External Auditor – NBC Institute

AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing

Discuss auditor responsibility for fraud detection, strategies for closing the expectation gap, differences between review and audit reports, and required reporting for managing fraud.

Question

Demmy Global Limited, a growth-oriented company controlled by its Managing Director, Mr. Longe, sells mobile smartphones through sales agents on a commission basis. Phones are supplied on a sale or return basis, with sales recognized upon receipt by agents. The company’s growth appears rapid due to fraudulent practices by Mr. Longe, including:

Fictitious agents responsible for 25% of revenue.
Year-end dispatch of inventories to agents with post-year-end returns recorded as repurchases.
Capitalization of 20% of cost of sales by falsifying purchase invoices with suppliers.
Director bonuses linked to profits, encouraging uncritical acceptance of rapid growth.

The fraud was concealed by falsified records, bribery, and restrictions on auditor access to corroborate sales and verify contracts.

The external auditor is now sued by a bank that granted a loan to Demmy Global Limited based on interim financial statements reviewed by the auditor, for which a review report was issued.

Required:

Discuss the extent to which an auditor is responsible for detecting fraud and error, and the external auditor’s procedure where fraud or error is suspected. (7 Marks)
Advise the auditor on strategies to close the expectation gap. (5 Marks)
Explain how the ‘review report’ issued by the auditor on the interim financial statements differs in terms of its level of assurance from the auditor’s report on the year-end financial statements. (2 Marks)
Evaluate the circumstance and nature of the reports that would have been necessary for the auditor based on the activities of the Managing Director. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit report, Expectation Gap, External Auditor, Fraud Detection, Management Fraud, Responsibility, Review Report
Level: Level 3

Topic: Forensic Auditing
Series: MAY 2024

AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations

Factors external auditors should consider when engaging an actuary for evaluating an insurance company's reserves and premium rates.

Question

b) Fritz Insurance is a large insurance company that provides a wide range of insurance products to individuals and businesses. As part of their annual audit, the external auditor has engaged the services of an Actuary to assist with the evaluation of the company’s reserves and the adequacy of its premium rates.

Required:
Explain FIVE (5) factors to be considered by External Auditors in engaging the services of an Actuary to assist with the evaluation of the company’s reserves and the adequacy of its premium rates. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Actuary, External Auditor, Insurance, Premium Rates, Reserves
Level: Level 2

Topic: Audit and Assurance Risk Environment, Professional and Ethical Considerations
Series: JULY 2023

AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Procedures external auditors perform to evaluate the effectiveness of data security controls.

Question

a) Abbey Ltd is a medium-sized manufacturing company that produces various products for consumers. The company has a large amount of confidential data, including financial records, trade secrets, and personal information of employees and customers. The company has recently become concerned about cyber security risks and has hired an external auditor to conduct an audit of their data security controls.

Required:
Explain FIVE (5) procedures the External Auditor would need to perform to obtain evidence to evaluate the effectiveness of Abbey Ltd’s data security controls.

(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Cybersecurity, Data security, External Auditor
Level: Level 2

Topic: Audit and Assurance Evidence, Audit and Assurance Risk Environment
Series: JULY 2023

AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment

List five ways an external auditor can fulfill responsibilities toward a company’s corporate governance.

Question

The external auditor’s responsibility towards corporate governance is to provide an independent and objective assessment of the effectiveness and efficiency of the company’s corporate governance practices. The auditor’s role is to evaluate the company’s internal controls and make recommendations for improvements to ensure the company is adhering to good corporate governance practices.

Required:
State FIVE (5) ways the External Auditor can fulfill his/her responsibility towards the company’s corporate governance practices.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, External Auditor, Internal Controls, Responsibilities, Risk Management
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: NOV 2023

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Question

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Audit Responsibilities, External Auditor, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing

Discuss auditor responsibility for fraud detection, strategies for closing the expectation gap, differences between review and audit reports, and required reporting for managing fraud.

Question

Fictitious agents responsible for 25% of revenue.
Year-end dispatch of inventories to agents with post-year-end returns recorded as repurchases.
Capitalization of 20% of cost of sales by falsifying purchase invoices with suppliers.
Director bonuses linked to profits, encouraging uncritical acceptance of rapid growth.

The fraud was concealed by falsified records, bribery, and restrictions on auditor access to corroborate sales and verify contracts.

The external auditor is now sued by a bank that granted a loan to Demmy Global Limited based on interim financial statements reviewed by the auditor, for which a review report was issued.

