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

AAA – Nov 2011 – L3 – SAII – Q9 – Group Audits

Explanation of audit procedures communication from secondary to primary auditor.0.............................................................

Question

A letter written by the secondary auditor to the primary auditor explaining all the procedures used in carrying out the audit of the subsidiary company is known as……………………………

Answer

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Tags: Communication in Audits, Group Audits, Primary Auditor, Secondary Auditor
Level: Level 3

Topic: Group audits
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q8 – Public Sector Audits

Process for appointing a State Auditor-General.

Question

The Auditor-General for a State is appointed by the Governor on the recommendation of………………..subject to the confirmation of the State House of Assembly.

Answer

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Topic: Public sector audit
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q7 – Auditor’s Legal Liability

Conditions under which an auditor owes a duty of care to third parties.

Question

In principle, the auditor does not owe a duty of care to a third party. However, it has been held in decided cases that the auditor owes a third party a duty of care under the……………………………

Answer

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Tags: Auditor Legal Responsibility, Duty of Care, Third Party Liability
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q6 – Audit of IT Systems and Data Analytics

Audit technique where auditor processes data concurrently with client.

Question

When the auditor sets up his own records and processes them at the same time as the client processing data, he is using a technique in computer known as……………….

Answer

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Tags: Audit of IT Systems, Computer Audit Techniques, Parallel Processing
Level: Level 1

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

AAA – Nov 2011 – L3 – SAII – Q5 – Regulatory Framework and Professional Standards

ICAN's authority to discipline members for ethical breaches.

Question

The power of The Institute of Chartered Accountants of Nigeria to initiate disciplinary action against any member who has run foul of ethical standards rests with……………………….

Answer

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Tags: Disciplinary Action, Ethical Standards, ICAN Authority, Professional Conduct
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

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

Definition of a retired partner retained for continuity in a firm.

Question

A retired partner in a firm now managed by other members but retained by the members for the sake of continuity is known as a………………………..

Answer

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Tags: Audit Firm Structure, Continuity, Firm Management, Retired Partner
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q3 – Audit Reporting

Responsibility for audit conduct and opinion expression in financial statements.

Question

The responsibility for the conduct of the audit and expressing an opinion on the financial statements in a firm of Chartered Accountants rests with the……….

Answer

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Tags: Audit Responsibility, Chartered Accountants, Financial Statements, Opinion Expression
Level: Level 3

Topic: Audit Reporting
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q2 – Audit of IT Systems and Data Analytics

Definition of the system development process in information systems.

Question

Any logical process used by a system analyst to develop an information system, including requirements, validation, training, and user-ownership, is referred to as……………………..

Answer

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Tags: Information Systems, Requirements Validation, System Development, User Ownership
Level: Level 3

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

AAA – Nov 2011 – L3 – SAII – Q1 – Advanced Audit Planning and Strategy

Definition of audit sampling application in evidence evaluation.

Question

The application of audit procedures to less than 100% of the items within an account balance or class of transactions to enable the auditors obtain and evaluate evidence is known as……………………..

Answer

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Tags: Audit Procedures, Audit Sampling, Evidence Evaluation
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

Question

To obtain an understanding of the internal control system, which ONE of the following computer documentations can assist the auditor?

A. System narrative
B. System flowchart
C. System counts
D. Record layout
E. Programme listing

Answer

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Tags: Audit evidence, Audit Procedures, Documentation, Internal Control, System Flowchart
Level: Level 3

Topic: Audit of IT Systems and Data Analytics
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.

You're reporting an error for "AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards"

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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AAA – Nov 2011 – L3 – SAII – Q9 – Group Audits

Explanation of audit procedures communication from secondary to primary auditor.0.............................................................

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AAA – Nov 2011 – L3 – SAII – Q8 – Public Sector Audits

Process for appointing a State Auditor-General.

You're reporting an error for "AAA – Nov 2011 – L3 – SAII – Q8 – Public Sector Audits"

AAA – Nov 2011 – L3 – SAII – Q7 – Auditor’s Legal Liability

Conditions under which an auditor owes a duty of care to third parties.

You're reporting an error for "AAA – Nov 2011 – L3 – SAII – Q7 – Auditor’s Legal Liability"

AAA – Nov 2011 – L3 – SAII – Q6 – Audit of IT Systems and Data Analytics

Audit technique where auditor processes data concurrently with client.

You're reporting an error for "AAA – Nov 2011 – L3 – SAII – Q6 – Audit of IT Systems and Data Analytics"

AAA – Nov 2011 – L3 – SAII – Q5 – Regulatory Framework and Professional Standards

ICAN's authority to discipline members for ethical breaches.

You're reporting an error for "AAA – Nov 2011 – L3 – SAII – Q5 – Regulatory Framework and Professional Standards"

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

Definition of a retired partner retained for continuity in a firm.

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AAA – Nov 2011 – L3 – SAII – Q3 – Audit Reporting

Responsibility for audit conduct and opinion expression in financial statements.

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AAA – Nov 2011 – L3 – SAII – Q2 – Audit of IT Systems and Data Analytics

Definition of the system development process in information systems.

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AAA – Nov 2011 – L3 – SAII – Q1 – Advanced Audit Planning and Strategy

Definition of audit sampling application in evidence evaluation.

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AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics.

Identifies the documentation that aids in understanding the internal control system.

You're reporting an error for "AAA – Nov 2011 – L3 – SA – Q20 – Audit of IT Systems and Data Analytics."

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