Series: NOV 2011

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AAA – Nov 2012 – L3 – SA – Q16 – Review of Subsequent Events and Going Concern Assumptions

Identifying the appropriate signatories for a Letter of Representation.

Question

The Letter of representation is normally signed by:

A. Managing Director and Chairman of the Board
B. Managing Director and Company Secretary
C. Managing Director and Finance Director
D. Chairman of the Board and Finance Director
E. Chairman of Audit Committee and the Managing Director

Answer

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Tags: Audit Documentation, Audit Procedure, Letter of Representation, Signatories
Level: Level 3

Topic: Review of Subsequent Events and Going Concern Assumptions
Series: NOV 2011

AAA – Nov 2012 – L3 – SA – Q15 – Audit of IT Systems and Data Analytics

Key focus areas for IT Auditors in a risk-based audit program.

Question

While developing a risk-based audit program, the Information Technology Auditor most likely will focus on:

A. Strategic controls
B. Critical IT applications
C. Operation control
D. Business strategy
E. Business process

Answer

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Tags: Audit Focus, Critical Applications, IT Audit, IT Systems, Risk-Based Audit
Level: Level 3

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

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

Question

Which of the statements listed below about IFRS is invalid?

A. Multinational should benefit from a number of cost savings when using IFRS
B. Companies that wish to reach a wider group of investors will find financial statements based on IFRS acceptable in all major markets
C. Using IFRS will make it easier, though more expensive, to have secondary listing in other countries of the world
D. Using the same accounting basis provides greater comparability between companies which will lead to more efficient investment
E. The original standard setter between (1973-2000) was International Accounting Standard Committee (IASC)

Answer

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Tags: Accounting Standards, Financial Reporting, IFRS, International Standards
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SB – Q6 – Internal Audit and Corporate Governance

Explores the functions and significance of various committees and concepts in governance, including the Public Accounts Committee and due diligence.

Question

Write short notes on the following:

(a) Public Accounts Committee
(3 Marks)

(b) Value-for-Money Audit
(3 Marks)

(d) Due Diligence
(3 Marks)

(e) Due Process
(3 Marks)

Answer

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Tags: Audit Alarm, Due diligence, Due Process, Public Accounts Committee, Value for Money Audit
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2011

AAA – Nov 2011 – L3 – SB – Q5 – Review of Subsequent Events and Going Concern Assumptions

Identifies going concern symptoms, audit procedures for evaluating going concern, and factors to assess continuation potential.

Question

When a company is experiencing going concern problems, it may exhibit various financial and non-financial symptoms.

Required:

(a) State FIVE financial and FIVE non-financial going concern symptoms.
(5 Marks)

(b) State the audit procedures you would adopt as an auditor to determine whether a client company is experiencing going concern problems.
(6 Marks)

(c) What other factors would you consider in assessing if the company can continue despite the going concern issues?
(4 Marks)

Answer

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Tags: Audit Procedures, Financial Stability, Financial Symptoms, Going Concern, Non-Financial Symptoms, Risk Assessment
Level: Level 3

Topic: Review of Subsequent Events and Going Concern Assumptions
Series: NOV 2011

AAA – Nov 2011 – L3 – SB – Q4 – Ethical Issues in Auditing

Clarifies auditor's statutory responsibilities, provisions in CAMA to reduce the communication gap, and controls for addressing performance gaps.

Question

The role of auditors is commonly misconceived. Many people argue that the auditor is expected to detect all frauds and irregularities in a client’s business. Others believe that the auditor should act more like a court of justice where truth is defended. In fact, the auditor’s responsibilities, powers, and duties are defined by statutes, ethics, and auditing standards.

Required:

(a) What are the provisions available in the Companies and Allied Matters Act Cap C20 LFN, 2004, which seek to reduce the communication gap between the auditor and the shareholders?
(7 Marks)

(b) Explain EIGHT controls available to address the problem of the performance gap.
(8 Marks)

Answer

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Tags: Audit Controls, Auditor Responsibilities, Communication Gap, Companies and Allied Matters Act, Performance Gap
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2011

AAA – Nov 2011 – L3 – SB – Q3 – Audit of Corporate Governance

Key objectives and structures within corporate governance, focusing on the audit committee's role and board actions affecting governance.

Question

(a) Outline the main objective of corporate governance.
(3 Marks)

(b) One of the tools of corporate governance in Nigeria is the establishment of the Audit Committee under Section 359 (6) of Companies and Allied Matters Act Cap C20 LFN, 2004. What are the composition and functions of an Audit Committee?
(6 Marks)

(c) State SIX instances when the corporate governance of a public company may be compromised by the Board of Directors.
(6 Marks)

Answer

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Tags: Audit Committee, Board of Directors, CAMA, Corporate Accountability, Corporate Governance, Governance Standards
Level: Level 3

Topic: Audit of Corporate Governance
Series: NOV 2011

AAA – Nov 2011 – L3 – SB – Q2 – Regulatory Framework and Professional Standards

Overview and impact of the Sarbanes-Oxley Act on corporate accountability and self-regulation.

