Audit Reports – NBC Institute

AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards

Explores the auditor's opinion, ISA 200 objectives, audit scope, and regulatory roles in auditing standards compliance.

Question

In an accountancy class on “Audit Opinion in International Standards on Auditing”, Ado, a lecturer at ICAN University, was explaining to the students that the end product of external audit work is the auditor‟s opinion expressed on the financial statements. He stated that a general purpose financial statement was in compliance with the financial reporting framework designed to meet the common financial information needs of a wide variety of users.

The role of audit is to provide a high level of assurance to the users of the financial statements and that it is necessary for users to have confidence that consistent auditing standards have been applied to the audits of financial statements of companies. He went further to explain that the overall objectives of the independent auditor is to ensure that the conduct of an audit is in accordance with International Standards on Auditing. He concluded that the auditor‟s report shall include a section with the heading “Opinion” as stated below
Opinion
We have audited the financial statements of Inajit Plc set out on pages XXX to XXXX which comprise the statement of financial position as at year end date, and the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, the notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of financial position of Inajit Plc as at year end date, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act 2020 and Financial Reporting Council Act,2011. At the end of the lecture a student in the class came to you for further explanation on the topic.
Required:
a. State the objectives of the independent auditor as stated in International Standards on Auditing. (5 Marks)
b. Outline what ISA 200 requires the auditor to do in relation to the audit of financial statements. (10 Marks)
c. Explain the scope of audit as described in the independent auditor’s report. (5 Marks)
d. Highlight the role of regulatory bodies in ensuring that audits are carried out in line with standards. (10 Marks)

Answer

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Tags: Audit Objectives, Audit opinion, Financial Statements, ISA Compliance, Regulatory Standards
Level: Level 2

Topic: Audit Reports
Series: NOV 2022

AA – Nov 2015 – L2 – Q4 – Audit Reports

Discussing the scope of statutory audits, limitations of an audit, and overall audit strategy.

Question

Briefly discuss the following:
a. The scope of the statutory audit as described in the independent auditors’ report. (5 Marks)
b. The main limitations of an audit. (5 Marks)
c. The overall audit strategy. (5 Marks)
d. Understanding the entity and its environment. (5 Marks)

Answer

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Tags: Audit Planning, Audit strategy, Limitations, Statutory Audit
Level: Level 2

Topic: Audit Reports, Planning an Audit
Series: NOV 2015

AA – Nov 2021 – L2 – Q1b – Audit Reports

List the minimum elements required in an auditor's report according to ISA 700.

Question

The auditor’s report is regulated by either the law (CAMA 2020) or regulation (ISA 700).
i. State the minimum elements of the auditor’s report as required by ISA 700. (10 Marks)
ii. Explain briefly the matters to be expressly stated in the report of the auditors of a company to its members on the accounts examined by them as stated in CAMA 2020. (10 Marks)

Answer

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Tags: Audit Standards, Auditor's Report, CAMA 2020, ISA 700
Level: Level 2

Topic: Audit Reports
Series: NOV 2021

AA – Nov 2021 – L2 – Q1a – Audit Reports

Define Key Audit Matters (KAMs) as per ISA 701 and how they are communicated in the auditor’s report.

Question

Independent Auditor’s Report
To The Members Of Fair Deals Limited (Extract)

Key Audit Matters
Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Goodwill
Goodwill under IFRSs: the company is required to annually test the amount of goodwill for impairment. This annual impairment test was significant to our audit because the balance of N3,024,115 as of December 31, 2020 is material to the financial statements. In addition, management’s assessment process is complex and highly judgmental and is based on assumptions, specifically achieving projected revenue which are affected by expected future market or economic conditions, particularly those in the North East zone.
Our audit procedures included, among others, using a valuation expert to assist us in evaluating the assumptions and methodologies used by the company in particular those relating to the forecast revenue growth and profit margins for domestic wares production. We also focused on the adequacy of the company disclosures about those assumptions to which the outcome of the impairment test is most sensitive, that is, those that have the most significant effect on the determination of the recoverable amount of goodwill.

