Regulatory Framework for Auditing

AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing

Examination of factors for audit acceptance, stages in auditing, and roles of ICAN and FGN in audit regulation.

Question

The partners of Integrity Professional Services have just obtained their practicing licenses from the Institute. The professional service firm has decided to engage in audit, taxation, and consulting services. The firm has secured the approval of shareholders of some companies to be their auditors.

In view of the development, interested candidates have been invited to submit applications for appointment as audit seniors in the firm. You were shortlisted for an interview:

Required:

a. Explain the factors to be considered before accepting the audit of a company. (4 Marks)

b. Describe the stages in an audit of a company. (6 Marks)

c. Discuss the different roles of the Institute of Chartered Accountants of Nigeria (ICAN) and the Federal Government of Nigeria (FGN) in the regulation of external audit. (10 Marks)

Answer

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Tags: Audit Acceptance, External Audit Regulation, ICAN, Stages in Audit
Level: Level 2

Topic: Regulatory Framework for Auditing
Series: MAY 2021

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

Question

Chukwuemeka & Co. (Chartered Accountants) has been auditors to GED Manufacturing Nigeria Plc. There have been some regulatory and compliance issues for which the company was sanctioned and paid penalties to the Financial Reporting Council of Nigeria.

At the board of directors meeting to consider the last annual report audited by the firm, some of the previous problems caused by the auditors were raised and discussed. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm.

To achieve their objective, a bigger firm that has international affiliation was considered to take a leading role in a joint audit arrangement and to ensure appropriate compliance. Your firm has been approached for the appointment. A meeting was scheduled between your firm, Chukwuemeka & Co., and the executive management of GED Manufacturing Nigeria Plc.

After the meeting, your firm was subsequently appointed, and the necessary formalities were properly followed. Your partner has directed that you liaise with Chukwuemeka & Co. to obtain the necessary materials for the preparation of the audit and that you review the prior year working papers to understand the issues. Your assessment of the documents obtained from the other auditor revealed the following, amongst others:

(i) The work done on the process of dispatch of goods and invoicing was not considered sufficient and appropriate.

(ii) The IT operations of the company had weak controls such that it was possible for some staff to override some of the existing controls.

Required:

a. Explain the risks inherent in the dispatch of goods and invoicing. (10 Marks)

b. Discuss the control objectives and principal controls that are relevant to the process of dispatch of goods and invoicing. (10 Marks)

c. Explain the limitations of a joint audit. (5 Marks)

d. Discuss the benefits of audit carried out by an internationally affiliated audit firm. (10 Marks)

e. Explain briefly the importance of audit working papers. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit risks, Auditor Independence, Compliance, Internal Control, Joint Audit
Level: Level 2

Topic: Regulatory Framework for Auditing
Series: MAY 2021

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Mr. Ajibade, a businessman based in the South West region of Nigeria intends to start a new company. The new company, when formed, will focus solely on the production of face masks and alcohol-based hand sanitisers which are needed to prevent the spread of the novel corona virus. This has been incorporated into the draft Memorandum of Association to be submitted to the Corporate Affairs Commission (CAC).

Mr. Ajibade has heard of section 377 of Companies and Allied Matters Act (CAMA) Cap C20 LFN 2004, which offers exemption from an audit if a company qualifies as a small company as per section 351 of the Act. He thinks that when he starts a small company, he will therefore be exempted from statutory audit and so save cost.

Mr. Ajibade has a growth plan for his prospective company. He has also heard that if the company is to grow bigger in the future, he will require more funding in the form of loans from banks and other financial institutions. The banks will require audited financial statements as a prerequisite to granting his company loan facilities. He is therefore, curious to know more about the importance of audited financial statements.
He has approached you for advice.

Required:
a. What qualifies a company as a small company according to CAMA.
(6 Marks)
b. The benefits and limitations of an audit.
(9 Marks)
c. The eligibility for qualification as external auditor.
(6 Marks)
d. The scope of a statutory audit.
(4 Marks)
e. According to ISA 300: Planning an Audit of Financial Statements, the objective of the auditor is to plan the audit work so that the audit will be performed in an effective manner.
Required:
Explain the benefits of adequate planning of the audit.
(5 Marks)
f. Explain THREE risk assessment procedures required by ISA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
(10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit

Explains and provides examples for different types of audits including forensic, information systems, compliance, and value for money audits.

