Risk of Misstatement – NBC Institute

AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

Question

Egunje Distributors Limited is a private company in which Chief Idowu is the major shareholder. Chief Idowu set up the business to help provide resources for his philanthropic gestures. He has been involved in the major control activities, and the business was achieving its purpose, and things were working well.

After a number of years, Chief Idowu stepped aside from the business and handed over effective management to one of his subordinates, whom he elevated to the rank of General Manager (GM). The GM followed Chief Idowu’s control processes for only one year and then introduced new ideas and processes, resulting in undue amounts being transferred into his private accounts rather than the company’s accounts. This has affected the results of the company.

While Chief Idowu has not decided to take any hasty action, he has decided to bring in your firm, due to its size, so that through your work, he may understand the reasons for the dwindling performance. It has been discussed and agreed that your report on the audit will provide insight into the reasons for the observed decline in performance.

Required:

a. Discuss the control environment, focusing on the requirements of ISA 315 – Identifying and assessing the risk of material misstatement through understanding the entity and its environment, that will be relevant to this situation. (9 Marks)

b. Evaluate the control activities that will require your attention. (6 Marks)

Answer

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Tags: Audit Planning, Control Activities, Control Environment, Internal Controls, ISA 315, Risk of Misstatement
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AA – May 2020 – L2 – Q2a – Audit Failure and Expectation Gap

Define the concept of materiality in the context of an audit.

Question

ISA 320: Materiality in Planning and Performing an Audit explains the concept of materiality and how it is used by the auditor in engagement to reach important conclusions regarding procedures and evidence obtained. The concept of materiality is a core concept in risk-based audit approaches.

Required:
i) Explain materiality. (2 marks)

ii) Briefly assess FOUR (4) ways materiality impacts an audit. (4 marks)

Answer

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Tags: Audit Planning, ISA 320, Materiality, Risk of Misstatement
Level: Level 2

Topic: Audit Failure and Expectation Gap
Series: MAY 2020

AAA – Nov 2016 – L3 – Q5b – Assurance Services | Audit Evidence

Evaluate the environmental issues that could lead to misstatements and recommend audit actions for J & K Mining Company.

Question

J & K Mining Company operates in the Abuakwa Community of the Eastern Region as a Sand Wining Company. The youth of the area had been opposing the activities of the company of late. Sasana, the Managing Director of J & K Mining Company, approached Kaku & Associates, a Chartered Accounting firm, to accept an attest engagement to examine and report on the environmental issues of J & K Mining Company Ltd. for the year ended 31 December 2013.

Required:
i) Evaluate the environmental issues that may lead to the risk of misstatements in the Financial Statements. (3 marks)

ii) Recommend the actions and the audit procedures that Kaku and Associates should undertake when they realize that J & K Mining Company Ltd. has environmental issues that may affect the Financial Statements. (7 marks)

Answer

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Tags: Audit Procedures, Environmental audit, Risk of Misstatement
Level: Level 3

Topic: Assurance services, Audit evidence
Series: NOV 2016

AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

Question

Required:

b. Evaluate the control activities that will require your attention. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Control Activities, Control Environment, Internal Controls, ISA 315, Risk of Misstatement
Level: Level 3

Topic: Audit of IT Systems and Data Analytics

AA – May 2020 – L2 – Q2a – Audit Failure and Expectation Gap

Define the concept of materiality in the context of an audit.

Question

Required:
i) Explain materiality. (2 marks)

ii) Briefly assess FOUR (4) ways materiality impacts an audit. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, ISA 320, Materiality, Risk of Misstatement
Level: Level 2

Topic: Audit Failure and Expectation Gap
Series: MAY 2020

AAA – Nov 2016 – L3 – Q5b – Assurance Services | Audit Evidence

Evaluate the environmental issues that could lead to misstatements and recommend audit actions for J & K Mining Company.

Question

Required:
i) Evaluate the environmental issues that may lead to the risk of misstatements in the Financial Statements. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Environmental audit, Risk of Misstatement
Level: Level 3

Topic: Assurance services, Audit evidence
Series: NOV 2016

Question Tag: Risk of Misstatement

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AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

AA – May 2020 – L2 – Q2a – Audit Failure and Expectation Gap

Define the concept of materiality in the context of an audit.

AAA – Nov 2016 – L3 – Q5b – Assurance Services | Audit Evidence

Evaluate the environmental issues that could lead to misstatements and recommend audit actions for J & K Mining Company.

AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

AA – May 2020 – L2 – Q2a – Audit Failure and Expectation Gap

Define the concept of materiality in the context of an audit.

AAA – Nov 2016 – L3 – Q5b – Assurance Services | Audit Evidence

Evaluate the environmental issues that could lead to misstatements and recommend audit actions for J & K Mining Company.

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AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

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AA – May 2020 – L2 – Q2a – Audit Failure and Expectation Gap

Define the concept of materiality in the context of an audit.

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AAA – Nov 2016 – L3 – Q5b – Assurance Services | Audit Evidence

Evaluate the environmental issues that could lead to misstatements and recommend audit actions for J & K Mining Company.

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AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

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AA – May 2020 – L2 – Q2a – Audit Failure and Expectation Gap

Define the concept of materiality in the context of an audit.

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AAA – Nov 2016 – L3 – Q5b – Assurance Services | Audit Evidence

Evaluate the environmental issues that could lead to misstatements and recommend audit actions for J & K Mining Company.

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