Question Tag: Auditor's responsibility

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AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

Question

In a recent seminar you attended, it was explained that although auditors can incur civil liability under various statutes, it is far more likely that they will incur liability for negligence under common law. The paper presenter mentioned cases against auditors which were in this area. You also learnt that auditors must be fully aware of the extent of their responsibilities, together with steps they must take to minimize the danger claims arising from professional negligence.

Required:
a. Discuss the extent of auditors’ responsibilities to shareholders and other stakeholders during the course of their normal professional engagement. (8 Marks)

b. Outline FIVE steps that audit firms can take to minimize the danger of claims against them. (5 Marks)

c. Itemize TWO steps that must be taken to minimize the danger of claims when the company is deemed to have been distressed. (2 Marks)
(Total 15 Marks)

Answer

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Tags: Audit Firms, Auditor's responsibility, Legal Liability, Professional Negligence
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

Question

Globamedia is a company listed on The Nigerian Exchange (NGX) and is a long-established media company. In the last three years, it made some losses, though it is making investment in digital publishing. This investment and the company’s projected sound future prospects have led to a good market rating since it was generally seen that this digital publishing is a leading edge in the media industry. Its investments have been funded through the use of reserves built over many years.

However, a few weeks ago, Globamedia’s shares were suspended, having fallen by more than the stipulated threshold by The Nigerian Exchange Group on rumors that asset values have been significantly overstated and that the company was no longer financially viable. Your firm as the auditors has come under significant criticism and is considered as being negligent.

Required:

a. Evaluate the legal position of your firm. (5 Marks)

b. Discuss the requirements for due care. (5 Marks)

c. Highlight the steps and procedures that the firm could have taken to prevent such a situation from occurring. (5 Marks)

Answer

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Tags: Audit Procedures, Auditor's responsibility, Due care, Financial Viability, Legal Liability, Media Industry, Risk Management
Level: Level 3

Topic: Auditor’s Legal Liability
Series: MAY 2024

AA – Dec 2022 – L2 – Q5d – Audit and Assurance Risk Environment

States the auditor's responsibilities when significant deficiencies in internal control are identified during an audit.

Question

A significant deficiency in internal control is one which merits the attention of those charged with governance.

Required:
State THREE (3) requirements of an Auditor when there are deficiencies in internal control of a client.

Answer

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Tags: Auditor's responsibility, Corporate Governance, Deficiencies, Internal Control, ISA
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: DEC 2022

AA – April 2022 – L2 – Q1d – Audit and Assurance Evidence

Identify five circumstances when the work of an auditor's expert is needed.

Question

ISA 620: “Using the Work of the Auditor’s Expert” provides guidance to auditors on relying on the work carried out by experts. Even though an expert’s work might be sought for relating to a particular issue, the Auditor has sole responsibility for the audit opinion being expressed.

Required:
Identify FIVE (5) circumstances the work of an Auditor’s Expert may be needed. (5 marks)

Answer

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Tags: Auditor's responsibility, Expert Reliance, Experts, ISA 620
Level: Level 2

Topic: Audit and Assurance Evidence
Series: APR 2022

AAA – Nov 2020 – L3 – Q3b – Audit Evidence | Evaluation and Review

Describe the auditor’s responsibility for subsequent events that occur before and after the auditor's report is signed.

Question

Describe your responsibility for subsequent events;
i) Assuming the events occurred before your report is signed (5 marks)

ii) Assuming the events occurred after signing your report but before the report was issued. (5 marks)

Answer

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Tags: Audit report, Auditor's responsibility, Financial Statements, Subsequent Events
Level: Level 3

Topic: Audit evidence, Evaluation and review
Series: NOV 2020

AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review

Describe the auditor’s responsibility for subsequent events occurring between specific periods in the audit process.

Question

b) In conducting an audit, audit procedures must be planned and performed so as to consider all significant transactions occurring after the reporting period. This means that the audit work does not stop with events only up to the reporting period. There are two key dates after the reporting period: the date of the audit report and the date that the financial statements are issued.

Required: Describe the auditor’s responsibility for subsequent events occurring between:

i) The year-end date and the date the auditor’s report is signed; and (2 marks)

ii) The date the auditor’s report is signed and the date the financial statements are issued. (3 marks)

Answer

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Tags: Auditor's responsibility, ISA 560, Subsequent Events
Level: Level 3

Topic: Audit evidence, Current issues
Series: NOV 2023

AAA – Aug 2022 – L3 – Q5c – Current issues

Discuss reasons for management’s reluctance to disclose material uncertainty and the auditor's responsibility when going concern assumption is inappropriate.