Revenue Recognition
The amount of revenue and profit recognised in the year on the sale of domestic wares and after-market services is dependent on the appropriate assessment of whether or not each long-term after-market contract for services is linked to or separated from the contract for sale of domestic wares. As the commercial arrangements can be complex, significant judgment is applied in selecting the accounting basis in each case. In our view, revenue recognition is significant to our audit as the company might inappropriately account for sales of domestic wares and long-term service agreements as a single arrangement for accounting purposes and this would usually lead to revenue and profit being recognised too early because the margin in the long-term service agreement is usually higher than the margin in the domestic wares sale agreement.
Our audit procedures to address the risk of material misstatement relating to revenue recognition, which was considered to be a significant risk, included:

Testing of controls, assisted by our own IT specialists, including, among others, those over: input of individual advertising campaigns’ terms and pricing; comparison of those terms and pricing data against the related overarching contracts with advertising agencies; and linkage to viewer data;
Detailed analysis of revenue and the timing of its recognition based on expectations derived from our industry knowledge and external market data, following up variances from our expectations.

Abuja, Nigeria (signed)
Date
Chartered Accountants

ISA 701 Communicating key Audit matters in the Independent Auditors Report was introduced to make the auditor’s report more informative and useful for the intended users.

Answer

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Tags: Auditing Standards, Goodwill, ISA 701, Key Audit Matters, Revenue Recognition
Level: Level 2

Topic: Audit Reports
Series: NOV 2021

AA – May 2019 – L2 – Q4 – Audit Reports

Exploration of audit report features, conditions for small company audit exemptions, and scope of statutory audit.

Question

Over time, the annual audit was developed as a way of adding credibility to the financial statements produced by management. The statutory audit is now a key feature of company law throughout the world.

You are required to:

a. Identify and explain THREE key features of an audit report. (12 Marks)

b. Explain the conditions under which a company can be classified as a small company in order to be exempted from an audit. (5 Marks)

c. Identify THREE points that would be included in the scope of the statutory audit as described in the independent auditor’s report. (3 Marks)

Answer

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Tags: Audit report, Audit Scope, Financial Statements, Independent Auditor, Small Company Exemption
Level: Level 2

Topic: Audit Reports
Series: MAY 2019

AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards

Explores the auditor's opinion, ISA 200 objectives, audit scope, and regulatory roles in auditing standards compliance.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Objectives, Audit opinion, Financial Statements, ISA Compliance, Regulatory Standards
Level: Level 2

Topic: Audit Reports
Series: NOV 2022

AA – Nov 2015 – L2 – Q4 – Audit Reports

Discussing the scope of statutory audits, limitations of an audit, and overall audit strategy.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Planning, Audit strategy, Limitations, Statutory Audit
Level: Level 2

Topic: Audit Reports, Planning an Audit
Series: NOV 2015

AA – Nov 2021 – L2 – Q1b – Audit Reports

List the minimum elements required in an auditor's report according to ISA 700.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Standards, Auditor's Report, CAMA 2020, ISA 700
Level: Level 2

Topic: Audit Reports
Series: NOV 2021

AA – Nov 2021 – L2 – Q1a – Audit Reports

Define Key Audit Matters (KAMs) as per ISA 701 and how they are communicated in the auditor’s report.

Question

Independent Auditor’s Report
To The Members Of Fair Deals Limited (Extract)

Testing of controls, assisted by our own IT specialists, including, among others, those over: input of individual advertising campaigns’ terms and pricing; comparison of those terms and pricing data against the related overarching contracts with advertising agencies; and linkage to viewer data;
Detailed analysis of revenue and the timing of its recognition based on expectations derived from our industry knowledge and external market data, following up variances from our expectations.

Abuja, Nigeria (signed)
Date
Chartered Accountants

ISA 701 Communicating key Audit matters in the Independent Auditors Report was introduced to make the auditor’s report more informative and useful for the intended users.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditing Standards, Goodwill, ISA 701, Key Audit Matters, Revenue Recognition
Level: Level 2

Topic: Audit Reports
Series: NOV 2021

AA – May 2019 – L2 – Q4 – Audit Reports

Exploration of audit report features, conditions for small company audit exemptions, and scope of statutory audit.

