Question Tag: Ethical Principles

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  • 15 Marks

AAA – May 2023 – L3 – Q7 – Forensic Auditing

Discuss ethical principles for fraud investigation, advise on evidence gathering procedures, and recommend laws and agencies for legal action.

At the annual general meeting of Aggressive Bank Limited for the year 2020, shareholders raised concerns over increasing cases of customer complaints about fraud. Shareholders emphasized that drastic actions were required to avoid brand damage and reputational issues.

In performing their oversight functions, the audit committee commissioned the internal audit unit to investigate fraud issues and likely causes. The internal audit report highlighted the following issues:

  1. Hacking of Accounts: Unauthorized transfers due to poor information security systems.
  2. Forgery: Forged cheques, signatures, and withdrawal slips used in collusion with bank staff.
  3. Fictitious Accounts: Opening and operating fake accounts to facilitate illegal transfers due to incomplete KYC.
  4. Loans to Fictitious Borrowers: Fictitious loans issued via fake accounts.
  5. False Overtime Claims: Junior staff claiming overtime for hours not worked.
  6. Suppression of Cash/Cheques: Diversion of customer deposits and loan repayments into fictitious accounts.
  7. Alteration of Programs: Unauthorized access to systems to manipulate account balances.

Likely Causes:

  • Weak internal controls and supervision.
  • Non-compliance with KYC rules.
  • Poor IT and database management.
  • Negligence, inadequate training, and poor working conditions.
  • Fear of reporting fraud to regulators due to reputational concerns.

The audit committee mandated management to engage a forensic expert to investigate and report on the matter within four weeks. Your firm has been appointed for this engagement.

Required:

(a) Discuss the ethical principles applicable to this situation. (5 Marks)

(b) Advise on the procedures to gather evidence for an acceptable report to management. (5 Marks)

(c) Recommend the agencies and relevant laws management should use to tackle these problems, where legal actions might be required. (5 Marks)

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  • 20 Marks

AAA – May 2023 – L3 – Q2 – Audit of IT Systems and Data Analytics

Discuss challenges and solutions for e-commerce assurance, ethical principles for forensic investigation, and assurance engagement reporting requirements.

There is an indication of increasing application of technology in the business and commercial world. Many activities are now carried out on a real-time basis, and payment systems are gradually reducing the use of cheques.

Your new audit client is one of the companies that has recently enhanced its business settings with respect to receipts and payments. The previous auditor has little depth in information and communication technology despite the growing trend. The client’s management also thinks that its performance in the past has been inadequately reported due to the complicity of the key accounting staff and inadequacies of the previous auditor. The client is therefore considering its options in the circumstances.

Required:

(a) Discuss the challenges encountered in the provision of assurance engagements on e-commerce systems and the approach to address these challenges. (8 Marks)

(b) Evaluate the ethical principles that will be relevant in the conduct of forensic investigation of this client and the considerations the accountant needs to bear in mind in such an assignment. (7 Marks)

(c) For proper conclusion of the exercise, set out the reporting requirements of an assurance engagement. (5 Marks)

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  • 20 Marks

CSME – May 2021 – L2 – Q6 – Ethics in Business

Analysis of Mr. John’s actions regarding insider trading based on various ethical perspectives.

Mr John, a professional accountant, is the Chief Executive Officer of a company quoted on the Nigerian Stock Exchange. He also owns about 20% of the company’s shares worth hundreds of millions of Naira. Due to several factors, the company began performing poorly, leading to an unpublished financial report indicating a huge loss. In anticipation of a slide in the company’s share price, Mr. John instructed his stockbroker to sell half of his shares for potential repurchase once the price drops after the financial statements are released. He profited substantially from this transaction.

Required:

a. Analyse the action of Mr. John using:
i. The Model Code (3 Marks)
ii. Critical Theory (3 Marks)
iii. Moral Development of Accountants (4 Marks)

b. Advise Mr. John on the fundamental ethical principles which professional accountants are expected to comply with. (10 Marks)

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  • 5 Marks

CSME – Nov 2016 – L2 – Q5b – Ethics in Business

Present four fundamental ethical principles for professional accountants and how they motivate compliance.

Present any FOUR fundamental ethical principles that should guide the actions of professional accountants in a way that would motivate a newly qualified accountant to comply with them.

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  • 20 Marks

AA – Nov 2019 – L2 – Q6 – Ethical Issues in Auditing

Explain the concepts of acting in the public interest, professional scepticism, and fundamental ethical principles for accountants.

A whistleblower reported to a regulator a misstatement in the financial statements of Koko Limited on overstated expenses and overvaluation of inventory.

An informed shareholder at the Annual General Meeting, while commenting on the company’s financial statements, stated that the company directors should always act in the public interest.

Required:
Explain:
a. “Acting in the public interest” (6 Marks)
b. Professional scepticism (4 Marks)
c. The fundamental principles a professional accountant should comply with (10 Marks)

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  • 20 Marks

AA – Nov 2021 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discuss the implications of supplying bank transaction information and the principles guiding accountants.

