NOV 2012 – Page 10 – NBC Institute

AAA – Nov 2013 – L3 – A – Q20 – Audit of Specialized Industries

This question tests knowledge of reserves that may or may not be reviewed during the audit of a non-life insurance company.

Question

Regarding the audit of a non-life insurance company, which of the following reserves may NOT be reviewed?
A. Reserve for unexpired risks
B. Reserve for outstanding claims
C. Contingent reserve
D. External reserve
E. Statutory reserve

Answer

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Tags: Audit, Non-Life Insurance, Reserves, Specialized Industries
Level: Level 3

Topic: Audit of Specialized Industries
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

Question

Which of the following assignments can be regarded as a continuous audit function?
A. Examining the effectiveness, efficiency, and economy of a cement project
B. Evaluating the adequacy of the security and control measures of the information technology
C. Ascertaining the fairness of the annual financial statements and notes to the accounts
D. Reviewing the internal control procedures before commencing the audit
E. Reviewing the company’s compliance with relevant guidance and release of financial information periodically

Answer

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Tags: Compliance, Continuous Audit, Financial Reporting, Internal Control
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q18 – Audit Reporting

This question assesses knowledge of the main users of financial reports that auditors focus on.

Question

The main users of financial reports that auditors need to be primarily concerned about are:
A. Management and directors of the company
B. The general public
C. Banks and other financial institutions that provide working capital
D. Suppliers
E. Shareholders of the company

Answer

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Level: Level 3

Topic: Audit Reporting
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

Question

Yakubu Chukwu & Co was sued by one of its clients who alleged that the firm failed to satisfy the auditing standards in identifying substandard and obsolete inventory while attending end-of-year stock take. Which of the following is the firm’s best defence?
A. It is quite impossible to expect the firm to identify substandard and obsolete inventory due to the special nature of the inventory
B. Yakubu Chukwu & Co has to prove that its audit has been carried out with reasonable skill, care, and diligence
C. Auditing standards are not legislated, therefore, the client has no right to sue the firm
D. The contributory negligence of the client
E. Identification of substandard and obsolete stock requires an expert opinion

Answer

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Tags: Audit Standards, Auditor Liability, Defence, Obsolete Inventory
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q16 – Group Audits

This question assesses the appropriate audit procedure for verifying a subsidiary’s accounts before consolidation.

Question

When a client has control over a subsidiary, what is the most appropriate audit procedure to obtain evidence to verify subsidiary accounts before consolidation?
A. Arrange for independent valuation of the assets and liabilities of the subsidiary
B. Be involved in the appointment of the subsidiary auditors
C. Rely on additional work carried out by the internal auditors
D. Send a template of your expectation to subsidiary auditors
E. Provide audit program for the subsidiary auditors

Answer

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Tags: Audit Procedure, Consolidation, Group Audits, Subsidiary Accounts
Level: Level 3

Topic: Group audit
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q15 – Audit Reporting

This question assesses the primary purpose of sending a letter of enquiry to a legal firm regarding client litigation.

Question

The main reasons why auditors send a letter of enquiry to the legal firm handling litigation or claims on behalf of their client is to provide:
A. Auditors with weak position in client litigation and claims
B. Auditors with written submission and statement of claims to the court
C. Information concerning the progress of outstanding cases to date
D. Auditors with corroborative audit evidence
E. Auditors with impact of legal opinion on financial statements

Answer

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Tags: Audit evidence, Legal claims, Letter of Enquiry, Litigation
Level: Level 3

Topic: Audit Reporting
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

Question

Factors that contribute to the weaknesses of local auditing standards include the following EXCEPT:
A. Standard setters being subject to political pressures
B. Having inadequate resources
C. Being insufficiently timed in response to market needs
D. Loss of investment by stakeholders
E. Having sources of fund which raise questions about their independence

Answer

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Tags: Audit Standards, Independence, Local Auditing Standards, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q13 – Environmental and Sustainability Audits

This question assesses the scope of social audit and identifies an area it does not cover.

