Topic: The regulatory environment

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AAA – July 2023 – L3 – Q5a – The regulatory environment | Current issues

Discusses factors influencing new auditing standards and procedures for their development by the International Federation of Accountants (IFAC).

The auditing profession is very dynamic and constantly confronted with new challenges emanating from the political and economic spheres. To meet these challenges the global authority responsible for the regulation of accountancy profession, The International Federation of Accountants (IFAC) has been ensuring that the standards for conduct of audit and assurance engagements are revised and brought up to date all the time.

Required: i) Discuss FOUR (4) factors that influence the development of new Auditing Standards. (5 marks)

ii) Identify the procedures for developing new Auditing Standards. (5 marks)

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  • 10 Marks

AAA – Nov 2020 – L3 – Q5a – The Regulatory Environment | Professional Responsibility and Liability

Identify and discuss the roles of three regulatory authorities in Ghana that may impact the conduct of an audit.

In the audit of financial statements, auditors consider the regulatory requirements. These cover professional standards promulgated by the International Federation of Accountants (IFAC) in the form of International Standards on Auditing (ISAs), International Standards on Quality Control (ISQC) as well as the International Ethics Standards Board for Accountants (IESBA). The other consideration involves legal requirements.

Required:
Identify THREE (3) regulatory authorities in Ghana whose requirements may be taken into account in the conduct of an audit and discuss their roles. (10 marks)

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  • 10 Marks

AAA – May 2017 – L3 – Q3a – The regulatory environment | Professional responsibility and liability

Discuss the implications of suspected non-compliance with insurance law on a company's operations, financial statements, and the audit process.

Your audit firm is auditing the current year’s financial statements of a major client in the insurance industry. At the planning stage when the engagement partner was doing the risk assessment, he had information that the company is under investigation by the National Insurance Commission for non-compliance with regulations. The client may be liable to sanctions if found culpable.

Non-compliance with laws and regulations has many implications for the operations of entities, their financial statements, and the audit of their financial statements.

Required:

i) Discuss the implications of the suspected non-compliance with the insurance law by the client on its operations and the financial statements. (5 marks)

ii) Evaluate the implications of the client’s non-compliance with the Insurance law on your audit. (5 marks)

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  • 5 Marks

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

a) Everclean Water Limited processes and packages portable water for local consumption. The factory is situated in a valley in a first-class residential area of the city. A major road used by most residents runs in front of the factory. Often this road is flooded with spill-over of water from the factory thus hindering vehicular and pedestrian movement. Management of the company on such occasions uses the services of a contractor to pump out the water from the road. This situation contravenes the provisions of the Factories, Offices and Shops Act 1970, Act 328. Everclean Water Limited has engaged Nadab and Associates as the auditors. In their preliminary tour of the factory the senior partners became aware of the flooding situation in the area. Back in the office the senior partners consulted ISA 250 “Consideration of laws and regulations in an audit of financial statements” for guidance on the auditor’s responsibility to consider laws and regulations in an audit of financial statements before carrying out the audit assignment.

i) State examples of the possible type of information that might have come to the auditors’ attention that might indicate non-compliance with the Factories, Offices, and Shops Act. (5 marks)

ii) Evaluate the possible effect on the financial statements for non-compliance with the law according to ISA 250. (5 marks)

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  • 10 Marks

AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations.

b) Wassaman Company is a private company established in the Wassa District in the Western Region to produce plastic bags to supply to sachet water producers. The company has 10 outlets within the district through which distribution is made to water producers. Employees of the company have been complaining about management’s reluctance to provide the health and safety needs of the company. The chief of the area has also shown his dissatisfaction about the extent of compliance with environmental laws and regulations by the company.

Required:

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations. (10 marks)

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  • 10 Marks

AAA – Mar 2024 – L3 – Q1b – The regulatory environment, Practice management, The audit approach

Discussion of issues with an audit engagement letter for Kumanji Ltd in accordance with ISA 210.

Ayesu & Associates, a reputable auditing firm, was approached by Kumanji Ltd to conduct an annual financial audit for the fiscal year ending December 31, 2023. Below is the audit engagement letter.

Re: Engagement Letter for the Audit of Financial Statements of Kumanji Ltd

We are pleased to confirm the terms of our engagement for the audit of your financial statements for the year ended December 31, 2023. This letter will serve as our agreement with Kumanji Ltd and outlines the scope of our services, responsibilities, and fee structure. Please review this letter carefully and let us know if you have any questions or concerns.

