Environmental Issues – NBC Institute

AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits

Steps in the audit process to identify environmental issues and major social concerns in a company's social policy report.

Question

Green Issues

Oil and Gas Limited is a company involved in the upstream petroleum activities in the Delta Region. The restiveness of the youth in this area of operation was a result of environmental degradation of the region. Your firm has just been appointed as the auditors to the company. During the preliminary planning stage of the audit, you realised that the environmental issues could have an impact on the financial statements.

Required:

(a) Enumerate EIGHT steps you would include in the audit process in order to highlight environmental issues that may be apparent in the client’s business.

(8 Marks)

(b) Identify SEVEN major social issues that an auditor will be concerned with in a company’s social policy report. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Audit Process, Delta Region, Environmental Issues, Financial Impact, Oil and gas, Social Policy Reporting, Social responsibility, Upstream Activities
Level: Level 3

Topic: Environmental and Sustainability Audits
Series: NOV 2014

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

Question

Question:

a. Discuss and provide examples of the types of non-financial, ethical, and environmental issues that might influence the objectives of companies. Consider the impact of these non-financial, ethical, and environmental issues on the achievement of primary financial objectives such as the maximisation of shareholder wealth. (12 Marks)

b. Discuss generally, the nature of the financial objectives that may be set in a not-for-profit organisation such as a charity or a hospital. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Environmental Issues, Ethics, Financial Goals, Non-financial objectives, Not-for-profit organizations, Shareholder Wealth
Level: Level 3

Topic: Ethical issues in financial management

CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)

Analyze Octopus Petroleum’s performance and ability to finance future oil spill costs

Question

Octopus Petroleum PLC is a multinational oil and gas group operating in the Niger Delta areas of Nigeria. The company has been highly profitable over the years. The group explores and extracts natural resources, holds reserves, and has recently become involved in the downstream sector by opening various commercial retail outlets for the sale of petrol to motorists.

In June 2020, the company was involved in an ecological disaster in the Ogoni area of Niger Delta as a result of massive oil spillage due to some technical faults, thereby resulting in spilling oil into the surrounding ocean and damaging wildlife and local communities.

Investors are concerned about the future prospects of Octopus Petroleum PLC and whether it represents a safe investment since the company normally operates in the lucrative oil and gas sector.

Octopus Petroleum Group annual report for the year 2020 and its comparative figures are shown below:

Octopus Petroleum Group Consolidated Statement of Profit or Loss for the Year Ended December 31

Octopus Petroleum Group Consolidated Statement of Financial Position as at December 31

Additional Information:

The N3,700 million provision for the Ogoni oil spill is an estimated cost net of relevant tax.
Calculating the financial cost of the oil spill in Ogoni land has been slightly problematic. However, N530 million had been expended by year-end, while the future costs of clean-up and compensation are undetermined.
One uncertain cost is fines payable to the Federal Government of Nigeria. Past fines have exceeded N2,500 million.
Octopus Petroleum Group vertically integrated in 2020 by acquiring and rebranding petrol stations.
Oil reserves were at record-high levels in 2020.
Oil prices increased by approximately 5% during 2020.
The company values inventory on a last-in-first-out (LIFO) basis, which contravenes IAS 2.
Dividend payments remained at N625 million for both 2020 and 2019.
Investors typically evaluate companies using these ratios:
- Profitability Ratios:
  - Return on Capital Employed (ROCE)
  - Return on Equity (ROE)
  - Gross Profit Percentage
  - Operating Profit Percentage
- Liquidity Ratios:
  - Current Ratio
  - Acid Test Ratio
- Resource Utilization and Financial Position Ratios:
  - Inventory Turnover
  - Asset Turnover
  - Interest Cover
  - Gearing Ratio

Required:

(a) Analyze the performance of Octopus Petroleum Group over the two-year period. Your analysis should also consider the group’s ability to finance the cost of the oil spill in Ogoni land in the coming years. (14 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Environmental Issues, Gearing, IAS 2, IAS 37, Liquidity Ratios, Oil Spill Costs, Profitability Ratios
Level: Level 3

Topic: Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits

Steps in the audit process to identify environmental issues and major social concerns in a company's social policy report.

