, was appointed auditor for Pen Co last year and has recently issued an unmodified opinion on the financial statements for the year ended 31 March 2013. To your surprise, the tax authorities have just launched an investigation into the affairs of Pen on suspicion of under-declaring income. (7 marks)

ii) Your firm has provided financial advice to the Scot family for many years and this has sometimes involved your firm carrying out transactions on their behalf. The eldest son, Gino, is to take up a position as a senior government official in a foreign country next month. (3 marks)

Required:

Identify and comment on the ethical and other professional issues raised by each of these matters and state what action, if any, MM & Co should now take.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Responsibility, Client Engagement, Ethical Issues, Professional Conduct
Level: Level 3

Topic: Professional responsibility and liability
Series: NOV 2015

AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors

Examines responsibilities in fraud prevention, asset ownership verification, depreciation rates, asset register contents, and revaluation effects.

Question

The duration of a contract varies from one day to three months. Anybody wishing to hire a car must possess a valid driver’s license. In addition, they must take out insurance with Keke Limited.

You are involved in the audit of non-current assets for the year ended December 31, 2015.

The company’s main non-current assets are:

Freehold land and buildings
Office equipment (mainly computers)
Motor vehicles

Freehold land and buildings: 2% on cost
Office equipment: 20% on cost
Motor vehicles: 50% on cost

Required:

a. What is the difference between the responsibilities of management and the auditor for the prevention and the detection of fraud? Explain how these responsibilities are carried out. (6 marks)

b. Describe how you would verify the ownership of:
i. Freehold land and buildings
ii. Computers
iii. Motor vehicles
(6 marks)

c. Comment on the appropriateness of the depreciation rates of the non-current assets and their respective effect on the income statement. (6 marks)

d. List the contents of a non-current asset register and describe its usefulness for Keke Limited. (6 marks)

e. Explain the accounting effect of the revaluation of the buildings to the financial statements and the audit work you would perform in this matter. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Verification, Auditor Responsibility, Depreciation, Fraud Detection, Non-current Assets, Revaluation
Level: Level 2

Topic: The Role and Responsibilities of Auditors
Series: MAY 2016

AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting

Discusses authoritative sources for the auditor’s report and explains the importance of management and auditor responsibility paragraphs.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit opinion, Auditor Responsibility, Auditor's Report, ISA 700, ISA 701, Management Responsibility
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2019

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

Question

Required:
i) State the TWO (2) types of fraud as identified by ISA 240.
ii) For each type of fraud, list THREE (3) examples.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Misappropriation, Auditor Responsibility, Financial Statements, Fraud, Fraudulent Reporting, ISA 240
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: DEC 2022

AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting

Discuss the auditor's responsibility for fraud detection and the validity of a client withholding audit fees due to undetected fraud.

Question

Required:

Discuss the stand taken by the Directors of the company.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Fees, Auditor Responsibility, Fraud Detection, Legal Dispute
Level: Level 3

Topic: Professional responsibility and liability, Reporting
Series: MAY 2017

AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability

Discusses the potential for audit failures to undermine the credibility of external audits and the responses the accountancy profession can implement.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit credibility, Audit failures, Auditor Responsibility, External audit, Professional competence
Level: Level 3

Topic: Current issues, Professional responsibility and liability, Reporting
Series: MAY 2018

AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting

Discusses the auditor’s responsibilities in relation to laws and regulations, non-compliance issues, and policies for prevention and detection of non-compliance.

Question

Required:
i) Explain the responsibility of external auditors in considering laws and regulations in an audit of financial statements. (2 marks)

ii) Explain the issue of non-compliance in relation to laws and regulations in an audit. (2 marks)

iii) Explain the policies and procedures which may be implemented to assist management in the prevention and detection of non-compliance with laws and regulations. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Responsibility, Internal Controls, Laws and regulations, Management responsibilities, Non-compliance
Level: Level 3

Topic: Audit evidence, Reporting, The audit approach
Series: MAY 2018

: AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability

Identify and comment on the ethical and professional issues related to client engagements for Pen Co and the Scot family, and suggest actions MM & Co should take.