Audit Period: The audit will cover the financial statements of Kumanji Ltd for the fiscal year beginning January 1, 2023, and ending on March 31, 2023.

Audit Fees: Our fee structure will be based on a fixed fee of GH¢5,000 for the audit, payable in two installments. The first installment of GH¢2,500 will be due at the commencement of the audit, and the remaining GH¢2,500 will be due upon completion of the audit.

Timeline for Reporting: We will deliver the audit report and financial statements to you within two months after the conclusion of our fieldwork.

Conflicts of Interest: We do not anticipate any conflicts of interest that may affect our independence or objectivity during the audit. If any conflicts arise, we will address them promptly.

Audit Scope: We will perform audit procedures in accordance with Generally Accepted Auditing Standards (GAAS) to obtain reasonable assurance about whether the financial statements are free from material misstatement. Specific audit procedures will be determined during the audit process.

Contingency Plan: We do not have a contingency plan in place for unexpected disruptions or events that may affect the audit process.

Please acknowledge your agreement to the terms outlined in this letter by signing and returning a copy to us at your earliest convenience. If you have any questions or require clarification on any aspect of this engagement, do not hesitate to contact us.

We look forward to working with you and providing high-quality audit services to Kumanji Ltd. Thank you for entrusting us with this important engagement.

Required:
In accordance with ISA 210: Agreeing the terms of audit engagements, discuss FIVE (5) issues with the engagement letter. (10 marks)

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  • 10 Marks

AAA – May 2020 – L3 – Q5a – The regulatory environment

Analyze the factors influencing the development of new auditing standards and discuss the procedures involved in their creation.

The auditing profession is very dynamic and constantly confronted with new challenges emanating from the political and economic spheres. To meet these challenges the global authority responsible for the regulation of accountancy profession, The International Federation of Accountants (IFAC) has been ensuring that the standards for conduct of audit and assurance engagements are revised and brought up to date all the time.

Required:

i) Analyze the factors that influence the development of new Auditing Standards. (6 marks)

ii) Discuss the procedures for developing new Auditing Standards. (4 marks)

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  • 10 Marks

AAA – July 2023 – L3 – Q5a – The regulatory environment | Current issues

Discusses factors influencing new auditing standards and procedures for their development by the International Federation of Accountants (IFAC).

The auditing profession is very dynamic and constantly confronted with new challenges emanating from the political and economic spheres. To meet these challenges the global authority responsible for the regulation of accountancy profession, The International Federation of Accountants (IFAC) has been ensuring that the standards for conduct of audit and assurance engagements are revised and brought up to date all the time.

Required: i) Discuss FOUR (4) factors that influence the development of new Auditing Standards. (5 marks)

ii) Identify the procedures for developing new Auditing Standards. (5 marks)

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  • 10 Marks

AAA – Nov 2020 – L3 – Q5a – The Regulatory Environment | Professional Responsibility and Liability

Identify and discuss the roles of three regulatory authorities in Ghana that may impact the conduct of an audit.

In the audit of financial statements, auditors consider the regulatory requirements. These cover professional standards promulgated by the International Federation of Accountants (IFAC) in the form of International Standards on Auditing (ISAs), International Standards on Quality Control (ISQC) as well as the International Ethics Standards Board for Accountants (IESBA). The other consideration involves legal requirements.

Required:
Identify THREE (3) regulatory authorities in Ghana whose requirements may be taken into account in the conduct of an audit and discuss their roles. (10 marks)

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  • 10 Marks

AAA – May 2017 – L3 – Q3a – The regulatory environment | Professional responsibility and liability

Discuss the implications of suspected non-compliance with insurance law on a company's operations, financial statements, and the audit process.

Your audit firm is auditing the current year’s financial statements of a major client in the insurance industry. At the planning stage when the engagement partner was doing the risk assessment, he had information that the company is under investigation by the National Insurance Commission for non-compliance with regulations. The client may be liable to sanctions if found culpable.

Non-compliance with laws and regulations has many implications for the operations of entities, their financial statements, and the audit of their financial statements.

