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Which of the following is the most appropriate objective of audit review?
A. Frauds and errors do not occur in an audit engagement
B. The audit is completed early for the report to be used
C. The audit is performed with the highest standard of quality
D. To ensure that appropriate bill is sent to the client
E. No dispute arises between the firm and the client
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Quality control in audit is maintained by professional accountancy bodies through all the following EXCEPT:
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The partners of a number of small firms, some of whom act as alternate firms to each other, were considering the outcome of some reviews by the Financial Reporting Council on some of the financial statements the firms prepared. These reviews showed significant lapses in the works they carried out and compliance failure of some appropriate standards. Some other practitioners among them also raised concerns about their failure to meet most of the monitoring guidelines issued by the Professional Practice Monitoring Committee of the Institute. Based on these, it has become imperative that something has to be done urgently to save them from further sanctions and possible litigations.
The partners of these small firms have consulted, sought, and obtained approval of your firm to train them on the requirements of relevant regulatory bodies as part of your firm’s contribution to the accountancy profession in general and in recognition of your firm as one of the reputable big firms. Your partner has directed that you prepare and make a presentation to help improve their service delivery standards.
Required:
Prepare an outline for a paper that will be used to address these practitioners on the following:
a. The consequences and actions that could arise as a result of poor quality professional service delivery.
(3 Marks)
b. The responsibilities of “key quality control matters” placed on the engagement partner in accordance with ISA 220-Quality Control for an Audit of Financial Statements. (12 Marks)
(Total 15 Marks)
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Bode, Ugo, Musa and Company is a firm of Chartered Accountants that has existed for over 20 years and achieved a strong reputation for quality audit work. The firm has expanded significantly over the past ten years – doubling its client base across different sectors of the Nigerian economy. The firm currently audits two banks, five listed entities, and over seventy other companies. It has also increased its audit staff base and grown the number of its partners from two to seven over the same period.
However, in the last two years, the firm has had a series of regulatory reviews due to several instances of errors noted in some financial statements audited by the firm. One of the clients, the shareholders of NigerKap Plc, petitioned the regulator over a misstatement in the value of their investment property. This resulted in an overstatement of profit and overpayment of taxes by the company based on the financial statements for the year ended December 31, 2015. The shareholders also threatened to take legal action against the firm.
The Managing Partner (MP) of the firm is very concerned about this situation and has commenced internal procedures to evaluate the quality of audits performed by the firm, especially for the NigerKap audit of 2015. A committee has been set up…
Required:
Discuss the internal procedures that Bode, Ugo, Musa and Company should implement to improve audit quality and prevent further regulatory issues.
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
Which of the following is the most appropriate objective of audit review?
A. Frauds and errors do not occur in an audit engagement
B. The audit is completed early for the report to be used
C. The audit is performed with the highest standard of quality
D. To ensure that appropriate bill is sent to the client
E. No dispute arises between the firm and the client
Find Related Questions by Tags, levels, etc.
Quality control in audit is maintained by professional accountancy bodies through all the following EXCEPT:
Find Related Questions by Tags, levels, etc.
The partners of a number of small firms, some of whom act as alternate firms to each other, were considering the outcome of some reviews by the Financial Reporting Council on some of the financial statements the firms prepared. These reviews showed significant lapses in the works they carried out and compliance failure of some appropriate standards. Some other practitioners among them also raised concerns about their failure to meet most of the monitoring guidelines issued by the Professional Practice Monitoring Committee of the Institute. Based on these, it has become imperative that something has to be done urgently to save them from further sanctions and possible litigations.
The partners of these small firms have consulted, sought, and obtained approval of your firm to train them on the requirements of relevant regulatory bodies as part of your firm’s contribution to the accountancy profession in general and in recognition of your firm as one of the reputable big firms. Your partner has directed that you prepare and make a presentation to help improve their service delivery standards.
Required:
Prepare an outline for a paper that will be used to address these practitioners on the following:
a. The consequences and actions that could arise as a result of poor quality professional service delivery.
(3 Marks)
b. The responsibilities of “key quality control matters” placed on the engagement partner in accordance with ISA 220-Quality Control for an Audit of Financial Statements. (12 Marks)
(Total 15 Marks)
Find Related Questions by Tags, levels, etc.
Bode, Ugo, Musa and Company is a firm of Chartered Accountants that has existed for over 20 years and achieved a strong reputation for quality audit work. The firm has expanded significantly over the past ten years – doubling its client base across different sectors of the Nigerian economy. The firm currently audits two banks, five listed entities, and over seventy other companies. It has also increased its audit staff base and grown the number of its partners from two to seven over the same period.
However, in the last two years, the firm has had a series of regulatory reviews due to several instances of errors noted in some financial statements audited by the firm. One of the clients, the shareholders of NigerKap Plc, petitioned the regulator over a misstatement in the value of their investment property. This resulted in an overstatement of profit and overpayment of taxes by the company based on the financial statements for the year ended December 31, 2015. The shareholders also threatened to take legal action against the firm.
The Managing Partner (MP) of the firm is very concerned about this situation and has commenced internal procedures to evaluate the quality of audits performed by the firm, especially for the NigerKap audit of 2015. A committee has been set up…
Required:
Discuss the internal procedures that Bode, Ugo, Musa and Company should implement to improve audit quality and prevent further regulatory issues.
Find Related Questions by Tags, levels, etc.
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