Your firm audits Sabona Limited, a privately owned company, which is a customer of Oldie Limited, another privately owned client company. The managing director of Oldie Limited has asked your firm to supply Sabona Limited bank transactions for the last six months as they are concerned about their ability to honour their financial obligation.

Required:
a. State whether or not you would supply this information and the reasons for your actions. (5 Marks)
b. Explain briefly FIVE fundamental principles issued by the Institute of Chartered Accountants of Nigeria (ICAN) as guides to accountants. (10 Marks)
c. Describe FIVE matters that could affect the independence and integrity of the auditor. (5 Marks)

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  • 12 Marks

BMF – Nov 2021 – L1 – SB – Q6C – Business and Organizational Structures and Choices

This question asks candidates to state and explain six values organizations should adopt to promote ethical principles.

In order to put the fundamental principles of ethics into practice, organizations need to adopt values that promote adherence to these principles.

State and explain SIX of these values.

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  • 6 Marks

FR – Mar/Jul 2020 – L2 – Q2d – Fundamental Principles of ICAN Code of Ethics

Explanation of five fundamental principles set out in the ICAN code of ethics.

Explain FIVE fundamental principles set out in the ICAN code of ethics.
(5 Marks)

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  • 10 Marks

FR – Nov 2023 – L2 – Q5a – Professional and Ethical Issues in Financial Reporting

Discuss potential actions to avoid breaching the five fundamental ethical principles and recommend possible actions in dealing with an ethical situation.

a)
i) Explain how you could potentially act in order not to breach each of the FIVE (5) fundamental principles of the IFAC’s code of ethics. (5 marks)

ii) Recommend FIVE (5) possible actions that you should take as a member of the Institute of Chartered Accountants, Ghana in dealing with the situation. (5 marks)

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  • 10 Marks

AA – May 2019 – L2 – Q1b – Audit and Assurance Evidence

Discusses the advantages of auditor independence and the inherent limitations of auditing.

b) The Institute of Chartered Accountants (Ghana) is organizing a continuous professional development program on the code of conduct for members and other relevant issues pertaining to audit. You are the audit partner of Lankai and Co, a firm of Chartered Accountants, and you are to present a paper on the independence of the auditor and the inherent limitations of auditing.
Required:
i) Explain TWO (2) advantages of independent audit.
(3 marks)
ii) The phrase “the auditor must be seen to be independent both in fact and appearance.”
(3 marks)
iii) Inherent limitations of audit.
(4 marks)

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  • 15 Marks

AAA – May 2023 – L3 – Q7 – Forensic Auditing

Discuss ethical principles for fraud investigation, advise on evidence gathering procedures, and recommend laws and agencies for legal action.

At the annual general meeting of Aggressive Bank Limited for the year 2020, shareholders raised concerns over increasing cases of customer complaints about fraud. Shareholders emphasized that drastic actions were required to avoid brand damage and reputational issues.

In performing their oversight functions, the audit committee commissioned the internal audit unit to investigate fraud issues and likely causes. The internal audit report highlighted the following issues:

  1. Hacking of Accounts: Unauthorized transfers due to poor information security systems.
  2. Forgery: Forged cheques, signatures, and withdrawal slips used in collusion with bank staff.
  3. Fictitious Accounts: Opening and operating fake accounts to facilitate illegal transfers due to incomplete KYC.
  4. Loans to Fictitious Borrowers: Fictitious loans issued via fake accounts.
  5. False Overtime Claims: Junior staff claiming overtime for hours not worked.
  6. Suppression of Cash/Cheques: Diversion of customer deposits and loan repayments into fictitious accounts.
  7. Alteration of Programs: Unauthorized access to systems to manipulate account balances.

Likely Causes:

  • Weak internal controls and supervision.
  • Non-compliance with KYC rules.
  • Poor IT and database management.
  • Negligence, inadequate training, and poor working conditions.
  • Fear of reporting fraud to regulators due to reputational concerns.

The audit committee mandated management to engage a forensic expert to investigate and report on the matter within four weeks. Your firm has been appointed for this engagement.

Required:

(a) Discuss the ethical principles applicable to this situation. (5 Marks)

(b) Advise on the procedures to gather evidence for an acceptable report to management. (5 Marks)

(c) Recommend the agencies and relevant laws management should use to tackle these problems, where legal actions might be required. (5 Marks)

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  • 20 Marks

AAA – May 2023 – L3 – Q2 – Audit of IT Systems and Data Analytics

Discuss challenges and solutions for e-commerce assurance, ethical principles for forensic investigation, and assurance engagement reporting requirements.

There is an indication of increasing application of technology in the business and commercial world. Many activities are now carried out on a real-time basis, and payment systems are gradually reducing the use of cheques.

Your new audit client is one of the companies that has recently enhanced its business settings with respect to receipts and payments. The previous auditor has little depth in information and communication technology despite the growing trend. The client’s management also thinks that its performance in the past has been inadequately reported due to the complicity of the key accounting staff and inadequacies of the previous auditor. The client is therefore considering its options in the circumstances.

