The Association of Builders is conducting a selection process for an external audit firm. Your firm has been invited to participate by submitting a proposal to render external audit services.
i. Terms of Reference: The terms of reference provide a scope of work and deliverables for external audit services for an initial three-year period from March 31, 2021, to March 31, 2023. Extension of the term by two years is subject to Council approval.
ii. Background: Established in 2014 and registered with the Corporate Affairs Commission, the Association of Builders is committed to public service and member guidance. It regulates the building profession, including registration, education, ethics, continuing professional development, and compliance with building standards.
iii. Objectives: The auditors will:
- Express an independent opinion on the financial statements’ true and fair view according to IFRS and relevant laws.
- Conduct the audit following International Standards on Auditing (ISAs) issued by IFAC.
- Comply with the Financial Reporting Council Act.
iv. Scope of Work: The audit provider will:
- Audit annual financial statements per IFRS and provide an audit opinion.
- Ensure ISA compliance in all audits.
- Collaborate with internal auditors to assess internal controls.
- Communicate audit findings and implications to management.
- Review and contribute to the annual report’s financial information.
- Attend Audit and Risk Committee meetings if needed.
v. Mandatory Requirements: The audit firm must:
- Be registered with a recognized accounting body and Financial Reporting Council.
- Demonstrate experience and understanding of the construction industry.
- Have the capacity for external audit services.
vi. Proposal Contents: Proposals must include:
- Firm profile and relevant experience.
- Information to evaluate competence.
- Methodology for audit processes.
- Description of similar past projects with fees.
- CVs of the proposed project team, detailing qualifications and experience.
vii. Evaluation Process: Proposals submitted after the deadline are disqualified.
Your firm has included you as a team member for the audit proposal preparation.
Required:
a. Identify and explain briefly the rights of external auditors concerning Companies and Allied Matters Act (CAMA). (5 Marks)
b. State the responsibilities of management and those charged with governance in relation to the financial statements. (6 Marks)
c. Explain what auditors are required to do under International Standards on Auditing (ISA 200). (4 Marks)
