Question Tag: Internal Control

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AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

Question

Blackmart Plc is one of your listed audit clients which offers property management, property financing, and mortgage services to its clients. During the audit of the company, the following matters came to your attention:

(i) Grace Sadiku, one of the audit team members, has provisionally agreed to take out a mortgage facility with a duration of 10 years using the facility of Blackmart Plc to finance her first residential property. In the area where the property is located, the first residential property gets a full tax waiver on the entire installments paid within the first 5 years, which is usually a significant tax incentive. The mortgage facility would be secured by the property and it has been defined as the best offer available in the market.

(ii) Also, during the period, the Human Resources (HR) Manager of Blackmart Plc resigned, and the company had reached out to your firm to provide a staff on secondment till a substantive HR Manager is appointed.

(iii) The management of Blackmart has also informed your audit team that the company maintains only two bank accounts and there will be no need to circularise the banks as the auditors can rely on the balances as generated from the bank’s portal as at the end of the year.

(iv) The audit committee has asked your firm to work with the internal audit team to design internal controls over the part of the accounting system which deals with revenue, and also evaluate the operating effectiveness of the internal controls.

Required:
Prepare a memo to your Manager, commenting on the professional and ethical issues arising from the audit of Blackmart Plc and also suggest to him/her on how to manage the identified issues. (15 Marks)

Answer

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Tags: Auditor Behavior, Bank Circularisation, Independence, Internal Control, Professional Ethics
Level: Level 3

Topic: Ethical Issues in Auditing

AAA – Nov 2013 – L3 – AII – Q11 – Internal Audit and Corporate Governance

Identify four key factors for internal control evaluation in universities.

Question

In the evaluation of the system of internal control as applicable to a university, there are four factors to be considered by the auditors as follows: Methods of keeping records, ………………. and ………………….., segregation of duties, and custodial controls.

Answer

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Tags: Custodial Controls, Internal Control, Segregation of Duties, Universities
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2013

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

Question

Which of the following assignments can be regarded as a continuous audit function?
A. Examining the effectiveness, efficiency, and economy of a cement project
B. Evaluating the adequacy of the security and control measures of the information technology
C. Ascertaining the fairness of the annual financial statements and notes to the accounts
D. Reviewing the internal control procedures before commencing the audit
E. Reviewing the company’s compliance with relevant guidance and release of financial information periodically

Answer

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Tags: Compliance, Continuous Audit, Financial Reporting, Internal Control
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

Question

Which of the following is the primary purpose for obtaining an understanding of client’s internal control?
A. Provide a basis for making constructive suggestions in a management letter
B. Determine the nature, timing and extent of tests to be performed in the audit
C. Obtain sufficient and competent evidential matter to afford a reasonable basis for an opinion on the financial statements under examination
D. Provide information for communication of internal control related matters to management
E. Obtain sufficient evidence to afford a basis for an opinion on the financial statements

Answer

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Tags: Audit Planning, Audit strategy, Internal Control
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics

This question assesses the knowledge of internal controls in a computerized accounting system.

Question

In order to understand the internal control system of a computerized accounting system of a client, which of the following computer documentation will assist the auditor the most?
A. System narrative
B. Record layout
C. Programme listing
D. Record counts
E. System flow charts

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit, Internal Control, IT Systems
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2013

AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards

Identifying non-responsibilities of directors related to accounting functions in a company.

Question

The responsibilities of the directors in relation to the accounting functions of the company fall under the following EXCEPT:
A. Safeguarding the company’s assets and preventing errors and fraud in the company
B. Defining the concept of materiality and tolerable error as a guide to the auditor
C. Ensuring that the company keeps proper accounting records as defined in the legislations
D. Setting up internal control system in the company as a standard practice
E. Preparing the financial statements to show the results of the company for the year and financial position as at year-end

Answer

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Tags: Accounting Functions, Directors' Responsibilities, Financial Statements, Internal Control
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2021 – L3 – Q1 – Overview of Advanced Audit and Assurance

Evaluate auditor's objectives under ISA 250, internal control deficiencies, and communication requirements for audit strategy.

