Topic: Regulatory Framework and Audit Responsibilities

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AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

Question

c) Reasonable assurance is the highest level of assurance auditors may provide. However, due to the limitations of auditing, it is impossible to guarantee ‘absolute’ assurance. Some users of financial statements, however, have the misconception that an audit provides absolute assurance and that the audit opinion guarantees that the financial statements are ‘accurate.’ The ‘Expectations Gap’ refers to these and other misunderstandings regarding the work of an auditor.

Required:
i) State FOUR (4) inherent limitations of an audit that makes it impossible to provide ‘absolute’ assurance.

(6 marks)
ii) State THREE (3) misconceptions about the role an auditor plays. (4 marks)

Answer

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Tags: Audit Expectations, Audit Limitations, Misconceptions, Reasonable Assurance
Level: Level 2

Topic: Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities
Series: JULY 2023

AA – July 2023 – L2 – Q2a – Regulatory Framework and Audit Responsibilities

Procedures for appointing a new auditor after a conflict of interest at AWS Bank Plc.

Question

a) AWS Bank Plc has one of their non-executive directors as a partner with their external auditors. This was known after a due diligence was conducted by Bank of Ghana (BoG) and later reported to the directors of AWS Bank Plc. BoG has advised the directors of the bank to take the necessary action within a month.

Required:
What procedures should the Directors of AWS Bank Plc take in appointing the new Auditor? (5 marks)

Answer

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Tags: Audit Procedures, Auditor appointment, Bank of Ghana, Corporate Governance
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: JULY 2023

AA – Nov 2017 – L2 – Q1b – Regulatory Framework and Audit Responsibilities

Explain why it is important for audits to be conducted in accordance with common auditing standards.

Question

Auditors are regulated by professional bodies and should follow recognised auditing standards such as International Standards on Auditing (ISAs).

Required:
Explain why it is important for audits to be conducted in accordance with Auditing Standards that are common to all audits.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Consistency, Audit quality, Auditing Standards, Financial Statements, Professional Bodies, Regulatory Framework
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2017

AA – Nov 2020 – L2 – Q5b – Regulatory Framework and Audit Responsibilities

List preconditions to assess before accepting an audit engagement.

Question

The objective of the auditor per ISA 210: Agreeing the terms of audit engagements is to accept or continue an audit engagement only when the basis upon which it is to be performed has been agreed. One way to do this is to establish whether the preconditions for an audit are present.

Required:
What are the preconditions to be assessed?
(5 marks)

Answer

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Tags: Acceptance Criteria, Audit Preconditions, Financial Reporting Framework, ISA 210, Management responsibilities
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2020

AA – Nov 2020 – L2 – Q5a – Regulatory Framework and Audit Responsibilities

Explain the purpose of an engagement letter and key information it should contain.

Question

ISA 210: Agreeing the terms of audit engagements requires that auditors should issue a letter of engagement before commencement of the audit.

Required:
i) What is the purpose of an engagement letter?
(1 mark)

ii) Identify FOUR (4) important pieces of information that the engagement letter should contain.
(4 marks)

Answer

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Tags: Audit Objectives, Audit Terms, Engagement letter, ISA 210, Responsibilities

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2020

AA – Dec 2022 – L2 – Q5a – Regulatory Framework and Audit Responsibilities

Outlines four rights that auditors have to effectively carry out their duties.

Question

Auditors have various duties to perform in their role as auditors, for example, to express an opinion regarding the truth and fairness of the financial statements.

Required:
State FOUR (4) rights that enable auditors to carry out their duties.

Answer

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Tags: Access to Information, Audit Process, Auditor's Rights, Corporate Governance
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: DEC 2022

AA – Nov 2015 – L2 – Q4 – Professional and Ethical Considerations, Regulatory Framework and Audit Responsibilities

Identifying threats to independence, resolving those threats, and determining whether to accept an audit appointment.

Question

You work for a firm of accountants and auditors which has eight partners. The audit firm has been invited by the Managing Director (MD) and majority shareholder of Wellbeing Co. to accept appointment as statutory auditor of the company, replacing the current firm of auditors who will not be re-appointed.

The principal activity of Wellbeing Co. is the manufacture and distribution of healthcare products. Your firm has several companies operating in the healthcare sector in its client portfolio.

The MD of Wellbeing has requested that your firm assists with the preparation of the company’s tax computation and provides consultancy services on an ongoing basis in connection with his plans to grow the business.

The MD has also suggested that a partner in your firm joins the board of Wellbeing Co. as a non-executive director.

Required:

a) Identify and explain the threats to independence and objectivity which may arise from the provision of the services requested by the Wellbeing MD, and state how these threats should be resolved.
(8 marks)

b) Describe the matters, other than independence and objectivity, to be considered and the procedures to be performed in order to determine whether it is appropriate for your firm to accept appointment as statutory auditor of Wellbeing Co.
(7 marks)

c) Set out the benefits to audit firms and their clients of having audit and non-audit services provided by the same firm of accountants.
(5 marks)

Answer

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Tags: Auditor Independence, Consultancy Services, Non-Audit Services, Objectivity, Statutory Auditor
Level: Level 2

Topic: Professional and Ethical Considerations, Regulatory Framework and Audit Responsibilities
Series: NOV 2015

AA – May 2017 – L2 – Q1c – Regulatory Framework and Audit Responsibilities

Explanation of five duties and rights of auditors under the Companies Act, 1963 (Act 179).

Question

Briefly explain FIVE duties and FIVE rights of an auditor under Section 136 of the Companies Act, 1963 (Act 179).