Required:

i) Discuss the implications of the suspected non-compliance with the insurance law by the client on its operations and the financial statements. (5 marks)

ii) Evaluate the implications of the client’s non-compliance with the Insurance law on your audit. (5 marks)

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  • 5 Marks

AAA – May 2016 – L3 – Q1a – The regulatory environment | The audit approach | Planning

Discuss types of information indicating non-compliance and evaluate the impact on financial statements per ISA 250.

a) Everclean Water Limited processes and packages portable water for local consumption. The factory is situated in a valley in a first-class residential area of the city. A major road used by most residents runs in front of the factory. Often this road is flooded with spill-over of water from the factory thus hindering vehicular and pedestrian movement. Management of the company on such occasions uses the services of a contractor to pump out the water from the road. This situation contravenes the provisions of the Factories, Offices and Shops Act 1970, Act 328. Everclean Water Limited has engaged Nadab and Associates as the auditors. In their preliminary tour of the factory the senior partners became aware of the flooding situation in the area. Back in the office the senior partners consulted ISA 250 “Consideration of laws and regulations in an audit of financial statements” for guidance on the auditor’s responsibility to consider laws and regulations in an audit of financial statements before carrying out the audit assignment.

i) State examples of the possible type of information that might have come to the auditors’ attention that might indicate non-compliance with the Factories, Offices, and Shops Act. (5 marks)

ii) Evaluate the possible effect on the financial statements for non-compliance with the law according to ISA 250. (5 marks)

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  • 10 Marks

AAA – Nov 2016 – L3 – Q1b – Professional responsibility and liability | The regulatory environment

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations.

b) Wassaman Company is a private company established in the Wassa District in the Western Region to produce plastic bags to supply to sachet water producers. The company has 10 outlets within the district through which distribution is made to water producers. Employees of the company have been complaining about management’s reluctance to provide the health and safety needs of the company. The chief of the area has also shown his dissatisfaction about the extent of compliance with environmental laws and regulations by the company.

Required:

Discuss the responsibilities of management and the auditor to ensure adherence to laws and regulations. (10 marks)

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  • 10 Marks

AAA – Mar 2024 – L3 – Q1b – The regulatory environment, Practice management, The audit approach

Discussion of issues with an audit engagement letter for Kumanji Ltd in accordance with ISA 210.

Ayesu & Associates, a reputable auditing firm, was approached by Kumanji Ltd to conduct an annual financial audit for the fiscal year ending December 31, 2023. Below is the audit engagement letter.

Re: Engagement Letter for the Audit of Financial Statements of Kumanji Ltd

We are pleased to confirm the terms of our engagement for the audit of your financial statements for the year ended December 31, 2023. This letter will serve as our agreement with Kumanji Ltd and outlines the scope of our services, responsibilities, and fee structure. Please review this letter carefully and let us know if you have any questions or concerns.

Audit Period: The audit will cover the financial statements of Kumanji Ltd for the fiscal year beginning January 1, 2023, and ending on March 31, 2023.

Audit Fees: Our fee structure will be based on a fixed fee of GH¢5,000 for the audit, payable in two installments. The first installment of GH¢2,500 will be due at the commencement of the audit, and the remaining GH¢2,500 will be due upon completion of the audit.

Timeline for Reporting: We will deliver the audit report and financial statements to you within two months after the conclusion of our fieldwork.

Conflicts of Interest: We do not anticipate any conflicts of interest that may affect our independence or objectivity during the audit. If any conflicts arise, we will address them promptly.

Audit Scope: We will perform audit procedures in accordance with Generally Accepted Auditing Standards (GAAS) to obtain reasonable assurance about whether the financial statements are free from material misstatement. Specific audit procedures will be determined during the audit process.

Contingency Plan: We do not have a contingency plan in place for unexpected disruptions or events that may affect the audit process.

Please acknowledge your agreement to the terms outlined in this letter by signing and returning a copy to us at your earliest convenience. If you have any questions or require clarification on any aspect of this engagement, do not hesitate to contact us.

We look forward to working with you and providing high-quality audit services to Kumanji Ltd. Thank you for entrusting us with this important engagement.

Required:
In accordance with ISA 210: Agreeing the terms of audit engagements, discuss FIVE (5) issues with the engagement letter. (10 marks)

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You're reporting an error for "AAA – Mar 2024 – L3 – Q1b – The regulatory environment, Practice management, The audit approach"

  • 10 Marks

AAA – May 2020 – L3 – Q5a – The regulatory environment

Analyze the factors influencing the development of new auditing standards and discuss the procedures involved in their creation.

The auditing profession is very dynamic and constantly confronted with new challenges emanating from the political and economic spheres. To meet these challenges the global authority responsible for the regulation of accountancy profession, The International Federation of Accountants (IFAC) has been ensuring that the standards for conduct of audit and assurance engagements are revised and brought up to date all the time.

Required:

i) Analyze the factors that influence the development of new Auditing Standards. (6 marks)

ii) Discuss the procedures for developing new Auditing Standards. (4 marks)

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