Question

During a debate session, there were arguments among the accountancy students of the University of Kunu that the quality of audit work performed recently did not portray accountancy professionals as men of integrity. In their opinion, most financial malpractice committed by members of staff of a company are not detected by the auditors at the time of their audit and this causes corporate failures or leaves the shareholders with little or no return on their investments.

It is obvious that most students are unclear about the various types of audit. They all agreed that an informed person should be invited to educate members of the association on this topic. As an ex-student of University of Kunu, you have been invited to give a talk on various types of audit.

Required:
Explain the following, giving examples to support your answer:
a. Forensic audit (5 Marks)
b. Information systems audit (5 Marks)
c. Compliance audit (5 Marks)
d. Value for money audit (5 Marks)
(Total 20 Marks)

Answer

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Level: Level 2

Topic: Introduction to Auditing, Regulatory Framework for Auditing, The Role and Responsibilities of Auditors
Series: MAR/JULY 2020

AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing

Examination of factors for audit acceptance, stages in auditing, and roles of ICAN and FGN in audit regulation.

Question

In view of the development, interested candidates have been invited to submit applications for appointment as audit seniors in the firm. You were shortlisted for an interview:

Required:

a. Explain the factors to be considered before accepting the audit of a company. (4 Marks)

b. Describe the stages in an audit of a company. (6 Marks)

c. Discuss the different roles of the Institute of Chartered Accountants of Nigeria (ICAN) and the Federal Government of Nigeria (FGN) in the regulation of external audit. (10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Acceptance, External Audit Regulation, ICAN, Stages in Audit
Level: Level 2

Topic: Regulatory Framework for Auditing
Series: MAY 2021

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

Question

(i) The work done on the process of dispatch of goods and invoicing was not considered sufficient and appropriate.

(ii) The IT operations of the company had weak controls such that it was possible for some staff to override some of the existing controls.

Required:

a. Explain the risks inherent in the dispatch of goods and invoicing. (10 Marks)

b. Discuss the control objectives and principal controls that are relevant to the process of dispatch of goods and invoicing. (10 Marks)

c. Explain the limitations of a joint audit. (5 Marks)

d. Discuss the benefits of audit carried out by an internationally affiliated audit firm. (10 Marks)

e. Explain briefly the importance of audit working papers. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit risks, Auditor Independence, Compliance, Internal Control, Joint Audit
Level: Level 2

Topic: Regulatory Framework for Auditing
Series: MAY 2021

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit

Explains and provides examples for different types of audits including forensic, information systems, compliance, and value for money audits.

Question

Answer

Find Related Questions by Tags, levels, etc.

Level: Level 2

Topic: Introduction to Auditing, Regulatory Framework for Auditing, The Role and Responsibilities of Auditors
Series: MAR/JULY 2020

Topic: Regulatory Framework for Auditing

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AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing

Examination of factors for audit acceptance, stages in auditing, and roles of ICAN and FGN in audit regulation.

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit

Explains and provides examples for different types of audits including forensic, information systems, compliance, and value for money audits.

AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing

Examination of factors for audit acceptance, stages in auditing, and roles of ICAN and FGN in audit regulation.

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit

Explains and provides examples for different types of audits including forensic, information systems, compliance, and value for money audits.

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AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing

Examination of factors for audit acceptance, stages in auditing, and roles of ICAN and FGN in audit regulation.

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AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

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AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit

Explains and provides examples for different types of audits including forensic, information systems, compliance, and value for money audits.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit"

AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing

Examination of factors for audit acceptance, stages in auditing, and roles of ICAN and FGN in audit regulation.

You're reporting an error for "AA – May 2021 – L2 – Q3 – Regulatory Framework for Auditing"

AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing

Analysis of audit risks and control objectives in a joint audit and compliance scenario.

You're reporting an error for "AA – May 2021 – L2 – Q1 – Regulatory Framework for Auditing"

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit

Explains and provides examples for different types of audits including forensic, information systems, compliance, and value for money audits.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q4 – Various Types of Audit"

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