Question

Social audit has to do with the extent to which a company gets involved and interacts with the society in which it operates. This means that social audit does not extend to ONE of the following:
A. Corporate code of conduct and business ethics
B. Pricing policy, product safety, and quality control
C. Transaction audit
D. Employee health and safety
E. Environmental pollution

Answer

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Tags: Business Ethics, Corporate Responsibility, Environmental audit, Social Audit
Level: Level 3

Topic: Environmental and Sustainability Audits
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

Question

Which of the following is the primary purpose for obtaining an understanding of client’s internal control?
A. Provide a basis for making constructive suggestions in a management letter
B. Determine the nature, timing and extent of tests to be performed in the audit
C. Obtain sufficient and competent evidential matter to afford a reasonable basis for an opinion on the financial statements under examination
D. Provide information for communication of internal control related matters to management
E. Obtain sufficient evidence to afford a basis for an opinion on the financial statements

Answer

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Tags: Audit Planning, Audit strategy, Internal Control
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q11 – Advanced Audit Planning and Strategy

This question tests knowledge of analytical procedures used to produce audit evidence.

Question

Which of the following is an analytical procedure generally used to produce audit evidence?
A. Confirmations mailed directly to the auditor by the client’s customers
B. Physical observation of inventories
C. Relationship among current financial balances and prior balances, forecasts, and non-financial data
D. Detailed examination of external and internal documents
E. Circularisation letters to debtors and creditors of the company

Answer

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Tags: Analytical procedures, Audit evidence, Audit Techniques
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q3 – Law of Contract

Identify the legal term for an auction sale.

Question

An advertisement of auction sale and request for bids is an example of ____________.

Answer

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Tags: Auction, Contracts, Invitation to Treat
Level: Level 1

Topic: Law of Contract
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q2 – Law of Tort

Identify the type of tort committed against a person’s reputation.

Question

A tort which is committed against a person’s reputation is called ____________.

Answer

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Tags: Defamation, Reputation, Torts
Level: Level 1

Topic: Law of Tort
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q1 – Contract Law

Identify the cardinal rules of interpretation in law.

Question

The cardinal rules of interpretation are the literal rule, Ejusdem generis rule, and _________.

Answer

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Tags: Legal Concepts, Rules of Interpretation
Level: Level 1

Topic: Contract Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q20 – Company Law

Identify the document that authorizes directors' remuneration.

Question

A director is not entitled to remuneration unless it is authorized by which of the following documents?

A. The memorandum of association
B. The directors’ manual
C. The company’s handbook
D. The articles of association
E. The shareholders’ book

Answer

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Tags: Company Law, Directors, Remuneration
Level: Level 1

Topic: Company Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q19 – Contract Law

Identify the legal activity that an undischarged bankrupt is not incapacitated from doing.

Question

An undischarged bankrupt is NOT legally incapacitated to do ONE of the following:

A. To marry a wife
B. To be elected into an elective office
C. To be appointed to or to act in the office of a Justice of Peace
D. To be appointed as a trustee of a trust estate
E. To be admitted to serve on a governing board of a statutory institution

Answer

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Tags: Bankruptcy, Legal Incapacities
Level: Level 1

Topic: Contract Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q18 – Law Relating to Banking

Identify which situation does not terminate the banker’s authority to honor a customer’s cheque.

Question

Which of the following circumstances will NOT terminate the banker’s authority to honor a customer’s cheque?

A. Notice of lunacy of the customer
B. Notice of presentation of a bankruptcy petition against the customer
C. Notice of an accident in which the customer is involved
D. Assignment of the balance in his account by the customer
E. Where the customer’s credit balance in the bank is insufficient to cover the cheque

Answer

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Tags: Banking, Cheques, Financial Transactions
Level: Level 1

Topic: Law Relating to Banking
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q17 – Negotiable Instruments

Identify which of the options is not a negotiable instrument.

Question

Which of the following is NOT a negotiable instrument?