Question

If indications are identified which suggest that the going concern basis might not be appropriate for preparing financial statements, the auditor is required by ISA 570 (Revised): Going Concern to consider the implications for his audit report. The form of the report will depend on the auditor’s judgement.

There are two possible views:

The use of the going concern is appropriate but material uncertainty exists or
The use of the going concern assumption is inappropriate.

Required:
i) Discuss THREE (3) reasons why management of a client’s company will probably be reluctant to include the disclosure about material uncertainty in relation to the going concern assumption.
(3 marks)

ii) State the auditor’s responsibility where the use of the going concern assumption is inappropriate.
(2 marks)

Answer

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Tags: Audit report, Auditor's responsibility, Going Concern, Material Uncertainty
Level: Level 3

Topic: Current issues
Series: AUG 2022

AAA – Nov 2018 – L3 – Q3a – Professional responsibility and liability

Discussion on the auditor's duty under money laundering laws and confidentiality requirements.

Question

It was reported in both the print and electronic media that “the hidden wealth of some of the world’s most prominent leaders, politicians, and celebrities including former Tory MPs and six peers have been released in a massive leak. The leak came from the database of lawyer Mossack Fonseca, who was alleged to have aided the people involved to form offshore companies, which enabled them to evade tax and indulge in money laundering. This revelation has implications for professional accountants who are required to report suspicious transactions and activities of clients.”

Required:
i) Discuss the auditor’s duty under money laundering laws and regulations and the requirement of confidentiality under the IFAC’s Code of Ethics for Professional Accountants. (4 marks)

ii) Recommend elements that should be included in an anti-money laundering programmed for an accounting firm. (6 marks)

Answer

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Tags: Auditor's responsibility, Confidentiality, Money laundering
Level: Level 3

Topic: Professional responsibility and liability
Series: NOV 2018

AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

Question

Required:
a. Discuss the extent of auditors’ responsibilities to shareholders and other stakeholders during the course of their normal professional engagement. (8 Marks)

b. Outline FIVE steps that audit firms can take to minimize the danger of claims against them. (5 Marks)

c. Itemize TWO steps that must be taken to minimize the danger of claims when the company is deemed to have been distressed. (2 Marks)
(Total 15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Firms, Auditor's responsibility, Legal Liability, Professional Negligence
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

Question

Required:

a. Evaluate the legal position of your firm. (5 Marks)

b. Discuss the requirements for due care. (5 Marks)

c. Highlight the steps and procedures that the firm could have taken to prevent such a situation from occurring. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Auditor's responsibility, Due care, Financial Viability, Legal Liability, Media Industry, Risk Management
Level: Level 3

Topic: Auditor’s Legal Liability
Series: MAY 2024

AA – Dec 2022 – L2 – Q5d – Audit and Assurance Risk Environment

States the auditor's responsibilities when significant deficiencies in internal control are identified during an audit.

Question

A significant deficiency in internal control is one which merits the attention of those charged with governance.

Required:
State THREE (3) requirements of an Auditor when there are deficiencies in internal control of a client.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor's responsibility, Corporate Governance, Deficiencies, Internal Control, ISA
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: DEC 2022

AA – April 2022 – L2 – Q1d – Audit and Assurance Evidence

Identify five circumstances when the work of an auditor's expert is needed.

Question

Required:
Identify FIVE (5) circumstances the work of an Auditor’s Expert may be needed. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor's responsibility, Expert Reliance, Experts, ISA 620
Level: Level 2

Topic: Audit and Assurance Evidence
Series: APR 2022

AAA – Nov 2020 – L3 – Q3b – Audit Evidence | Evaluation and Review

Describe the auditor’s responsibility for subsequent events that occur before and after the auditor's report is signed.

Question

Describe your responsibility for subsequent events;
i) Assuming the events occurred before your report is signed (5 marks)

ii) Assuming the events occurred after signing your report but before the report was issued. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit report, Auditor's responsibility, Financial Statements, Subsequent Events
Level: Level 3

Topic: Audit evidence, Evaluation and review
Series: NOV 2020

AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review

Describe the auditor’s responsibility for subsequent events occurring between specific periods in the audit process.

Question

Required: Describe the auditor’s responsibility for subsequent events occurring between:

i) The year-end date and the date the auditor’s report is signed; and (2 marks)

ii) The date the auditor’s report is signed and the date the financial statements are issued. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor's responsibility, ISA 560, Subsequent Events
Level: Level 3

Topic: Audit evidence, Current issues
Series: NOV 2023

AAA – Aug 2022 – L3 – Q5c – Current issues

Discuss reasons for management’s reluctance to disclose material uncertainty and the auditor's responsibility when going concern assumption is inappropriate.