Question

You are required to:

a. Identify and explain THREE key features of an audit report. (12 Marks)

b. Explain the conditions under which a company can be classified as a small company in order to be exempted from an audit. (5 Marks)

c. Identify THREE points that would be included in the scope of the statutory audit as described in the independent auditor’s report. (3 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit report, Audit Scope, Financial Statements, Independent Auditor, Small Company Exemption
Level: Level 2

Topic: Audit Reports
Series: MAY 2019

Topic: Audit Reports

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AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards

Explores the auditor's opinion, ISA 200 objectives, audit scope, and regulatory roles in auditing standards compliance.

AA – Nov 2015 – L2 – Q4 – Audit Reports

Discussing the scope of statutory audits, limitations of an audit, and overall audit strategy.

AA – Nov 2021 – L2 – Q1b – Audit Reports

List the minimum elements required in an auditor's report according to ISA 700.

AA – Nov 2021 – L2 – Q1a – Audit Reports

Define Key Audit Matters (KAMs) as per ISA 701 and how they are communicated in the auditor’s report.

AA – May 2019 – L2 – Q4 – Audit Reports

Exploration of audit report features, conditions for small company audit exemptions, and scope of statutory audit.

AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards

Explores the auditor's opinion, ISA 200 objectives, audit scope, and regulatory roles in auditing standards compliance.

AA – Nov 2015 – L2 – Q4 – Audit Reports

Discussing the scope of statutory audits, limitations of an audit, and overall audit strategy.

AA – Nov 2021 – L2 – Q1b – Audit Reports

List the minimum elements required in an auditor's report according to ISA 700.

AA – Nov 2021 – L2 – Q1a – Audit Reports

Define Key Audit Matters (KAMs) as per ISA 701 and how they are communicated in the auditor’s report.

AA – May 2019 – L2 – Q4 – Audit Reports

Exploration of audit report features, conditions for small company audit exemptions, and scope of statutory audit.

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AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards

Explores the auditor's opinion, ISA 200 objectives, audit scope, and regulatory roles in auditing standards compliance.

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AA – Nov 2015 – L2 – Q4 – Audit Reports

Discussing the scope of statutory audits, limitations of an audit, and overall audit strategy.

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AA – Nov 2021 – L2 – Q1b – Audit Reports

List the minimum elements required in an auditor's report according to ISA 700.

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AA – Nov 2021 – L2 – Q1a – Audit Reports

Define Key Audit Matters (KAMs) as per ISA 701 and how they are communicated in the auditor’s report.

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AA – May 2019 – L2 – Q4 – Audit Reports

Exploration of audit report features, conditions for small company audit exemptions, and scope of statutory audit.

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AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards

Explores the auditor's opinion, ISA 200 objectives, audit scope, and regulatory roles in auditing standards compliance.

You're reporting an error for "AA – Nov 2022 – L2 – Q1 – Audit Opinion and Standards"

AA – Nov 2015 – L2 – Q4 – Audit Reports

Discussing the scope of statutory audits, limitations of an audit, and overall audit strategy.

You're reporting an error for "AA – Nov 2015 – L2 – Q4 – Audit Reports"

AA – Nov 2021 – L2 – Q1b – Audit Reports

List the minimum elements required in an auditor's report according to ISA 700.

You're reporting an error for "AA – Nov 2021 – L2 – Q1b – Audit Reports"

AA – Nov 2021 – L2 – Q1a – Audit Reports

Define Key Audit Matters (KAMs) as per ISA 701 and how they are communicated in the auditor’s report.

You're reporting an error for "AA – Nov 2021 – L2 – Q1a – Audit Reports"

AA – May 2019 – L2 – Q4 – Audit Reports

Exploration of audit report features, conditions for small company audit exemptions, and scope of statutory audit.

You're reporting an error for "AA – May 2019 – L2 – Q4 – Audit Reports"

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