Required:

Discuss the extent to which an auditor is responsible for detecting fraud and error, and the external auditor’s procedure where fraud or error is suspected. (7 Marks)
Advise the auditor on strategies to close the expectation gap. (5 Marks)
Explain how the ‘review report’ issued by the auditor on the interim financial statements differs in terms of its level of assurance from the auditor’s report on the year-end financial statements. (2 Marks)
Evaluate the circumstance and nature of the reports that would have been necessary for the auditor based on the activities of the Managing Director. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit report, Expectation Gap, External Auditor, Fraud Detection, Management Fraud, Responsibility, Review Report
Level: Level 3

Topic: Forensic Auditing
Series: MAY 2024

AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations

Factors external auditors should consider when engaging an actuary for evaluating an insurance company's reserves and premium rates.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Actuary, External Auditor, Insurance, Premium Rates, Reserves
Level: Level 2

Topic: Audit and Assurance Risk Environment, Professional and Ethical Considerations
Series: JULY 2023

AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Procedures external auditors perform to evaluate the effectiveness of data security controls.

Question

Required:
Explain FIVE (5) procedures the External Auditor would need to perform to obtain evidence to evaluate the effectiveness of Abbey Ltd’s data security controls.

(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Cybersecurity, Data security, External Auditor
Level: Level 2

Topic: Audit and Assurance Evidence, Audit and Assurance Risk Environment
Series: JULY 2023

AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment

List five ways an external auditor can fulfill responsibilities toward a company’s corporate governance.

Question

Required:
State FIVE (5) ways the External Auditor can fulfill his/her responsibility towards the company’s corporate governance practices.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, External Auditor, Internal Controls, Responsibilities, Risk Management
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: NOV 2023

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Question

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Audit Responsibilities, External Auditor, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

Question Tag: External Auditor

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing

Discuss auditor responsibility for fraud detection, strategies for closing the expectation gap, differences between review and audit reports, and required reporting for managing fraud.

AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations

Factors external auditors should consider when engaging an actuary for evaluating an insurance company's reserves and premium rates.

AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Procedures external auditors perform to evaluate the effectiveness of data security controls.

AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment

List five ways an external auditor can fulfill responsibilities toward a company’s corporate governance.

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing

Discuss auditor responsibility for fraud detection, strategies for closing the expectation gap, differences between review and audit reports, and required reporting for managing fraud.

AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations

Factors external auditors should consider when engaging an actuary for evaluating an insurance company's reserves and premium rates.

AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Procedures external auditors perform to evaluate the effectiveness of data security controls.

AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment

List five ways an external auditor can fulfill responsibilities toward a company’s corporate governance.

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Our offerings

Contact Info

Customer

Get In Touch

Question Tag: External Auditor

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing

Discuss auditor responsibility for fraud detection, strategies for closing the expectation gap, differences between review and audit reports, and required reporting for managing fraud.

You're reporting an error for "AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing"

AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations

Factors external auditors should consider when engaging an actuary for evaluating an insurance company's reserves and premium rates.

You're reporting an error for "AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations"

AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Procedures external auditors perform to evaluate the effectiveness of data security controls.

You're reporting an error for "AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence"

AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment

List five ways an external auditor can fulfill responsibilities toward a company’s corporate governance.

You're reporting an error for "AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment"

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

You're reporting an error for "AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting"

AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing

Discuss auditor responsibility for fraud detection, strategies for closing the expectation gap, differences between review and audit reports, and required reporting for managing fraud.

You're reporting an error for "AAA – May 2024 – L3 – SB – Q4 – Forensic Auditing"

AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations

Factors external auditors should consider when engaging an actuary for evaluating an insurance company's reserves and premium rates.

You're reporting an error for "AA – July 2023 – L2 – Q3b – Audit and Assurance Risk Environment, Professional and Ethical Considerations"

AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence

Procedures external auditors perform to evaluate the effectiveness of data security controls.

You're reporting an error for "AA – July 2023 – L2 – Q3a – Audit and Assurance Risk Environment, Audit and Assurance Evidence"

AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment

List five ways an external auditor can fulfill responsibilities toward a company’s corporate governance.

You're reporting an error for "AA – Nov 2023 – L2 – Q1a – Audit and Assurance Risk Environment"

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

You're reporting an error for "AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting"

Our offerings

Contact Info

Customer

Get In Touch

admin