Answer

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Tags: Auditor Duties, Auditor Rights, Companies Act, Corporate Governance
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: MAY 2017

AA – Nov 2016 – L2 – Q4c – Regulatory Framework and Audit Responsibilities

Outline the procedures for appointing auditors according to the Companies Act.

Question

Outline the procedures for the appointment of auditors in accordance with the Companies Act 1963 (Act 179). (8 marks)

Answer

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Tags: Auditor appointment, Companies Act, Procedures
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2016

AA – May 2020 – L2 – Q5b – Regulatory Framework and Audit Responsibilities

Outline the procedures for communicating deficiencies in internal controls to those charged with governance.

Question

You have completed the audit of ABC Ltd for the year ended October 31, 2019.

Required:
i) Outline the procedures for communicating deficiencies in internal controls to those charged with governance and management. (6 marks)

ii) Illustrate how the deficiencies are reported. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Communication, Deficiency Reporting, Internal Controls, ISA 265
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: MAY 2020

AA – July 2023 – L2 – Q2c – Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities

Identification of inherent limitations of audit and misconceptions regarding the role of an auditor.

Question

Required:
i) State FOUR (4) inherent limitations of an audit that makes it impossible to provide ‘absolute’ assurance.

(6 marks)
ii) State THREE (3) misconceptions about the role an auditor plays. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Expectations, Audit Limitations, Misconceptions, Reasonable Assurance
Level: Level 2

Topic: Audit Failure and Expectation Gap, Regulatory Framework and Audit Responsibilities
Series: JULY 2023

AA – July 2023 – L2 – Q2a – Regulatory Framework and Audit Responsibilities

Procedures for appointing a new auditor after a conflict of interest at AWS Bank Plc.

Question

Required:
What procedures should the Directors of AWS Bank Plc take in appointing the new Auditor? (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Auditor appointment, Bank of Ghana, Corporate Governance
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: JULY 2023

AA – Nov 2017 – L2 – Q1b – Regulatory Framework and Audit Responsibilities

Explain why it is important for audits to be conducted in accordance with common auditing standards.

Question

Auditors are regulated by professional bodies and should follow recognised auditing standards such as International Standards on Auditing (ISAs).

Required:
Explain why it is important for audits to be conducted in accordance with Auditing Standards that are common to all audits.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Consistency, Audit quality, Auditing Standards, Financial Statements, Professional Bodies, Regulatory Framework
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2017

AA – Nov 2020 – L2 – Q5b – Regulatory Framework and Audit Responsibilities

List preconditions to assess before accepting an audit engagement.

Question

Required:
What are the preconditions to be assessed?
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Acceptance Criteria, Audit Preconditions, Financial Reporting Framework, ISA 210, Management responsibilities
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2020

AA – Nov 2020 – L2 – Q5a – Regulatory Framework and Audit Responsibilities

Explain the purpose of an engagement letter and key information it should contain.

Question

ISA 210: Agreeing the terms of audit engagements requires that auditors should issue a letter of engagement before commencement of the audit.

Required:
i) What is the purpose of an engagement letter?
(1 mark)

ii) Identify FOUR (4) important pieces of information that the engagement letter should contain.
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Objectives, Audit Terms, Engagement letter, ISA 210, Responsibilities

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2020

AA – Dec 2022 – L2 – Q5a – Regulatory Framework and Audit Responsibilities

Outlines four rights that auditors have to effectively carry out their duties.

Question

Auditors have various duties to perform in their role as auditors, for example, to express an opinion regarding the truth and fairness of the financial statements.

Required:
State FOUR (4) rights that enable auditors to carry out their duties.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Access to Information, Audit Process, Auditor's Rights, Corporate Governance
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: DEC 2022

AA – Nov 2015 – L2 – Q4 – Professional and Ethical Considerations, Regulatory Framework and Audit Responsibilities

Identifying threats to independence, resolving those threats, and determining whether to accept an audit appointment.

Question

The principal activity of Wellbeing Co. is the manufacture and distribution of healthcare products. Your firm has several companies operating in the healthcare sector in its client portfolio.

The MD has also suggested that a partner in your firm joins the board of Wellbeing Co. as a non-executive director.

Required:

c) Set out the benefits to audit firms and their clients of having audit and non-audit services provided by the same firm of accountants.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Independence, Consultancy Services, Non-Audit Services, Objectivity, Statutory Auditor
Level: Level 2

Topic: Professional and Ethical Considerations, Regulatory Framework and Audit Responsibilities
Series: NOV 2015

AA – May 2017 – L2 – Q1c – Regulatory Framework and Audit Responsibilities

Explanation of five duties and rights of auditors under the Companies Act, 1963 (Act 179).

Question

Briefly explain FIVE duties and FIVE rights of an auditor under Section 136 of the Companies Act, 1963 (Act 179).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor Duties, Auditor Rights, Companies Act, Corporate Governance
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: MAY 2017

AA – Nov 2016 – L2 – Q4c – Regulatory Framework and Audit Responsibilities

Outline the procedures for appointing auditors according to the Companies Act.

Question

Outline the procedures for the appointment of auditors in accordance with the Companies Act 1963 (Act 179). (8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Auditor appointment, Companies Act, Procedures
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2016

AA – May 2020 – L2 – Q5b – Regulatory Framework and Audit Responsibilities

Outline the procedures for communicating deficiencies in internal controls to those charged with governance.

Question

You have completed the audit of ABC Ltd for the year ended October 31, 2019.

Required:
i) Outline the procedures for communicating deficiencies in internal controls to those charged with governance and management. (6 marks)

ii) Illustrate how the deficiencies are reported. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Communication, Deficiency Reporting, Internal Controls, ISA 265
Level: Level 2