Audit of Public Sector Entities

AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

Question

Greater Tomorrow Foundation (GTF) was established with the aim of providing support to children from disadvantaged backgrounds who wish to participate in sports, such as tennis, athletics, and football. It has benefited the country, with some beneficiaries representing the nation in international competitions.

GTF has a constitution detailing how income can be spent and limits administrative expenditure to one-eighth of its income annually.

GTF’s income comes solely from voluntary donations, including:

Cash collected by volunteers from the public.
Direct donations from generous individuals.

Certain donations specify that the principal amount cannot be spent, with income generated (interest) allocated to specific activities, like providing sports equipment (e.g., footballs, boots, rackets, sportswear, etc.).

Required:

a. Explain FIVE areas of inherent risk in Greater Tomorrow Foundation (GTF) and explain the effect of each risk on the audit approach. (10 Marks)

b. Explain FIVE reasons why the control environment may be weak in GTF. (10 Marks)

Answer

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Tags: Audit Approach, Compliance, Control Environment, Donations, Financial Controls, Inherent Risk, Non-profit
Level: Level 2

Topic: Audit of Public Sector Entities

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

Question

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)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, CAMA Compliance, Ethical Standards, External Audit Services, Terms of Reference
Level: Level 2

Topic: Audit of Public Sector Entities
Series: MAY 2023

AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities

This question focuses on audit areas to consider for not-for-profit organisations and other factors peculiar to their audits.

Question

Savealife Nigeria is the local member of Savealife International, a Non-governmental Donor Agency.

Required:

a) Summarise the main audit areas to consider in relation to the audit of Savealife Nigeria.
(10 Marks)

b) Highlight other factors peculiar to such not-for-profit organisations that the Auditor needs to consider.
(5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Risk, Donations, NGO Audit, Not-for-Profit Organisations, Restricted Funds
Level: Level 2

Topic: Audit of Public Sector Entities
Series: NOV 2016

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

Question

Garkuwa Nigeria Limited is a newly incorporated company that deals in building materials. The Managing Director is engaged on a full-time basis in the running of the business. Other employees are: the accounts officer who keeps the books, the cashier, and two laborers. The company does not maintain inventory records, and inventory is a material item in the financial statements. The Managing Director wants you to advise him on inventory count procedures with a view to ensuring that the methods used at arriving at the inventory value will be satisfactory. The first financial statements of the company are to be made up for the 12 months to December 31, 2021.

a. Advise the Managing Director on how he should organize and carry out the physical inventory count. (9 Marks)
b. State the records and information he should retain in connection with the count. (3 Marks)
c. How should he arrive at the individual values for the various inventory items? (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Internal Controls, Inventory Count, Physical Inventory, Valuation Procedures
Level: Level 2

Topic: Audit of Public Sector Entities
Series: MAY 2022

AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

Question

GTF has a constitution detailing how income can be spent and limits administrative expenditure to one-eighth of its income annually.

GTF’s income comes solely from voluntary donations, including:

Cash collected by volunteers from the public.
Direct donations from generous individuals.

Required:

a. Explain FIVE areas of inherent risk in Greater Tomorrow Foundation (GTF) and explain the effect of each risk on the audit approach. (10 Marks)

b. Explain FIVE reasons why the control environment may be weak in GTF. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Approach, Compliance, Control Environment, Donations, Financial Controls, Inherent Risk, Non-profit
Level: Level 2

Topic: Audit of Public Sector Entities

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

Question

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.

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)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Proposal, CAMA Compliance, Ethical Standards, External Audit Services, Terms of Reference
Level: Level 2

Topic: Audit of Public Sector Entities
Series: MAY 2023

AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities

This question focuses on audit areas to consider for not-for-profit organisations and other factors peculiar to their audits.

Question

Savealife Nigeria is the local member of Savealife International, a Non-governmental Donor Agency.

Required:

a) Summarise the main audit areas to consider in relation to the audit of Savealife Nigeria.
(10 Marks)

b) Highlight other factors peculiar to such not-for-profit organisations that the Auditor needs to consider.
(5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Risk, Donations, NGO Audit, Not-for-Profit Organisations, Restricted Funds
Level: Level 2

Topic: Audit of Public Sector Entities
Series: NOV 2016

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Internal Controls, Inventory Count, Physical Inventory, Valuation Procedures
Level: Level 2

Topic: Audit of Public Sector Entities
Series: MAY 2022

Topic: Audit of Public Sector Entities

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AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities

This question focuses on audit areas to consider for not-for-profit organisations and other factors peculiar to their audits.

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities

This question focuses on audit areas to consider for not-for-profit organisations and other factors peculiar to their audits.

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

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Topic: Audit of Public Sector Entities

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AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

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AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

You're reporting an error for "AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities"

AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities

This question focuses on audit areas to consider for not-for-profit organisations and other factors peculiar to their audits.

You're reporting an error for "AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities"

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

You're reporting an error for "AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities"

AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities

Identify inherent risks in a non-profit organization and assess control environment weaknesses impacting audit approach.

You're reporting an error for "AA – Nov 2023 – L2 – Q4 – Audit of Public Sector Entities"

AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities

Outline external auditor rights, management responsibilities, and ISA requirements in proposal submission.

You're reporting an error for "AA – May 2023 – L2 – SC – Q5 – Audit of Public Sector Entities"

AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities

This question focuses on audit areas to consider for not-for-profit organisations and other factors peculiar to their audits.

You're reporting an error for "AA – Nov 2016 – L2 – Q7 – Audit of Public Sector Entities"

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

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