Question

The Sarbanes-Oxley Act of 2002, enacted in the United States to guide and regulate the work of accountants and auditors, raised issues about the culture of self-regulation in the accounting profession.

You are required to:

(a) State the reason for its enactment and issues covered therein.
(2 Marks)

(b) State its main provisions that relate to corporate accountability.
(8 Marks)

Answer

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Tags: Corporate Accountability, Corporate Scandals, Public Companies, Sarbanes-Oxley Act, Self-regulation
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SB – Q1 – Application of Audit and Assurance Principles

Evaluate the steps for identifying and responding to fraud risk during audit planning.

Question

Fela Idaewor is the auditor for Matty Co. Ltd, a rapidly expanding retail business based in Lekki. This is her first year as the audit manager. During her engagement planning, she observed multiple risk factors, such as the company’s strong interest in maintaining earnings and share prices, unrealistic financial forecasts, and high reliance on debt financing for expansion. Additionally, there were strong indications that fraud might have been committed by top management.

Required
(a) What should Idaewor do about the possibility of fraud at the planning stage? (7 Marks)
(b) What documentation is required for identifying risk factors? (5 Marks)
(c) If Idaewor has evidence suggesting fraud, what are her communication responsibilities to management? (3 Marks)

Answer

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Tags: Audit Planning, Fraud Detection, Management Communication, Professional Skepticism, Risk Factors
Level: Level 3

Topic: Application of Audit and Assurance Principles
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q20 – Assurance Engagements

Definition of an assurance engagement's objective in providing confidence to users.

Question

An assignment in which the practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter is…………………………

Answer

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Tags: Assurance Engagement, Confidence Enhancement, Evaluation, Measurement
Level: Level 3

Topic: Assurance Engagements
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q8 – Trial Balance

This question asks about what a collection of ledger balances is used for.

Question

A collection of ledger balances is used in preparing?

Answer

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Tags: Ledger Balances, Trial Balance
Level: Level 1

Topic: Trial Balance: Usefulness and Limitations
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q7 – Control Accounts

This question asks how contra entries in control accounts are corrected.

Question

By what means do you effect correction of contra entries in control accounts?

Answer

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Tags: Contra Entries, Control Accounts
Level: Level 1

Topic: Control Accounts
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q6 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing stock in a trading company.

Question

What is the basis of valuing stock in a trading company?

Answer

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Tags: Inventory Valuation, Stock
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q5 – Recording Financial Transactions

This question asks about the source document used for recording entries on the credit side of the bank cash book.

Question

Apart from bank payment vouchers, what other source document can be used to record entries on the credit side of the bank cash book?

Answer

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Tags: Cash Books, Source Documents
Level: Level 1

FA – Nov 2011 – L1 – SA – Q4 – Recording Financial Transactions

This question asks about the art of recording monetary transactions to ascertain the financial position.

Question

The art of recording all monetary transactions of an entity to ascertain the financial position is called?

Answer

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Tags: Bookkeeping, Recording Transactions
Level: Level 1

FA – Nov 2011 – L1 – SA – Q3 – Bank Reconciliation

This question asks about the source document used to identify an uncredited lodgement.

Question

What is the source document by which a bank reconciliation officer can identify an uncredited lodgement?

Answer

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Tags: Bank Reconciliation, Source Documents
Level: Level 1

Topic: Bank reconciliations
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q2 – Virtual Accounting: Digitisation

This question asks about the built-in safety measure in an accounting spreadsheet that allows for reversals of recent actions.

Question

What is the built-in safety measure in any accounting spreadsheet package that allows for the reversal of most recent actions which returns the worksheet to its previous state?

Answer

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Tags: Accounting Software, Reversal
Level: Level 1

Topic: Virtual Accounting: Digitisation
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q1 – Virtual Accounting: Digitisation

This question asks about the element of the worksheet in an accounting package that allows graphical presentation.

Question

What is the element of the worksheet in the accounting package that allows for the presentation of information in graphical form?

Answer

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Tags: Accounting Software, Graphical Presentation
Level: Level 1

Topic: Virtual Accounting: Digitisation
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q20 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing inventory.

Question

The basis of valuation of inventory is
A. Lower of cost or net realizable value
B. Lower of cost and market value
C. Lower of cost and net realizable value
D. Lower of average cost and market value
E. Lower of average cost and net realizable value

Answer

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Tags: Inventory Valuation, Lower of Cost or Market Value
Level: Level 1

Topic: Accounting for Inventories (IAS 2)
Series: NOV 2011

FA – Nov 2011 – L1 – SA – Q19 – Hire Purchase and Consumer Credit Transactions

This question asks about the interest payable in the first year on a hire purchase agreement.

