Question Tag: Auditors' responsibilities

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AAA – Nov 2021 – L3 – Q4 – Audit Completion and Final Review

Discuss auditor responsibilities for detecting misstatements in different reporting periods and associated audit procedures.

Question

Your firm is the auditor of Sharp Electronics Co. Plc, a listed company, which assembles electronic home appliances for sale on retail and wholesale bases. The electronic appliances parts are purchased from within and outside the country. The extract from the statement of financial position of the company is as follows:

Sharp Electronics Co. Plc – Statement of Financial Position

You have been asked by the partner in charge of the audit to consider your firm’s audit responsibilities with respect to subsequent events, and the associated audit procedures for such matters.

Required:

a. Discuss the responsibilities of the auditors for detecting misstatements in the financial statements during the following periods:

i. From the end of the reporting period up to the date of the audit report. (8 Marks)

ii. After the date of the audit report and before financial statements are issued. (6 Marks)

iii. After the financial statements have been issued. (3 Marks)

b. State the details of the work you will carry out in period (a)(ii) above to identify significant subsequent events affecting the financial statements. (5 Marks)

Answer

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Tags: Auditors' responsibilities, Financial Statements, Misstatements, Periodic review, Subsequent Events
Level: Level 3

Topic: Audit Completion and Final Review

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

Question

During the audit of fixed assets for Next Engineering Plc as of December 31, 2016, two issues were encountered:

The cost calculations for direct labor on assets under construction were destroyed, with the direct labor cost totaling ₦20,000,000.
A government grant of ₦50,000,000, received for plant and equipment purchased during the year, was fully credited to the income statement as an exceptional item, though the plant and equipment have a 10-year useful life.

Requirements:
a. Discuss the general forms of modifications available to auditors in drafting their report and specify circumstances for each form.

(6 Marks)
b. Assuming a modified audit report is necessary regarding the government grant treatment, draft the relevant section (entire report not required).

(5 Marks)
c. Analyze the auditor’s general responsibility concerning the directors’ report on land and building valuation.

(4 Marks)

Answer

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Tags: Auditors' responsibilities, Fixed Assets, Government Grant, Land and Building Valuation, Modified Audit Report
Level: Level 3

Topic: Audit Reporting
Series: NOV 2017

AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors

Explaining factors a chartered accountant must consider in resolving ethical conflicts in auditing.

Question

In evaluating compliance with the fundamental principles, a chartered accountant may be required to resolve a conflict in the application of fundamental principles. You are required to state and explain what factors he must take into consideration in his evaluation.

Answer

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Tags: Auditors' responsibilities, Ethical Conflicts, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing the fundamental principle of duty of confidentiality in audit and assurance engagements.

Question

Briefly discuss the fundamental principle of Duty of Confidentiality.

Answer

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Tags: Auditors' responsibilities, Confidentiality, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Mar 2023 – L2 – Q5b – Completion Procedures and Reporting

List the responsibilities of an auditor in auditing historical financial statements under ISA 700.

Question

Your manager is presenting to the Engagement Partner the draft opinion on the financial statements of a recently audited client. Your manager has tasked you to research into the responsibilities of an external auditor for auditing historical financial statements in line with ISA 700 (Revised): Forming an Opinion and Reporting on Financial Statements.

Required:
State FIVE (5) responsibilities of an auditor in line with the above standard.

Answer

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Tags: Auditors' responsibilities, Financial Statements, ISA 700, Material Misstatement

Topic: Completion Procedures and Reporting
Series: MAR 2023

AA – Mar 2023 – L2 – Q4a – Completion Procedures and Reporting

Explain the auditor's responsibilities regarding subsequent events and how a legal claim should be reported in financial statements.

Question

You are an audit assistant for an audit client with a year-end of 31 December 2021. A major customer has instituted a legal action against the company for faulty goods supplied after the year-end. A recently recruited intern who was part of your team was of the opinion that because of the cut-off assertion, any event after 31 December 2021 should not affect the financial statements and therefore the auditor should have no responsibility for issues occurring after the reporting year.

Following your audit of the client, you have concluded that there is a possibility, but not a probability, that the claim will be successful. However, management has decided not to make a provision or disclosure in the financial statements for this matter.

Required:
In reference to the preamble:
i) Describe the auditor’s responsibility for subsequent events occurring between:

The year-end date and the date the auditor’s report is signed; and
The date the auditor’s report is signed and the date the financial statements are issued. (6 marks)

ii) Explain how the matter should be reported in the financial statements. (4 marks)

Answer

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Tags: Auditors' responsibilities, Financial Statements, IAS 37, Legal claims, Subsequent Events
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAR 2023

AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment

Discuss the auditor’s responsibilities concerning fraud and the procedures to follow when fraud risks are identified.