Question

Eat Well Bakeries is a private limited liability company. It bakes bread and other confectioneries, produced from the main bakery and a smaller bakery in another part of town. Products are sold from these two bakeries and five additional outlets in the same town. Distributors purchase products outright and bear the risk of sale.

The main administrative and management functions of the bakeries are conducted from the main bakery, while basic records are kept at the small bakery and sales outlets. These records are transmitted to the main office every morning. Detailed accounting records and performance analysis are handled in the main administrative office.

Despite being a private business, the chairman insists on maintaining proper standards to stay competitive. The chairman transferred the company’s audit to your firm after a discussion with your partner, and professional clearance was obtained. However, limited documentation from the predecessor auditor was available, and no extensive documentation was done at the beginning of the audit.

You have been assigned to continue the audit from where it was left off, ensuring the chairman’s expectations are met.

Required:

a. Evaluate the Auditor’s objective concerning ISA 250 that would be discussed with the chairman. (5 Marks)

b. Prepare an outline of matters that should be communicated. (5 Marks)

c. Your review shows internal control challenges. Based on this, prepare a brief on:

i. The meaning of deficiency as per ISA 265 (3 Marks)
ii. The components to be included in communication to the chairman regarding deficiencies (5 Marks)

d. Evaluate potential audit strategies, and recommend an appropriate model for application to Eat Well Bakeries. (12 Marks)

Answer

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Tags: Audit Objectives, Audit strategy, Communication with Governance, Deficiency Reporting, Internal Control, ISA 250, ISA 265, Risk Assessment
Level: Level 3

Topic: Overview of Advanced Audit and Assurance

AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

Question

To obtain an understanding of the internal control system, which ONE of the following computer documentations can assist the auditor?

A. System narrative
B. System flowchart
C. System counts
D. Record layout
E. Programme listing

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit evidence, Audit Procedures, Documentation, Internal Control, System Flowchart
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2011

AAA – Nov 2023 – L3 – SC – Q7 – Audit Planning and Strategy

Outlines audit strategies, factors for strategy selection, and distinction between audit strategy and audit plan for Orlando Professional Services.

Question

The overseas technical partners of Orlando Professional Services came for a review of operations and system of internal control of the firm. A number of audit engagement files regarding financial statements on which the firm had expressed audit opinion were selected for review. It was believed that the strategic review would be necessary to determine the appropriate audit approach for a detailed audit plan in the firm to bring efficiency and enhance good client service delivery. The review exercise also covered:

i. The firm’s basis of risk assessment on audit and assurance engagements;
ii. Determination of staff recruitment, training, reward, and evaluation;
iii. Previous audit opinions on financial statements and progress on ongoing jobs;
iv. System of archival and retrieval of documents;
v. Major risks and other factors such as industry issues;
vi. Procedures for engaging and monitoring experts both internal and external; and
vii. Reports from regulators.

The team interviewed partners, staff, and directors of major clients of the firm. It was believed that the outcome of the review exercise would help to reposition the firm and upscale strategies to get a fair share of the market in the upcoming mandatory rotation of auditors.

At the end of the exercise, it was reported that the audit strategy of the firm was not robust enough, too generic, and lacked focus to meet the firm’s need in the next decade. The team recommended that proactive steps should be taken to evolve a good strategy that would stand the test of time in the light of the increasing competition in the audit and assurance marketplace.

As a staff of the firm, you have been selected as a member of the committee to develop the new audit strategies for submission in the next two weeks for the consideration and approval of the executive council of Orlando Professional Services.

Required:

a. Outline the approaches to the main audit strategies your firm is expected to adopt.
(9 Marks)

b. Explain the factors that will be considered in the selection of audit strategies.
(4 Marks)

c. Explain the difference between Audit Strategy and Audit Plan.
(2 Marks)

Total: 15 Marks

Answer

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Tags: Audit Plan, Audit strategy, Client Service, Document Management, Expert Engagement, Internal Control, Market Competition, Risk Assessment, Staff Training
Level: Level 3

Topic: Audit Planning and Strategy
Series: NOV 2023

AAA – Nov 2022 – L3 – SC – Q6 – Internal Audit and Corporate Governance

Discuss reasons for outsourcing internal audit, advantages/disadvantages, and functions that cannot be outsourced.

