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 – SA – Q9 – Regulatory Framework and Professional Standards

Identifies an entity not affecting the audit of financial statements in Nigeria.

Question

The audit of financial statements in Nigeria is not affected by ONE of the following:

A. Securities and Exchange Commission
B. Auditing Standards
C. Nigerian Accounting Standard Board
D. The Institute of Chartered Accountants of Nigeria
E. Auditing Exposure Drafts

Answer

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Tags: Audit Oversight, Auditing Standards, Financial Statement Audit, Nigerian Regulations
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q8 – Audit of Accounting Estimates and Fair Value Measurements (IAS 36, IFRS 13)

Identifies the appropriate stock valuation method as per SAS 4 standards.

Question

In accordance with SAS 4, which ONE of the following methods is appropriate in valuation of stock?

A. Latest in, first out
B. Base stock
C. Specific identification
D. Latest purchase price
E. Weighted average

Answer

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Tags: Financial Reporting, Inventory Methods, SAS 4, Stock valuation
Level: Level 3

Topic: Audit of Accounting Estimates and Fair Value Measurements (IAS 36, IFRS 13)
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q7 – Audit Reporting

Determines the correct date for an auditor’s report based on audit standards.

Question

The auditors’ report should be dated on the day that the:

A. Report is delivered to the client
B. Field work is completed
C. Fiscal period under which the audit ends
D. Review of the working papers is completed
E. Board meeting approves the accounts

Answer

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Tags: Audit Completion, Audit Date, Auditor's Report, Reporting Standards
Level: Level 3

Topic: Audit Reporting
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q6 – Ethical Issues in Auditing

Identifies a service inappropriate for an audit firm to provide due to independence and ethical concerns.

Question

Which ONE of these services may not be appropriate for an audit firm?

A. Advising clients on corporate structures, recruitment, and other human capital needs
B. Giving necessary legal advice on tax returns including negotiation with the tax authorities
C. Acting as a receiver of the company’s operations on behalf of debenture holders and creditors of the company
D. Making detailed enquiries and gathering all necessary information to meet the clients’ specific needs
E. Advising clients on how best the business can be run and controlled including issues of accountability and management

Answer

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Tags: Audit Services, Auditor Independence, Conflict of Interest, Ethical Boundaries
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q5 – Ethical Issues in Auditing

Identifies exceptions where auditors may not disclose a client's confidential information.

Question

Auditors can disclose the client’s confidential information for the following reasons EXCEPT:

A. Auditors know client has committed terrorist offence
B. Information is required by the auditor for another client
C. Auditors suspect client has committed treason
D. There is public duty to disclose
E. Disclosure is needed to protect auditor’s own interest

Answer

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Tags: Auditor Disclosure, Client Information, Confidentiality, Ethics, Legal Requirements
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2011

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

Identifies exceptions to threats that compromise auditor objectivity.

Question

Threats to objectivity include the following EXCEPT:

A. Familiarity threat
B. Self-regulatory threat
C. Intimidation threat
D. Advocacy threat
E. Self-interest threat

Answer

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Tags: Ethics, Objectivity, Professional Standards, Threats to Independence
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q3 – Public Sector Audits

Identifies the audit type within the Auditor-General’s scope of responsibilities.

Question

Which ONE of the following is a type of audit included in the scope of responsibilities of the Auditor-General for the Federation?

A. Regulatory audit
B. Computer audit
C. Operational audit
D. Programme audit
E. Management audit

Answer

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Tags: Audit Types, Auditor General, Government Accountability, Public Sector Audit
Level: Level 3

Topic: Public sector audit
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q2 – Audit of Specialized Industries

Focuses on the key provision auditors should prioritize in insurance company audits.

Question

In conducting the audit of an insurance company, to which ONE of the following should the auditor pay special attention?

A. Provision for depreciation
B. Provision for unearned interest
C. Provision for loan losses
D. Provision for outstanding claims
E. Provision for general reserve

Answer

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Tags: Auditor Focus, Insurance Audit, Outstanding Claims, Provisions
Level: Level 3

Topic: Audit of Specialized Industries
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q1 – Auditor’s Legal Liability

Identifies the IT automation service that alleviates document-based process management.

Question

A technology that takes away the problems associated with managing Information Technology Systems and can help automate document-based processes, so that customers can focus on growing and knowing their businesses, is known as:

A. Hosted services
B. Bureau services
C. Amazon services
D. Desktop services
E. Office assistance services

Answer

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Tags: Auditor's Liability, Court Cases, Legal Decisions, Professional Responsibility
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2011

BL – Nov 2011 – L1 – SB – Q6 – Negotiable Instruments

Understanding the characteristics of negotiable instruments, banker's duties, revocation of wills, and parties to a bill of exchange.

Question

(a) State FOUR characteristics of a negotiable instrument. (4 Marks)

(b) Mr. Eddie is a customer of Perfect Bank Limited. He issued a cheque for the sum of N20,000 to Mr. Jossy. At the time of issuing the cheque, his account was in credit to the tune of N150,000. The cheque was dishonored by the bank. Mr. Eddie wants to sue the bank. You are required to advise Mr. Eddie. (5 Marks)

(d) State the parties to a Bill of Exchange. (3 Marks)

Answer

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Tags: Banker-Customer Relationship, Bill of Exchange, Negotiable Instruments, Revocation, Will
Level: Level 1

Topic: Negotiable Instruments
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.

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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.

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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 – SA – Q9 – Regulatory Framework and Professional Standards

Identifies an entity not affecting the audit of financial statements in Nigeria.

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AAA – Nov 2011 – L3 – SA – Q8 – Audit of Accounting Estimates and Fair Value Measurements (IAS 36, IFRS 13)

Identifies the appropriate stock valuation method as per SAS 4 standards.

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AAA – Nov 2011 – L3 – SA – Q7 – Audit Reporting

Determines the correct date for an auditor’s report based on audit standards.

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AAA – Nov 2011 – L3 – SA – Q6 – Ethical Issues in Auditing

Identifies a service inappropriate for an audit firm to provide due to independence and ethical concerns.

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AAA – Nov 2011 – L3 – SA – Q5 – Ethical Issues in Auditing

Identifies exceptions where auditors may not disclose a client's confidential information.

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

Identifies exceptions to threats that compromise auditor objectivity.

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AAA – Nov 2011 – L3 – SA – Q3 – Public Sector Audits

Identifies the audit type within the Auditor-General’s scope of responsibilities.

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AAA – Nov 2011 – L3 – SA – Q2 – Audit of Specialized Industries

Focuses on the key provision auditors should prioritize in insurance company audits.

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AAA – Nov 2011 – L3 – SA – Q1 – Auditor’s Legal Liability

Identifies the IT automation service that alleviates document-based process management.

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BL – Nov 2011 – L1 – SB – Q6 – Negotiable Instruments

Understanding the characteristics of negotiable instruments, banker's duties, revocation of wills, and parties to a bill of exchange.

You're reporting an error for "BL – Nov 2011 – L1 – SB – Q6 – Negotiable Instruments"

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