Question

ISA 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements recognizes that financial statements’ misrepresentation can occur as a result of either fraud or error. The distinction is whether the underlying activity that caused the misrepresentation was deliberate or unintentional. An auditor’s job is not to determine whether or not fraud has happened. The external auditor is concerned with getting reasonable assurance that the financial statements as a whole are free of material misstatement, whether due to fraud or error.

Required:
i) Describe TWO (2) ways by which the external auditor may report fraud in an engagement. (2 marks)
ii) Discuss TWO (2) types of fraud in relation to the financial statements. (2 marks)
iii) State SIX (6) audit procedures that the auditor is required to perform in light of the risk of fraud. (6 marks)

Answer

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Tags: Audit Procedures, Auditors' responsibilities, Financial Statements, Fraud, ISA 240
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: MAR 2023

AA – May 2018 – L2 – Q1b – Regulatory Framework and Audit Responsibilities

Compares the responsibilities of directors and auditors in relation to annual financial statements, focusing on potential legal action for misleading audit opinions.

Question

Atu Emma & Co Chartered Accountants has audited Great Tribulation Ltd for 10 years. In 2017, the Directors found out that the company has been borrowing to finance operating expenses and this has gone on for the past two years. They have advised their lawyers to commence legal action against the auditors for misleading the Directors into approving the annual financial statements after they have given an unqualified audit opinion.

Required: Compare the responsibilities of the directors and auditors regarding the annual financial statements of Great Tribulations Ltd. (10 marks)

Answer

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Tags: Audit opinion, Auditors' responsibilities, Directors' Responsibilities, Financial Statements, Legal Action
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: MAY 2018

AAA – Nov 2021 – L3 – Q4 – Audit Completion and Final Review

Discuss auditor responsibilities for detecting misstatements in different reporting periods and associated audit procedures.

Question

Sharp Electronics Co. Plc – Statement of Financial Position

You have been asked by the partner in charge of the audit to consider your firm’s audit responsibilities with respect to subsequent events, and the associated audit procedures for such matters.

Required:

a. Discuss the responsibilities of the auditors for detecting misstatements in the financial statements during the following periods:

i. From the end of the reporting period up to the date of the audit report. (8 Marks)

ii. After the date of the audit report and before financial statements are issued. (6 Marks)

iii. After the financial statements have been issued. (3 Marks)

b. State the details of the work you will carry out in period (a)(ii) above to identify significant subsequent events affecting the financial statements. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Financial Statements, Misstatements, Periodic review, Subsequent Events
Level: Level 3

Topic: Audit Completion and Final Review

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

Question

During the audit of fixed assets for Next Engineering Plc as of December 31, 2016, two issues were encountered:

The cost calculations for direct labor on assets under construction were destroyed, with the direct labor cost totaling ₦20,000,000.
A government grant of ₦50,000,000, received for plant and equipment purchased during the year, was fully credited to the income statement as an exceptional item, though the plant and equipment have a 10-year useful life.

Requirements:
a. Discuss the general forms of modifications available to auditors in drafting their report and specify circumstances for each form.

(6 Marks)
b. Assuming a modified audit report is necessary regarding the government grant treatment, draft the relevant section (entire report not required).

(5 Marks)
c. Analyze the auditor’s general responsibility concerning the directors’ report on land and building valuation.

(4 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Fixed Assets, Government Grant, Land and Building Valuation, Modified Audit Report
Level: Level 3

Topic: Audit Reporting
Series: NOV 2017

AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors

Explaining factors a chartered accountant must consider in resolving ethical conflicts in auditing.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Ethical Conflicts, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing the fundamental principle of duty of confidentiality in audit and assurance engagements.

Question

Briefly discuss the fundamental principle of Duty of Confidentiality.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Confidentiality, Professional Ethics
Level: Level 2

Topic: Professional Ethics and Code of Conduct for Auditors
Series: NOV 2015

AA – Mar 2023 – L2 – Q5b – Completion Procedures and Reporting

List the responsibilities of an auditor in auditing historical financial statements under ISA 700.

Question

Required:
State FIVE (5) responsibilities of an auditor in line with the above standard.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Financial Statements, ISA 700, Material Misstatement

Topic: Completion Procedures and Reporting
Series: MAR 2023

AA – Mar 2023 – L2 – Q4a – Completion Procedures and Reporting

Explain the auditor's responsibilities regarding subsequent events and how a legal claim should be reported in financial statements.