Question

The Internal Audit Unit of Oluvia Bank Limited has been accused of collusion with staff in committing monumental fraud. The following types of fraud were found to be common:

Cheque suppression
Fraudulent bookkeeping to overstate income
Inflation of the worth of the company’s assets
Intercepting replaced customers’ cards
Fraudsters impersonating Senior Managers or Chief Executive Officer
Online banking fraud, such as phishing, malware attacks, and clone websites
Impersonating the owner of an account or using fake documents to open an account under someone else’s name (no proper Know Your Customer conducted)

The bank examiners came and were surprised at the level of fraud in the bank and requested management to address it urgently.

After the supervisory visit, the board of directors discussed the issue with the bank’s external auditors, who suggested that the bank could outsource the internal audit functions. The Board of Directors found this suggestion favorable and mandated the Managing Director to act swiftly and report back with details at the next board meeting.

Required:

a. Discuss the main reasons for outsourcing internal audit functions. (3 Marks)

b. Outline the advantages and disadvantages of outsourcing. (10 Marks)

c. Discuss which part of the internal audit function cannot be outsourced. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Operations, Corporate Governance, Fraud Detection, Independence, Internal Audit, Internal Control, Outsourcing
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2022

AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Behavior, Bank Circularisation, Independence, Internal Control, Professional Ethics
Level: Level 3

Topic: Ethical Issues in Auditing

AAA – Nov 2013 – L3 – AII – Q11 – Internal Audit and Corporate Governance

Identify four key factors for internal control evaluation in universities.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Custodial Controls, Internal Control, Segregation of Duties, Universities
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2013

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Compliance, Continuous Audit, Financial Reporting, Internal Control
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Audit strategy, Internal Control
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics

This question assesses the knowledge of internal controls in a computerized accounting system.

Question

Answer

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Tags: Audit, Internal Control, IT Systems
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2013

AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards

Identifying non-responsibilities of directors related to accounting functions in a company.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Functions, Directors' Responsibilities, Financial Statements, Internal Control
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2021 – L3 – Q1 – Overview of Advanced Audit and Assurance

Evaluate auditor's objectives under ISA 250, internal control deficiencies, and communication requirements for audit strategy.

Question

You have been assigned to continue the audit from where it was left off, ensuring the chairman’s expectations are met.

Required:

a. Evaluate the Auditor’s objective concerning ISA 250 that would be discussed with the chairman. (5 Marks)

b. Prepare an outline of matters that should be communicated. (5 Marks)

c. Your review shows internal control challenges. Based on this, prepare a brief on:

i. The meaning of deficiency as per ISA 265 (3 Marks)
ii. The components to be included in communication to the chairman regarding deficiencies (5 Marks)

d. Evaluate potential audit strategies, and recommend an appropriate model for application to Eat Well Bakeries. (12 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Objectives, Audit strategy, Communication with Governance, Deficiency Reporting, Internal Control, ISA 250, ISA 265, Risk Assessment
Level: Level 3

Topic: Overview of Advanced Audit and Assurance

AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

Question

To obtain an understanding of the internal control system, which ONE of the following computer documentations can assist the auditor?

A. System narrative
B. System flowchart
C. System counts
D. Record layout
E. Programme listing

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit evidence, Audit Procedures, Documentation, Internal Control, System Flowchart
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
Series: NOV 2011

AAA – Nov 2023 – L3 – SC – Q7 – Audit Planning and Strategy

Outlines audit strategies, factors for strategy selection, and distinction between audit strategy and audit plan for Orlando Professional Services.

Question

Required:

a. Outline the approaches to the main audit strategies your firm is expected to adopt.
(9 Marks)

b. Explain the factors that will be considered in the selection of audit strategies.
(4 Marks)

c. Explain the difference between Audit Strategy and Audit Plan.
(2 Marks)

Total: 15 Marks

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Plan, Audit strategy, Client Service, Document Management, Expert Engagement, Internal Control, Market Competition, Risk Assessment, Staff Training
Level: Level 3

Topic: Audit Planning and Strategy
Series: NOV 2023

AAA – Nov 2022 – L3 – SC – Q6 – Internal Audit and Corporate Governance

Discuss reasons for outsourcing internal audit, advantages/disadvantages, and functions that cannot be outsourced.