Question

Required:

Identify and comment on the ethical and other professional issues raised by each of these matters and state what action, if any, MM & Co should now take.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Responsibility, Client Engagement, Ethical Issues, Professional Conduct
Level: Level 3

Topic: Professional responsibility and liability
Series: NOV 2015

Question Tag: Auditor Responsibility

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AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors

Examines responsibilities in fraud prevention, asset ownership verification, depreciation rates, asset register contents, and revaluation effects.

AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting

Discusses authoritative sources for the auditor’s report and explains the importance of management and auditor responsibility paragraphs.

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting

Discuss the auditor's responsibility for fraud detection and the validity of a client withholding audit fees due to undetected fraud.

AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability

Discusses the potential for audit failures to undermine the credibility of external audits and the responses the accountancy profession can implement.

AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting

Discusses the auditor’s responsibilities in relation to laws and regulations, non-compliance issues, and policies for prevention and detection of non-compliance.

: AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability

Identify and comment on the ethical and professional issues related to client engagements for Pen Co and the Scot family, and suggest actions MM & Co should take.

AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors

Examines responsibilities in fraud prevention, asset ownership verification, depreciation rates, asset register contents, and revaluation effects.

AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting

Discusses authoritative sources for the auditor’s report and explains the importance of management and auditor responsibility paragraphs.

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting

Discuss the auditor's responsibility for fraud detection and the validity of a client withholding audit fees due to undetected fraud.

AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability

Discusses the potential for audit failures to undermine the credibility of external audits and the responses the accountancy profession can implement.

AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting

Discusses the auditor’s responsibilities in relation to laws and regulations, non-compliance issues, and policies for prevention and detection of non-compliance.

: AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability

Identify and comment on the ethical and professional issues related to client engagements for Pen Co and the Scot family, and suggest actions MM & Co should take.

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Question Tag: Auditor Responsibility

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AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors

Examines responsibilities in fraud prevention, asset ownership verification, depreciation rates, asset register contents, and revaluation effects.

You're reporting an error for "AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors"

AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting

Discusses authoritative sources for the auditor’s report and explains the importance of management and auditor responsibility paragraphs.

You're reporting an error for "AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting"

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

You're reporting an error for "AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment"

AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting

Discuss the auditor's responsibility for fraud detection and the validity of a client withholding audit fees due to undetected fraud.

You're reporting an error for "AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting"

AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability

Discusses the potential for audit failures to undermine the credibility of external audits and the responses the accountancy profession can implement.

You're reporting an error for "AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability"

AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting

Discusses the auditor’s responsibilities in relation to laws and regulations, non-compliance issues, and policies for prevention and detection of non-compliance.

You're reporting an error for "AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting"

: AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability

Identify and comment on the ethical and professional issues related to client engagements for Pen Co and the Scot family, and suggest actions MM & Co should take.

You're reporting an error for ": AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability"

AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors

Examines responsibilities in fraud prevention, asset ownership verification, depreciation rates, asset register contents, and revaluation effects.

You're reporting an error for "AA – May 2016 – L2 – Q1 – The Role and Responsibilities of Auditors"

AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting

Discusses authoritative sources for the auditor’s report and explains the importance of management and auditor responsibility paragraphs.

You're reporting an error for "AA – Nov 2019 – L2 – Q5b – Completion Procedures and Reporting"

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

You're reporting an error for "AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment"

AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting

Discuss the auditor's responsibility for fraud detection and the validity of a client withholding audit fees due to undetected fraud.

You're reporting an error for "AAA – May 2017 – L3 – Q2b – Professional responsibility and liability | Reporting"

AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability

Discusses the potential for audit failures to undermine the credibility of external audits and the responses the accountancy profession can implement.

You're reporting an error for "AAA – May 2018 – L3 – Q3b – Current Issues, Reporting, Professional responsibility and liability"

AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting

Discusses the auditor’s responsibilities in relation to laws and regulations, non-compliance issues, and policies for prevention and detection of non-compliance.

You're reporting an error for "AAA – May 2018 – L3 – Q3a – The audit approach, Audit evidence, Reporting"

: AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability

Identify and comment on the ethical and professional issues related to client engagements for Pen Co and the Scot family, and suggest actions MM & Co should take.

You're reporting an error for ": AAA – Nov 2015 – L3 – Q5b – Professional Responsibility and Liability"

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