Topic: Regulatory Framework and Professional Standards

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AAA – May 2023 – L3 – Q6 – Regulatory Framework and Professional Standards

Evaluate the principles of the Nigerian Data Protection Regulation and discuss its requirements in an audit context.

Question

The audit of one of your firm’s new clients is ongoing. Review and compliance procedures were being carried out by the audit team. There were unsatisfactory issues with some of the data generated for use in the testing process. These issues were escalated, and it became necessary to bring in the firm’s IT specialists for confirmation purposes. With your competence in this area, you were asked to provide the necessary guidance and assurance needed by the audit team.

Required:

(a) Evaluate the components of the governing principles of the Nigerian Data Protection Regulation, 2019, as applicable in the circumstance. (6 Marks)

(b) Discuss the requirements of the data protection framework. (9 Marks)

Answer

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Tags: Audit Compliance, Data protection, IT Assurance, Nigerian Data Protection Regulation
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

Question

In compliance with ISA 250 “Consideration of Laws and Regulations in an Audit of Financial Statements,” the auditor shall conduct the audit in a manner that gives them confidence that the client has met all legal requirements of the country in which it operates.

As the Audit Partner in charge of APB Manufacturing Plc, you are required to:

a. Identify and clarify SIX steps that ISA 250 requires of you in ascertaining that the company complies with all applicable laws and regulations. (9 Marks)
b. State and explain FOUR procedural actions you will take in the event that the company failed to comply, in material areas, with applicable laws and regulations. (6 Marks)

Answer

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Tags: Audit Procedures, Compliance Testing, ISA 250, Legal Requirements, Non-Compliance Actions
Level: Level 3

Topic: Regulatory Framework and Professional Standards

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 – Q9 – Regulatory Framework and Professional Standards

This question tests understanding of the required components of IFRS-compliant financial statements.

Question

Which of the following is NOT required as part of Financial Statements that are International Financial Reporting Standards (IFRS) compliant?
A. Statement of financial position
B. Statement of cash flows
C. Account receivable
D. Chairman’s statement
E. Non-current assets

Answer

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Tags: Financial Statements, IFRS Compliance, Reporting Standards
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2013

AAA – Nov 2013 – L3 – A – Q3 – Regulatory Framework and Professional Standards

This question assesses knowledge of the organizations represented on the Board of the Financial Reporting Council of Nigeria.

Question

Which of the following organisations has no representation on the Board of the Financial Reporting Council of Nigeria?
A. Chartered Institute of Taxation of Nigeria
B. Chartered Institute of Stockbrokers
C. Nigerian Institute of Bankers
D. Nigerian Institute of Estate Surveyors and Valuers
E. National Insurance Commission

Answer

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Tags: Financial Reporting, Governance, Professional Standards, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

Question

One of the major deficiencies of our Local Standards over IFRS’s presentation of Non-current Assets is that our Local Standards do not recognise ……………. process.

Answer

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Tags: Accounting Standards, IFRS, Local Standards, Non-current Assets, Regulatory Differences
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q7 – Regulatory Framework and Professional Standards

Defines the role of a chartered accountant reporting under CAMA and NSE listing requirements.

Question

A chartered accountant in public practice, who is engaged to report under the relevant provisions of the Companies and Allied Matters Act, CAP. C20, LFN 2004, and the listing requirements of the Nigerian Stock Exchange is known as …………….

Answer

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Tags: CAMA, Chartered Accountant, Nigerian Stock Exchange, Public Practice, Reporting Requirements
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

Question

The audited financial statements of every company must be filed with the ……………………

Answer

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Tags: Audit Standards, Corporate Governance, Filing Requirements, Financial Statements, Regulatory Compliance
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

Question

According to ISA 320, the auditor is expected to treat information as IMMATERIAL if:

A. Its omission could influence the economic decision of users based on the financial statement
B. Its misstatement could alter the decision of stakeholders based on the financial statements
C. Its omission is within the audit objective
D. Its misstatement will make an audit objective to be defeated
E. Its omission threatens the going concern of the organisation

Answer

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Tags: Audit Standards, Financial Statements, Immaterial Information, ISA 320, Materiality
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q11 – Regulatory Framework and Professional Standards

Identifying impacts not associated with the Due Process Review in contract awarding.