Question

Green Issues

Required:

(a) Enumerate EIGHT steps you would include in the audit process in order to highlight environmental issues that may be apparent in the client’s business.

(8 Marks)

(b) Identify SEVEN major social issues that an auditor will be concerned with in a company’s social policy report. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Audit Process, Delta Region, Environmental Issues, Financial Impact, Oil and gas, Social Policy Reporting, Social responsibility, Upstream Activities
Level: Level 3

Topic: Environmental and Sustainability Audits
Series: NOV 2014

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

Question

Question:

b. Discuss generally, the nature of the financial objectives that may be set in a not-for-profit organisation such as a charity or a hospital. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Environmental Issues, Ethics, Financial Goals, Non-financial objectives, Not-for-profit organizations, Shareholder Wealth
Level: Level 3

Topic: Ethical issues in financial management

CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)

Analyze Octopus Petroleum’s performance and ability to finance future oil spill costs

Question

Investors are concerned about the future prospects of Octopus Petroleum PLC and whether it represents a safe investment since the company normally operates in the lucrative oil and gas sector.

Octopus Petroleum Group annual report for the year 2020 and its comparative figures are shown below:

Octopus Petroleum Group Consolidated Statement of Profit or Loss for the Year Ended December 31

Octopus Petroleum Group Consolidated Statement of Financial Position as at December 31

Additional Information:

The N3,700 million provision for the Ogoni oil spill is an estimated cost net of relevant tax.
Calculating the financial cost of the oil spill in Ogoni land has been slightly problematic. However, N530 million had been expended by year-end, while the future costs of clean-up and compensation are undetermined.
One uncertain cost is fines payable to the Federal Government of Nigeria. Past fines have exceeded N2,500 million.
Octopus Petroleum Group vertically integrated in 2020 by acquiring and rebranding petrol stations.
Oil reserves were at record-high levels in 2020.
Oil prices increased by approximately 5% during 2020.
The company values inventory on a last-in-first-out (LIFO) basis, which contravenes IAS 2.
Dividend payments remained at N625 million for both 2020 and 2019.
Investors typically evaluate companies using these ratios:
- Profitability Ratios:
  - Return on Capital Employed (ROCE)
  - Return on Equity (ROE)
  - Gross Profit Percentage
  - Operating Profit Percentage
- Liquidity Ratios:
  - Current Ratio
  - Acid Test Ratio
- Resource Utilization and Financial Position Ratios:
  - Inventory Turnover
  - Asset Turnover
  - Interest Cover
  - Gearing Ratio

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Environmental Issues, Gearing, IAS 2, IAS 37, Liquidity Ratios, Oil Spill Costs, Profitability Ratios
Level: Level 3

Topic: Provisions, Contingent Liabilities and Contingent Assets (IAS 37)

Question Tag: Environmental Issues

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AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits

Steps in the audit process to identify environmental issues and major social concerns in a company's social policy report.

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)

Analyze Octopus Petroleum’s performance and ability to finance future oil spill costs

AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits

Steps in the audit process to identify environmental issues and major social concerns in a company's social policy report.

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)

Analyze Octopus Petroleum’s performance and ability to finance future oil spill costs

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AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits

Steps in the audit process to identify environmental issues and major social concerns in a company's social policy report.

You're reporting an error for "AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits"

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

You're reporting an error for "FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management"

CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)

Analyze Octopus Petroleum’s performance and ability to finance future oil spill costs

You're reporting an error for "CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)"

AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits

Steps in the audit process to identify environmental issues and major social concerns in a company's social policy report.

You're reporting an error for "AAA – Nov 2014 – L3 – SC – Q5 – Environmental and Sustainability Audits"

FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management

Discuss non-financial and ethical issues affecting financial objectives and outline financial objectives in not-for-profit organizations.

You're reporting an error for "FM – May 2021 – L3 – Q3 – Ethical Issues in Financial Management"

CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)

Analyze Octopus Petroleum’s performance and ability to finance future oil spill costs

You're reporting an error for "CR – May 2023 – L3 – Q2a – Provisions, Contingent Liabilities, and Contingent Assets (IAS 37)"

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