Question

There are two possible views:

The use of the going concern is appropriate but material uncertainty exists or
The use of the going concern assumption is inappropriate.

ii) State the auditor’s responsibility where the use of the going concern assumption is inappropriate.
(2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit report, Auditor's responsibility, Going Concern, Material Uncertainty
Level: Level 3

Topic: Current issues
Series: AUG 2022

AAA – Nov 2018 – L3 – Q3a – Professional responsibility and liability

Discussion on the auditor's duty under money laundering laws and confidentiality requirements.

Question

ii) Recommend elements that should be included in an anti-money laundering programmed for an accounting firm. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor's responsibility, Confidentiality, Money laundering
Level: Level 3

Topic: Professional responsibility and liability
Series: NOV 2018

Question Tag: Auditor's responsibility

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AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

You're reporting an error for "AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability"

AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

You're reporting an error for "AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability"

AA – Dec 2022 – L2 – Q5d – Audit and Assurance Risk Environment

States the auditor's responsibilities when significant deficiencies in internal control are identified during an audit.

You're reporting an error for "AA – Dec 2022 – L2 – Q5d – Audit and Assurance Risk Environment"

AA – April 2022 – L2 – Q1d – Audit and Assurance Evidence

Identify five circumstances when the work of an auditor's expert is needed.

You're reporting an error for "AA – April 2022 – L2 – Q1d – Audit and Assurance Evidence"

AAA – Nov 2020 – L3 – Q3b – Audit Evidence | Evaluation and Review

Describe the auditor’s responsibility for subsequent events that occur before and after the auditor's report is signed.

You're reporting an error for "AAA – Nov 2020 – L3 – Q3b – Audit Evidence | Evaluation and Review"

AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review

Describe the auditor’s responsibility for subsequent events occurring between specific periods in the audit process.

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AAA – Aug 2022 – L3 – Q5c – Current issues

Discuss reasons for management’s reluctance to disclose material uncertainty and the auditor's responsibility when going concern assumption is inappropriate.

You're reporting an error for "AAA – Aug 2022 – L3 – Q5c – Current issues"

AAA – Nov 2018 – L3 – Q3a – Professional responsibility and liability

Discussion on the auditor's duty under money laundering laws and confidentiality requirements.

You're reporting an error for "AAA – Nov 2018 – L3 – Q3a – Professional responsibility and liability"

AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability

This question discusses auditors' responsibilities to shareholders and stakeholders, steps to minimize liability risks, and actions in distressed companies.

You're reporting an error for "AAA – Nov 2012 – L3 – SB – Q6 – Auditor’s Legal Liability"

AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability

Assess the auditor's legal position and requirements for due care in Globamedia's case, and outline preventive steps.

You're reporting an error for "AAA – May 2024 – L3 – SC – Q5 – Auditor’s Legal Liability"

AA – Dec 2022 – L2 – Q5d – Audit and Assurance Risk Environment

States the auditor's responsibilities when significant deficiencies in internal control are identified during an audit.

You're reporting an error for "AA – Dec 2022 – L2 – Q5d – Audit and Assurance Risk Environment"

AA – April 2022 – L2 – Q1d – Audit and Assurance Evidence

Identify five circumstances when the work of an auditor's expert is needed.

You're reporting an error for "AA – April 2022 – L2 – Q1d – Audit and Assurance Evidence"

AAA – Nov 2020 – L3 – Q3b – Audit Evidence | Evaluation and Review

Describe the auditor’s responsibility for subsequent events that occur before and after the auditor's report is signed.

You're reporting an error for "AAA – Nov 2020 – L3 – Q3b – Audit Evidence | Evaluation and Review"

AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review

Describe the auditor’s responsibility for subsequent events occurring between specific periods in the audit process.

You're reporting an error for "AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review"

AAA – Aug 2022 – L3 – Q5c – Current issues

Discuss reasons for management’s reluctance to disclose material uncertainty and the auditor's responsibility when going concern assumption is inappropriate.

You're reporting an error for "AAA – Aug 2022 – L3 – Q5c – Current issues"

AAA – Nov 2018 – L3 – Q3a – Professional responsibility and liability

Discussion on the auditor's duty under money laundering laws and confidentiality requirements.

You're reporting an error for "AAA – Nov 2018 – L3 – Q3a – Professional responsibility and liability"

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