Question

The impact of Due Process Review EXCLUDES:

A. Recognition of competent contractors
B. Recognition and reinstatement of rightful contract winners
C. Elimination of middlemen in contract awards
D. Elimination of doubt in the ability of the contractor
E. Elimination of businessmen in contract awards

Answer

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Tags: Contract Awards, Contractor Evaluation, Due Process, Regulatory Compliance
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifying an invalid statement about the benefits and use of IFRS.

Question

Which of the statements listed below about IFRS is invalid?

A. Multinational should benefit from a number of cost savings when using IFRS
B. Companies that wish to reach a wider group of investors will find financial statements based on IFRS acceptable in all major markets
C. Using IFRS will make it easier, though more expensive, to have secondary listing in other countries of the world
D. Using the same accounting basis provides greater comparability between companies which will lead to more efficient investment
E. The original standard setter between (1973-2000) was International Accounting Standard Committee (IASC)

Answer

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Tags: Accounting Standards, Financial Reporting, IFRS, International Standards
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2012 – L3 – SA – Q6 – Regulatory Framework and Professional Standards

Responsibilities and regulatory compliance of auditors conducting transnational audits.

Question

Auditors that carry out transnational audit usually belong to multinational firms and as such are:

A. Independent of the local laws and regulations
B. Not expected to operate under the professional rules of any particular country
C. Not accountable to any supervisory body
D. Expected to buy the shares of the multinational corporations to gain entry into the country
E. Operating subject to national laws and professional values in more than one country

Answer

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Tags: Multinational Firms, Professional Standards, Regulatory Framework, Transnational Audit
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q4 – Regulatory Framework and Professional Standards

Identifying non-deficiencies of historical cost accounting in inflation periods.

Question

The deficiencies of historical cost accounting during inflation EXCLUDE which of the following?
A. The Net Book Value of Fixed Assets is often substantially below their current value
B. The statement of financial position figure of stock reflects prices ruling at the date of purchase or manufacture rather than those current at the year end
C. Charges made in arriving at the profit do not reflect the current value of assets, which result in overstated profit in real terms
D. If the historical cost accounting profit were distributed in full, the level of operations would have to be curtailed
E. The understatement of profit and the overstatement of assets prevent meaningful calculations of profitability

Answer

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Tags: Financial Statements, Historical Cost, Inflation Accounting, Profit Overstatement
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q3 – Regulatory Framework and Professional Standards

Identifying non-responsibilities of directors related to accounting functions in a company.

Question

The responsibilities of the directors in relation to the accounting functions of the company fall under the following EXCEPT:
A. Safeguarding the company’s assets and preventing errors and fraud in the company
B. Defining the concept of materiality and tolerable error as a guide to the auditor
C. Ensuring that the company keeps proper accounting records as defined in the legislations
D. Setting up internal control system in the company as a standard practice
E. Preparing the financial statements to show the results of the company for the year and financial position as at year-end

Answer

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Tags: Accounting Functions, Directors' Responsibilities, Financial Statements, Internal Control
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q1 – Regulatory Framework and Professional Standards

Understanding conditions under which an auditor may disclose client’s confidential information.

Question

An auditor can disclose the client’s confidential information for the following reasons EXCEPT:
A. Auditor suspects that the client has committed treason
B. When there is a public duty to disclose
C. Disclosure is needed to protect the auditor’s interest
D. When the client has committed an act of felony
E. When information is formally requested by another client

Answer

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Tags: Auditor’s Disclosure, Confidentiality, Ethics, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2011 – L3 – SB – Q2 – Regulatory Framework and Professional Standards

Overview and impact of the Sarbanes-Oxley Act on corporate accountability and self-regulation.

Question

The Sarbanes-Oxley Act of 2002, enacted in the United States to guide and regulate the work of accountants and auditors, raised issues about the culture of self-regulation in the accounting profession.

