ISA 250 – NBC Institute

AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

Question

In compliance with ISA 250 “Consideration of Laws and Regulations in an Audit of Financial Statements,” the auditor shall conduct the audit in a manner that gives them confidence that the client has met all legal requirements of the country in which it operates.

As the Audit Partner in charge of APB Manufacturing Plc, you are required to:

a. Identify and clarify SIX steps that ISA 250 requires of you in ascertaining that the company complies with all applicable laws and regulations. (9 Marks)
b. State and explain FOUR procedural actions you will take in the event that the company failed to comply, in material areas, with applicable laws and regulations. (6 Marks)

Answer

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Tags: Audit Procedures, Compliance Testing, ISA 250, Legal Requirements, Non-Compliance Actions
Level: Level 3

Topic: 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.

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 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

Question

You are a manager in Obuns & Co, a firm of Chartered Accountants, responsible for the audit of Akudre Plc, a listed entity, for the year ended 31 May 2020. The company operates in the textile industry and manufactures a range of goods, including clothing, linen, and soft furnishings. Akudre Plc employs approximately 750 sales staff across the country who sell the company’s products to both households and small to medium-sized businesses. Around 75% of Akudre Plc’s sales transactions are cash-based, and each sales staff member prepares a monthly cash sales report.

According to Akudre Plc’s CEO, Adu Oke, each staff member (including senior management) is encouraged to make cash sales on a commission basis to friends and family. Mr. Oke recently sold products worth N4,000,000 to business associates, depositing these funds into an offshore bank account under his sole control.

Review of Audit Working Papers:
A review of the audit working papers and an initial meeting with Mr. Oke revealed these issues:

Obuns & Co performed tax computations for Akudre Plc and completed tax returns for the company and Mr. Oke, invoiced as part of the total fee for audit and professional services. Mr. Oke’s personal tax return reflects numerous property transactions across international locations, which are detailed in off-shore accounts.

Financing Issue:
The audit committee has requested the audit engagement partner attend a post-audit meeting with the company’s bank officials, including the CFO and a representative from the audit committee, to renegotiate Akudre Plc’s lending facility. The audit partner is expected to confirm the company’s financial stability and verify that going concern procedures, including cash flow forecasts, were audited.

Required:
a. Discuss the policies and procedures which Obuns & Co. should have in place in relation to an anti-money laundering programme. (5 Marks)
b. Evaluate whether there are any indicators of money laundering activities by Akudre Plc or its staff. (4 Marks)
c. Describe the requirements of ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements. (5 Marks)
d. Discuss the actions required when an auditor identifies or suspects material instances of non-compliance by a client under ISA 250. (5 Marks)
e. Identify and evaluate any ethical threats and professional issues arising from the audit committee’s request for the audit engagement partner to attend the financing meeting. (3 Marks)
f. If loan finance is essential for the company’s survival and uncertainty exists regarding agreement finalization, evaluate additional audit procedures to ascertain if a material uncertainty exists. (10 Marks)
g. Evaluate the impact on the audit report in these scenarios:

i. Going concern assumption is appropriate, but material uncertainty exists.
ii. Going concern assumption is appropriate, material uncertainty exists, and disclosures are adequate.
iii. Going concern assumption is appropriate, material uncertainty exists, but disclosures are inadequate.
iv. Going concern assumption is inappropriate. (8 Marks)

Answer

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Tags: Anti-Money Laundering, Audit Procedures, Compliance, Ethical Threats, Going Concern, ISA 250
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

Question

a) Everclean Water Limited processes and packages portable water for local consumption. The factory is situated in a valley in a first-class residential area of the city. A major road used by most residents runs in front of the factory. Often this road is flooded with spill-over of water from the factory thus hindering vehicular and pedestrian movement. Management of the company on such occasions uses the services of a contractor to pump out the water from the road. This situation contravenes the provisions of the Factories, Offices and Shops Act 1970, Act 328. Everclean Water Limited has engaged Nadab and Associates as the auditors. In their preliminary tour of the factory the senior partners became aware of the flooding situation in the area. Back in the office the senior partners consulted ISA 250 “Consideration of laws and regulations in an audit of financial statements” for guidance on the auditor’s responsibility to consider laws and regulations in an audit of financial statements before carrying out the audit assignment.

i) State examples of the possible type of information that might have come to the auditors’ attention that might indicate non-compliance with the Factories, Offices, and Shops Act. (5 marks)

ii) Evaluate the possible effect on the financial statements for non-compliance with the law according to ISA 250. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Financial Statements, ISA 250, Laws and regulations, Non-compliance
Level: Level 3

Topic: Planning, The audit approach, The regulatory environment
Series: MAY 2016

AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

Question

As the Audit Partner in charge of APB Manufacturing Plc, you are required to:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Compliance Testing, ISA 250, Legal Requirements, Non-Compliance Actions
Level: Level 3

Topic: 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.

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 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

Question

Review of Audit Working Papers:
A review of the audit working papers and an initial meeting with Mr. Oke revealed these issues:

Obuns & Co performed tax computations for Akudre Plc and completed tax returns for the company and Mr. Oke, invoiced as part of the total fee for audit and professional services. Mr. Oke’s personal tax return reflects numerous property transactions across international locations, which are detailed in off-shore accounts.

i. Going concern assumption is appropriate, but material uncertainty exists.
ii. Going concern assumption is appropriate, material uncertainty exists, and disclosures are adequate.
iii. Going concern assumption is appropriate, material uncertainty exists, but disclosures are inadequate.
iv. Going concern assumption is inappropriate. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Anti-Money Laundering, Audit Procedures, Compliance, Ethical Threats, Going Concern, ISA 250
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

Question

i) State examples of the possible type of information that might have come to the auditors’ attention that might indicate non-compliance with the Factories, Offices, and Shops Act. (5 marks)

ii) Evaluate the possible effect on the financial statements for non-compliance with the law according to ISA 250. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Financial Statements, ISA 250, Laws and regulations, Non-compliance
Level: Level 3

Topic: Planning, The audit approach, The regulatory environment
Series: MAY 2016

Question Tag: ISA 250

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AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

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.

AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

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.

AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

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AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

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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.

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AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

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AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

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AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

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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 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

You're reporting an error for "AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards"

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

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