Question

A car with a cash price of N750,000 was acquired on hire purchase on 1 January 2010. The agreement required an initial deposit of N150,000 and three equal yearly installments payable effective 31 December 2010. Interest of 15% is payable on the balance outstanding at the end of each year. How much interest is payable at the end of first year?
A. N22,500
B. N45,000
C. N90,000
D. N112,500
E. N135,000

Answer

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Tags: Hire Purchase, Interest Calculations
Level: Level 1

Topic: Hire Purchase and Consumer Credit Transactions
Series: NOV 2011

Series: NOV 2011

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AAA – Nov 2012 – L3 – SA – Q16 – Review of Subsequent Events and Going Concern Assumptions

Identifying the appropriate signatories for a Letter of Representation.

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AAA – Nov 2012 – L3 – SA – Q15 – Audit of IT Systems and Data Analytics

Key focus areas for IT Auditors in a risk-based audit program.

You're reporting an error for "AAA – Nov 2012 – L3 – SA – Q15 – Audit of IT Systems and Data Analytics"

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

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AAA – Nov 2011 – L3 – SB – Q6 – Internal Audit and Corporate Governance

Explores the functions and significance of various committees and concepts in governance, including the Public Accounts Committee and due diligence.

You're reporting an error for "AAA – Nov 2011 – L3 – SB – Q6 – Internal Audit and Corporate Governance"

AAA – Nov 2011 – L3 – SB – Q5 – Review of Subsequent Events and Going Concern Assumptions

Identifies going concern symptoms, audit procedures for evaluating going concern, and factors to assess continuation potential.

You're reporting an error for "AAA – Nov 2011 – L3 – SB – Q5 – Review of Subsequent Events and Going Concern Assumptions"

AAA – Nov 2011 – L3 – SB – Q4 – Ethical Issues in Auditing

Clarifies auditor's statutory responsibilities, provisions in CAMA to reduce the communication gap, and controls for addressing performance gaps.

You're reporting an error for "AAA – Nov 2011 – L3 – SB – Q4 – Ethical Issues in Auditing"

AAA – Nov 2011 – L3 – SB – Q3 – Audit of Corporate Governance

Key objectives and structures within corporate governance, focusing on the audit committee's role and board actions affecting governance.

You're reporting an error for "AAA – Nov 2011 – L3 – SB – Q3 – Audit of Corporate Governance"

AAA – Nov 2011 – L3 – SB – Q2 – Regulatory Framework and Professional Standards

Overview and impact of the Sarbanes-Oxley Act on corporate accountability and self-regulation.

You're reporting an error for "AAA – Nov 2011 – L3 – SB – Q2 – Regulatory Framework and Professional Standards"

AAA – Nov 2011 – L3 – SB – Q1 – Application of Audit and Assurance Principles

Evaluate the steps for identifying and responding to fraud risk during audit planning.

You're reporting an error for "AAA – Nov 2011 – L3 – SB – Q1 – Application of Audit and Assurance Principles"

AAA – Nov 2011 – L3 – SAII – Q20 – Assurance Engagements

Definition of an assurance engagement's objective in providing confidence to users.

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FA – Nov 2011 – L1 – SA – Q8 – Trial Balance

This question asks about what a collection of ledger balances is used for.

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FA – Nov 2011 – L1 – SA – Q7 – Control Accounts

This question asks how contra entries in control accounts are corrected.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q7 – Control Accounts"

FA – Nov 2011 – L1 – SA – Q6 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing stock in a trading company.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q6 – Accounting for Inventories (IAS 2)"

FA – Nov 2011 – L1 – SA – Q5 – Recording Financial Transactions

This question asks about the source document used for recording entries on the credit side of the bank cash book.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q5 – Recording Financial Transactions"

FA – Nov 2011 – L1 – SA – Q4 – Recording Financial Transactions

This question asks about the art of recording monetary transactions to ascertain the financial position.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q4 – Recording Financial Transactions"

FA – Nov 2011 – L1 – SA – Q3 – Bank Reconciliation

This question asks about the source document used to identify an uncredited lodgement.

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FA – Nov 2011 – L1 – SA – Q2 – Virtual Accounting: Digitisation

This question asks about the built-in safety measure in an accounting spreadsheet that allows for reversals of recent actions.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q2 – Virtual Accounting: Digitisation"

FA – Nov 2011 – L1 – SA – Q1 – Virtual Accounting: Digitisation

This question asks about the element of the worksheet in an accounting package that allows graphical presentation.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q1 – Virtual Accounting: Digitisation"

FA – Nov 2011 – L1 – SA – Q20 – Accounting for Inventories (IAS 2)

This question asks about the basis for valuing inventory.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q20 – Accounting for Inventories (IAS 2)"

FA – Nov 2011 – L1 – SA – Q19 – Hire Purchase and Consumer Credit Transactions

This question asks about the interest payable in the first year on a hire purchase agreement.

You're reporting an error for "FA – Nov 2011 – L1 – SA – Q19 – Hire Purchase and Consumer Credit Transactions"

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