You are required to:

(a) State the reason for its enactment and issues covered therein.
(2 Marks)

(b) State its main provisions that relate to corporate accountability.
(8 Marks)

Answer

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Tags: Corporate Accountability, Corporate Scandals, Public Companies, Sarbanes-Oxley Act, Self-regulation
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q11 – Regulatory Framework and Professional Standards

Definition of audit procedure statements by accountancy bodies.

Question

Statements by professional accountancy bodies stating the basic procedures to be adopted when conducting an audit assignment are called………………..

Answer

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Tags: Audit Procedures, Professional Standards, Regulatory Statements
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SAII – Q5 – Regulatory Framework and Professional Standards

ICAN's authority to discipline members for ethical breaches.

Question

The power of The Institute of Chartered Accountants of Nigeria to initiate disciplinary action against any member who has run foul of ethical standards rests with……………………….

Answer

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Tags: Disciplinary Action, Ethical Standards, ICAN Authority, Professional Conduct
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2011 – L3 – SA – Q9 – Regulatory Framework and Professional Standards

Identifies an entity not affecting the audit of financial statements in Nigeria.

Question

The audit of financial statements in Nigeria is not affected by ONE of the following:

A. Securities and Exchange Commission
B. Auditing Standards
C. Nigerian Accounting Standard Board
D. The Institute of Chartered Accountants of Nigeria
E. Auditing Exposure Drafts

Answer

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Tags: Audit Oversight, Auditing Standards, Financial Statement Audit, Nigerian Regulations
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2011

AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

Question

You are a manager in Obuns & Co, a firm of Chartered Accountants, responsible for the audit of Akudre Plc, a listed entity, for the year ended 31 May 2020. The company operates in the textile industry and manufactures a range of goods, including clothing, linen, and soft furnishings. Akudre Plc employs approximately 750 sales staff across the country who sell the company’s products to both households and small to medium-sized businesses. Around 75% of Akudre Plc’s sales transactions are cash-based, and each sales staff member prepares a monthly cash sales report.

According to Akudre Plc’s CEO, Adu Oke, each staff member (including senior management) is encouraged to make cash sales on a commission basis to friends and family. Mr. Oke recently sold products worth N4,000,000 to business associates, depositing these funds into an offshore bank account under his sole control.

Review of Audit Working Papers:
A review of the audit working papers and an initial meeting with Mr. Oke revealed these issues:

Obuns & Co performed tax computations for Akudre Plc and completed tax returns for the company and Mr. Oke, invoiced as part of the total fee for audit and professional services. Mr. Oke’s personal tax return reflects numerous property transactions across international locations, which are detailed in off-shore accounts.

Financing Issue:
The audit committee has requested the audit engagement partner attend a post-audit meeting with the company’s bank officials, including the CFO and a representative from the audit committee, to renegotiate Akudre Plc’s lending facility. The audit partner is expected to confirm the company’s financial stability and verify that going concern procedures, including cash flow forecasts, were audited.

Required:
a. Discuss the policies and procedures which Obuns & Co. should have in place in relation to an anti-money laundering programme. (5 Marks)
b. Evaluate whether there are any indicators of money laundering activities by Akudre Plc or its staff. (4 Marks)
c. Describe the requirements of ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements. (5 Marks)
d. Discuss the actions required when an auditor identifies or suspects material instances of non-compliance by a client under ISA 250. (5 Marks)
e. Identify and evaluate any ethical threats and professional issues arising from the audit committee’s request for the audit engagement partner to attend the financing meeting. (3 Marks)
f. If loan finance is essential for the company’s survival and uncertainty exists regarding agreement finalization, evaluate additional audit procedures to ascertain if a material uncertainty exists. (10 Marks)
g. Evaluate the impact on the audit report in these scenarios:

i. Going concern assumption is appropriate, but material uncertainty exists.
ii. Going concern assumption is appropriate, material uncertainty exists, and disclosures are adequate.
iii. Going concern assumption is appropriate, material uncertainty exists, but disclosures are inadequate.
iv. Going concern assumption is inappropriate. (8 Marks)

Answer

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Tags: Anti-Money Laundering, Audit Procedures, Compliance, Ethical Threats, Going Concern, ISA 250
Level: Level 3