Risk Assessment Procedures

AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control

Describes factors for obtaining entity and environmental information for risk assessment and procedures to perform risk assessment.

Question

The independent auditor identifies and assesses the risk of material misstatements through understanding the entity and its environment.

Required:
a. Describe the factors the auditor should consider while obtaining information on the entity and its environment.
(10 Marks)

b. Explain why the auditor needs to perform risk assessment and the procedures.
(5 Marks)

Answer

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Tags: Audit Planning, ISA 315, Risk Assessment Procedures, Risk of Material Misstatement
Level: Level 2

Topic: Risk Assessment and Internal Control
Series: NOV 2018

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Mr. Ajibade, a businessman based in the South West region of Nigeria intends to start a new company. The new company, when formed, will focus solely on the production of face masks and alcohol-based hand sanitisers which are needed to prevent the spread of the novel corona virus. This has been incorporated into the draft Memorandum of Association to be submitted to the Corporate Affairs Commission (CAC).

Mr. Ajibade has heard of section 377 of Companies and Allied Matters Act (CAMA) Cap C20 LFN 2004, which offers exemption from an audit if a company qualifies as a small company as per section 351 of the Act. He thinks that when he starts a small company, he will therefore be exempted from statutory audit and so save cost.

Mr. Ajibade has a growth plan for his prospective company. He has also heard that if the company is to grow bigger in the future, he will require more funding in the form of loans from banks and other financial institutions. The banks will require audited financial statements as a prerequisite to granting his company loan facilities. He is therefore, curious to know more about the importance of audited financial statements.
He has approached you for advice.

Required:
a. What qualifies a company as a small company according to CAMA.
(6 Marks)
b. The benefits and limitations of an audit.
(9 Marks)
c. The eligibility for qualification as external auditor.
(6 Marks)
d. The scope of a statutory audit.
(4 Marks)
e. According to ISA 300: Planning an Audit of Financial Statements, the objective of the auditor is to plan the audit work so that the audit will be performed in an effective manner.
Required:
Explain the benefits of adequate planning of the audit.
(5 Marks)
f. Explain THREE risk assessment procedures required by ISA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
(10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control

Describes factors for obtaining entity and environmental information for risk assessment and procedures to perform risk assessment.

Question

The independent auditor identifies and assesses the risk of material misstatements through understanding the entity and its environment.

Required:
a. Describe the factors the auditor should consider while obtaining information on the entity and its environment.
(10 Marks)

b. Explain why the auditor needs to perform risk assessment and the procedures.
(5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, ISA 315, Risk Assessment Procedures, Risk of Material Misstatement
Level: Level 2

Topic: Risk Assessment and Internal Control
Series: NOV 2018

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

Question Tag: Risk Assessment Procedures

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AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control

Describes factors for obtaining entity and environmental information for risk assessment and procedures to perform risk assessment.

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control

Describes factors for obtaining entity and environmental information for risk assessment and procedures to perform risk assessment.

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

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AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control

Describes factors for obtaining entity and environmental information for risk assessment and procedures to perform risk assessment.

You're reporting an error for "AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control"

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control

Describes factors for obtaining entity and environmental information for risk assessment and procedures to perform risk assessment.

You're reporting an error for "AA – Nov 2018 – L2 – Q4a and Q4b – Risk Assessment and Internal Control"

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

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