Question

The Internal Audit Unit of Oluvia Bank Limited has been accused of collusion with staff in committing monumental fraud. The following types of fraud were found to be common:

Cheque suppression
Fraudulent bookkeeping to overstate income
Inflation of the worth of the company’s assets
Intercepting replaced customers’ cards
Fraudsters impersonating Senior Managers or Chief Executive Officer
Online banking fraud, such as phishing, malware attacks, and clone websites
Impersonating the owner of an account or using fake documents to open an account under someone else’s name (no proper Know Your Customer conducted)

The bank examiners came and were surprised at the level of fraud in the bank and requested management to address it urgently.

Required:

a. Discuss the main reasons for outsourcing internal audit functions. (3 Marks)

b. Outline the advantages and disadvantages of outsourcing. (10 Marks)

c. Discuss which part of the internal audit function cannot be outsourced. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bank Operations, Corporate Governance, Fraud Detection, Independence, Internal Audit, Internal Control, Outsourcing
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2022

Question Tag: Internal Control

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AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

You're reporting an error for "AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing"

AAA – Nov 2013 – L3 – AII – Q11 – Internal Audit and Corporate Governance

Identify four key factors for internal control evaluation in universities.

You're reporting an error for "AAA – Nov 2013 – L3 – AII – Q11 – Internal Audit and Corporate Governance"

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance"

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy"

AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics

This question assesses the knowledge of internal controls in a computerized accounting system.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics"

AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards

Identifying non-responsibilities of directors related to accounting functions in a company.

You're reporting an error for "AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards"

AAA – Nov 2021 – L3 – Q1 – Overview of Advanced Audit and Assurance

Evaluate auditor's objectives under ISA 250, internal control deficiencies, and communication requirements for audit strategy.

You're reporting an error for "AAA – Nov 2021 – L3 – Q1 – Overview of Advanced Audit and Assurance"

AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

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AAA – Nov 2023 – L3 – SC – Q7 – Audit Planning and Strategy

Outlines audit strategies, factors for strategy selection, and distinction between audit strategy and audit plan for Orlando Professional Services.

You're reporting an error for "AAA – Nov 2023 – L3 – SC – Q7 – Audit Planning and Strategy"

AAA – Nov 2022 – L3 – SC – Q6 – Internal Audit and Corporate Governance

Discuss reasons for outsourcing internal audit, advantages/disadvantages, and functions that cannot be outsourced.

You're reporting an error for "AAA – Nov 2022 – L3 – SC – Q6 – Internal Audit and Corporate Governance"

AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

You're reporting an error for "AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing"

AAA – Nov 2013 – L3 – AII – Q11 – Internal Audit and Corporate Governance

Identify four key factors for internal control evaluation in universities.

You're reporting an error for "AAA – Nov 2013 – L3 – AII – Q11 – Internal Audit and Corporate Governance"

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance"

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy"

AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics

This question assesses the knowledge of internal controls in a computerized accounting system.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q2 – Audit of IT Systems and Data Analytics"

AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards

Identifying non-responsibilities of directors related to accounting functions in a company.

You're reporting an error for "AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards"

AAA – Nov 2021 – L3 – Q1 – Overview of Advanced Audit and Assurance

Evaluate auditor's objectives under ISA 250, internal control deficiencies, and communication requirements for audit strategy.

You're reporting an error for "AAA – Nov 2021 – L3 – Q1 – Overview of Advanced Audit and Assurance"

AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

You're reporting an error for "AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics."

AAA – Nov 2023 – L3 – SC – Q7 – Audit Planning and Strategy

Outlines audit strategies, factors for strategy selection, and distinction between audit strategy and audit plan for Orlando Professional Services.

You're reporting an error for "AAA – Nov 2023 – L3 – SC – Q7 – Audit Planning and Strategy"

AAA – Nov 2022 – L3 – SC – Q6 – Internal Audit and Corporate Governance

Discuss reasons for outsourcing internal audit, advantages/disadvantages, and functions that cannot be outsourced.

You're reporting an error for "AAA – Nov 2022 – L3 – SC – Q6 – Internal Audit and Corporate Governance"

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