Required:

(a) Discuss the challenges encountered in the provision of assurance engagements on e-commerce systems and the approach to address these challenges. (8 Marks)

(b) Evaluate the ethical principles that will be relevant in the conduct of forensic investigation of this client and the considerations the accountant needs to bear in mind in such an assignment. (7 Marks)

(c) For proper conclusion of the exercise, set out the reporting requirements of an assurance engagement. (5 Marks)

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  • 20 Marks

CSME – May 2021 – L2 – Q6 – Ethics in Business

Analysis of Mr. John’s actions regarding insider trading based on various ethical perspectives.

Mr John, a professional accountant, is the Chief Executive Officer of a company quoted on the Nigerian Stock Exchange. He also owns about 20% of the company’s shares worth hundreds of millions of Naira. Due to several factors, the company began performing poorly, leading to an unpublished financial report indicating a huge loss. In anticipation of a slide in the company’s share price, Mr. John instructed his stockbroker to sell half of his shares for potential repurchase once the price drops after the financial statements are released. He profited substantially from this transaction.

Required:

a. Analyse the action of Mr. John using:
i. The Model Code (3 Marks)
ii. Critical Theory (3 Marks)
iii. Moral Development of Accountants (4 Marks)

b. Advise Mr. John on the fundamental ethical principles which professional accountants are expected to comply with. (10 Marks)

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  • 5 Marks

CSME – Nov 2016 – L2 – Q5b – Ethics in Business

Present four fundamental ethical principles for professional accountants and how they motivate compliance.

Present any FOUR fundamental ethical principles that should guide the actions of professional accountants in a way that would motivate a newly qualified accountant to comply with them.

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  • 20 Marks

AA – Nov 2019 – L2 – Q6 – Ethical Issues in Auditing

Explain the concepts of acting in the public interest, professional scepticism, and fundamental ethical principles for accountants.

A whistleblower reported to a regulator a misstatement in the financial statements of Koko Limited on overstated expenses and overvaluation of inventory.

An informed shareholder at the Annual General Meeting, while commenting on the company’s financial statements, stated that the company directors should always act in the public interest.

Required:
Explain:
a. “Acting in the public interest” (6 Marks)
b. Professional scepticism (4 Marks)
c. The fundamental principles a professional accountant should comply with (10 Marks)

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  • 20 Marks

AA – Nov 2021 – L2 – Q4 – Professional Ethics and Code of Conduct for Auditors (IESBA Code)

Discuss the implications of supplying bank transaction information and the principles guiding accountants.

Your firm audits Sabona Limited, a privately owned company, which is a customer of Oldie Limited, another privately owned client company. The managing director of Oldie Limited has asked your firm to supply Sabona Limited bank transactions for the last six months as they are concerned about their ability to honour their financial obligation.

Required:
a. State whether or not you would supply this information and the reasons for your actions. (5 Marks)
b. Explain briefly FIVE fundamental principles issued by the Institute of Chartered Accountants of Nigeria (ICAN) as guides to accountants. (10 Marks)
c. Describe FIVE matters that could affect the independence and integrity of the auditor. (5 Marks)

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  • 12 Marks

BMF – Nov 2021 – L1 – SB – Q6C – Business and Organizational Structures and Choices

This question asks candidates to state and explain six values organizations should adopt to promote ethical principles.

In order to put the fundamental principles of ethics into practice, organizations need to adopt values that promote adherence to these principles.

State and explain SIX of these values.

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  • 6 Marks

FR – Mar/Jul 2020 – L2 – Q2d – Fundamental Principles of ICAN Code of Ethics

Explanation of five fundamental principles set out in the ICAN code of ethics.

Explain FIVE fundamental principles set out in the ICAN code of ethics.
(5 Marks)

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  • 10 Marks

FR – Nov 2023 – L2 – Q5a – Professional and Ethical Issues in Financial Reporting

Discuss potential actions to avoid breaching the five fundamental ethical principles and recommend possible actions in dealing with an ethical situation.

a)
i) Explain how you could potentially act in order not to breach each of the FIVE (5) fundamental principles of the IFAC’s code of ethics. (5 marks)

ii) Recommend FIVE (5) possible actions that you should take as a member of the Institute of Chartered Accountants, Ghana in dealing with the situation. (5 marks)

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  • 10 Marks

AA – May 2019 – L2 – Q1b – Audit and Assurance Evidence

Discusses the advantages of auditor independence and the inherent limitations of auditing.

b) The Institute of Chartered Accountants (Ghana) is organizing a continuous professional development program on the code of conduct for members and other relevant issues pertaining to audit. You are the audit partner of Lankai and Co, a firm of Chartered Accountants, and you are to present a paper on the independence of the auditor and the inherent limitations of auditing.
Required:
i) Explain TWO (2) advantages of independent audit.
(3 marks)
ii) The phrase “the auditor must be seen to be independent both in fact and appearance.”
(3 marks)
iii) Inherent limitations of audit.
(4 marks)

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