A. Credit card
B. Dividend warrants
C. Treasury bills
D. Traveller’s cheques
E. Bearer bonds

Answer

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Tags: Credit Cards, Financial Transactions, Negotiable Instruments
Level: Level 1

Topic: Negotiable Instruments
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q16 – Partnership Law

Identify what information is not required for the registration of a partnership.

Question

Which of the following information is NOT among the particulars required for the registration of a partnership?
A. The firm’s name
B. The general nature of the business
C. The full name of each partner
D. The details of each partner’s bank account
E. The principal place of business

Answer

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Tags: Business Law, Partnership, Registration
Level: Level 1

Topic: Partnership Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q15 – Company Law

Identify which clause limits ultra vires actions in a company.

Question

An act of a company which is considered as ultra vires is that which is not authorized by ONE of the following:
A. Subjects clause
B. Directors clause
C. Authorization clause
D. Shareholders clause
E. Objects clause

Answer

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Tags: Acts of Company, Company Law, Ultra Vires
Level: Level 1

Topic: Company Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q14 – Company Law

Identify what must not be in the Memorandum of Association.

Question

The Memorandum of Association of a company limited by shares must contain all the following EXCEPT:
A. The marital status of the subscribers
B. The name of the company with “Limited” as the last word
C. That the registered office of the company will be situated in Nigeria
D. The objects of the company
E. That the liability of the members is limited

Answer

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Tags: Company Law, Corporate Structure, Memorandum of Association
Level: Level 1

Topic: Company Law
Series: NOV 2012

Series: NOV 2012

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AAA – Nov 2013 – L3 – A – Q20 – Audit of Specialized Industries

This question tests knowledge of reserves that may or may not be reviewed during the audit of a non-life insurance company.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q20 – Audit of Specialized Industries"

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance"

AAA – Nov 2013 – L3 – A – Q18 – Audit Reporting

This question assesses knowledge of the main users of financial reports that auditors focus on.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q18 – Audit Reporting"

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability"

AAA – Nov 2013 – L3 – A – Q16 – Group Audits

This question assesses the appropriate audit procedure for verifying a subsidiary’s accounts before consolidation.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q16 – Group Audits"

AAA – Nov 2013 – L3 – A – Q15 – Audit Reporting

This question assesses the primary purpose of sending a letter of enquiry to a legal firm regarding client litigation.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q15 – Audit Reporting"

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards"

AAA – Nov 2013 – L3 – A – Q13 – Environmental and Sustainability Audits

This question assesses the scope of social audit and identifies an area it does not cover.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q13 – Environmental and Sustainability Audits"

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy"

AAA – Nov 2013 – L3 – A – Q11 – Advanced Audit Planning and Strategy

This question tests knowledge of analytical procedures used to produce audit evidence.

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BL – Nov 2012 – L1 – SA – Q3 – Law of Contract

Identify the legal term for an auction sale.

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BL – Nov 2012 – L1 – SA – Q2 – Law of Tort

Identify the type of tort committed against a person’s reputation.

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BL – Nov 2012 – L1 – SA – Q1 – Contract Law

Identify the cardinal rules of interpretation in law.

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BL – Nov 2012 – L1 – SA – Q20 – Company Law

Identify the document that authorizes directors' remuneration.

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BL – Nov 2012 – L1 – SA – Q19 – Contract Law

Identify the legal activity that an undischarged bankrupt is not incapacitated from doing.

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BL – Nov 2012 – L1 – SA – Q18 – Law Relating to Banking

Identify which situation does not terminate the banker’s authority to honor a customer’s cheque.

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BL – Nov 2012 – L1 – SA – Q17 – Negotiable Instruments

Identify which of the options is not a negotiable instrument.

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BL – Nov 2012 – L1 – SA – Q16 – Partnership Law

Identify what information is not required for the registration of a partnership.

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BL – Nov 2012 – L1 – SA – Q15 – Company Law

Identify which clause limits ultra vires actions in a company.

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BL – Nov 2012 – L1 – SA – Q14 – Company Law

Identify what must not be in the Memorandum of Association.

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