Question

Required:
In reference to the preamble:
i) Describe the auditor’s responsibility for subsequent events occurring between:

The year-end date and the date the auditor’s report is signed; and
The date the auditor’s report is signed and the date the financial statements are issued. (6 marks)

ii) Explain how the matter should be reported in the financial statements. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditors' responsibilities, Financial Statements, IAS 37, Legal claims, Subsequent Events
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAR 2023

AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment

Discuss the auditor’s responsibilities concerning fraud and the procedures to follow when fraud risks are identified.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Auditors' responsibilities, Financial Statements, Fraud, ISA 240
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: MAR 2023

AA – May 2018 – L2 – Q1b – Regulatory Framework and Audit Responsibilities

Compares the responsibilities of directors and auditors in relation to annual financial statements, focusing on potential legal action for misleading audit opinions.

Question

Required: Compare the responsibilities of the directors and auditors regarding the annual financial statements of Great Tribulations Ltd. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit opinion, Auditors' responsibilities, Directors' Responsibilities, Financial Statements, Legal Action
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: MAY 2018

Question Tag: Auditors' responsibilities

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AAA – Nov 2021 – L3 – Q4 – Audit Completion and Final Review

Discuss auditor responsibilities for detecting misstatements in different reporting periods and associated audit procedures.

You're reporting an error for "AAA – Nov 2021 – L3 – Q4 – Audit Completion and Final Review"

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

You're reporting an error for "AAA – Nov 2017 – L3 – Q6 – Audit Reporting"

AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors

Explaining factors a chartered accountant must consider in resolving ethical conflicts in auditing.

You're reporting an error for "AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors"

AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing the fundamental principle of duty of confidentiality in audit and assurance engagements.

You're reporting an error for "AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – Mar 2023 – L2 – Q5b – Completion Procedures and Reporting

List the responsibilities of an auditor in auditing historical financial statements under ISA 700.

You're reporting an error for "AA – Mar 2023 – L2 – Q5b – Completion Procedures and Reporting"

AA – Mar 2023 – L2 – Q4a – Completion Procedures and Reporting

Explain the auditor's responsibilities regarding subsequent events and how a legal claim should be reported in financial statements.

You're reporting an error for "AA – Mar 2023 – L2 – Q4a – Completion Procedures and Reporting"

AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment

Discuss the auditor’s responsibilities concerning fraud and the procedures to follow when fraud risks are identified.

You're reporting an error for "AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment"

AA – May 2018 – L2 – Q1b – Regulatory Framework and Audit Responsibilities

Compares the responsibilities of directors and auditors in relation to annual financial statements, focusing on potential legal action for misleading audit opinions.

You're reporting an error for "AA – May 2018 – L2 – Q1b – Regulatory Framework and Audit Responsibilities"

AAA – Nov 2021 – L3 – Q4 – Audit Completion and Final Review

Discuss auditor responsibilities for detecting misstatements in different reporting periods and associated audit procedures.

You're reporting an error for "AAA – Nov 2021 – L3 – Q4 – Audit Completion and Final Review"

AAA – Nov 2017 – L3 – Q6 – Audit Reporting

Discuss audit report modifications, draft modified report on grant treatment, and analyze auditor’s responsibilities regarding asset valuation.

You're reporting an error for "AAA – Nov 2017 – L3 – Q6 – Audit Reporting"

AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors

Explaining factors a chartered accountant must consider in resolving ethical conflicts in auditing.

You're reporting an error for "AA – Nov 2015 – L2 – Q5b – Professional Ethics and Code of Conduct for Auditors"

AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discussing the fundamental principle of duty of confidentiality in audit and assurance engagements.

You're reporting an error for "AA – Nov 2015 – L2 – Q5a – Professional Ethics and Code of Conduct for Auditors (IESBA Code)"

AA – Mar 2023 – L2 – Q5b – Completion Procedures and Reporting

List the responsibilities of an auditor in auditing historical financial statements under ISA 700.

You're reporting an error for "AA – Mar 2023 – L2 – Q5b – Completion Procedures and Reporting"

AA – Mar 2023 – L2 – Q4a – Completion Procedures and Reporting

Explain the auditor's responsibilities regarding subsequent events and how a legal claim should be reported in financial statements.

You're reporting an error for "AA – Mar 2023 – L2 – Q4a – Completion Procedures and Reporting"

AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment

Discuss the auditor’s responsibilities concerning fraud and the procedures to follow when fraud risks are identified.

You're reporting an error for "AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment"

AA – May 2018 – L2 – Q1b – Regulatory Framework and Audit Responsibilities

Compares the responsibilities of directors and auditors in relation to annual financial statements, focusing on potential legal action for misleading audit opinions.

You're reporting an error for "AA – May 2018 – L2 – Q1b – Regulatory Framework and Audit Responsibilities"

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