Question Tag: Audit Documentation

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q16 – Review of Subsequent Events and Going Concern Assumptions

Identifying the appropriate signatories for a Letter of Representation.

The Letter of representation is normally signed by:

A. Managing Director and Chairman of the Board
B. Managing Director and Company Secretary
C. Managing Director and Finance Director
D. Chairman of the Board and Finance Director
E. Chairman of Audit Committee and the Managing Director

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  • 15 Marks

AA – May 2016 – L2 – Q5 – The Role and Responsibilities of Auditors

Steps for auditor replacement when incumbent auditors do not wish to resign, and brief overview of audit documentation.

Alhaji Abubakar Yusuf is the managing director of Nasara Tech Limited, a private company. Nasara Tech is currently audited by Mike and Co. Alhaji Abubakar has informed you that the directors of Nasara Tech wish to appoint your firm, Adewuyi Adeyemi and Co., as auditors in place of Mike and Co., but they consider that Mike and Co. will not be willing to resign.

Required:

a. Assuming that Mike and Co. are not willing to resign, set out the statutory and other procedures which will have to be followed by Nasara Tech Limited, your firm, and which may be adopted by Mike and Co. in connection with this proposed appointment. You should assume that Adewuyi Adeyemi and Co. have adequate resources to take on the audit of Nasara Tech Limited and that there are no issues surrounding independence or client integrity. (6 Marks)

b. Assuming that Mike and Co. are willing to resign part way through their term of office, set out the procedures to be followed by Mike and Co. and Nasara Tech Limited in order to effect the resignations. (4 Marks)

Your office has recently taken on a new trainee, John. You have been asked to explain to John what information is recorded in the audit process and where.

c. Set out a brief explanation for John. (5 Marks)

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  • 20 Marks

AA – Nov 2022 – L2 – Q2a – Audit Documentation Requirements

Overview of audit documentation requirements per ISA 230, including reasons and required contents.

The International Standards on Auditing (ISA) 230 deals with the auditor’s responsibility to prepare audit documentation for an audit of financial statements.

Required:
a. State FIVE reasons for preparing audit documentation. (5 Marks)
b. Highlight the requirements of ISA 230 on audit documentation. (3 Marks)
c. State FIVE contents each of current and permanent files. (10 Marks)
d. Explain who owns audit working papers and why. (2 Marks)

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  • 15 Marks

AA – May 2023 – L2 – SC – Q7 – Risk Assessment and Internal Control

Addressing the impact of record loss on business continuity and methods to manage data recovery.

Indorise Limited has been in business for about 20 years. The company has divisional offices in three locations. The accounting records are kept mainly at the head office, with backup in an adjacent building to the office. The office is located close to a petrol station.

An unfortunate incident occurred in a certain year when the petrol station caught fire, engulfing most offices in the area. The company lost most of the properties in the building, including important accounting records. Consequently, the company relocated its office to another street. However, many of the accounting records were not backed up, leading to disputes from the tax office, customers, and suppliers over balances, with some parties even initiating litigation claims.

Required:

a. Explain the importance of maintaining adequate backup for accounting records. (5 Marks)

b. Identify measures that Indorise Limited could implement to prevent future data loss. (5 Marks)

c. Discuss the role of internal controls in ensuring business continuity in cases of disaster. (5 Marks)

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  • 15 Marks

AA – May 2023 – L2 – SC – Q6 – Audit Documentation

Types, importance, and determining conditions for audit working paper files.

At one of the seminars you attended on legal and regulatory frameworks of financial reporting, it was stated that one of the duties of the Financial Reporting Council of Nigeria (FRC) is to provide legal and regulatory frameworks for minimum practice guidelines for auditors in Nigeria. To do this, the FRC ensures that all activities of Registered Auditors, other Assurance Providers, and Audit Committee members are regulated to sustain best ethical practices and promote quality audit services.

It is part of the obligations of the Financial Reporting Council of Nigeria to conduct practice reviews of registered professionals. You learned that, for effective monitoring, the Audit Regulation mandates external auditors to create an audit file for each statutory audit carried out and to retain the working papers and other materials supporting the audit report conclusions for a minimum of seven years.

A classmate from university, now a banker, attended the seminar with you and has asked for further clarification on what is meant by “working paper” and why regulators are concerned with audit file reviews.

Required:

a. Identify the different types of audit working paper files. (5 Marks)

b. Outline the importance of audit working paper files. (5 Marks)

c. Explain briefly the conditions that determine the size of audit working papers. (5 Marks)

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  • 15 Marks

AA – Nov 2015 – L2 – Q6 – Audit Documentation

Discussing the retention of working papers, justification for retaining them, and types of information found in audit files.

Delta, Gamma, and Co. are the auditors to Hope Limited. The firm proposes to move their office to new premises and wishes to destroy old audit working papers beyond six years while others are to be converted into electronic copies by using scanners. Hope Limited, having decided to discontinue with Delta, Gamma & Co. as its auditors, has requested that the firm should hand over to their new auditors all the audit working papers of the previous years and the permanent audit file.

Required:
a. Advise Delta, Gamma & Co. on the above scenarios. (5 Marks)
b. Justify why it is important to maintain and keep audit working papers. (5 Marks)
c. State FIVE types of information you would expect to see in each of the following:
i. Permanent audit file
ii. Current working paper file (5 Marks)

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  • 30 Marks

AA – May 2022 – L2 – SA – Q1 – Auditing in a Computerized Environment

Discuss computer audit packages, CAATs, and threats to IT systems in a computerized auditing environment.

Quality Plastic Manufacturing Company Limited has been operating for about a decade. The company is into the production of plastic chairs, bowls, tables, and other related products. It was awarded a contract to produce chairs for a Pentecostal church that has branches across 36 states of the country, including Abuja. The church has its convention ground that occupies large hectares of land along Lagos-Abeokuta expressway. The number of chairs, which are in millions, would be produced and delivered to the headquarters of the church from where they would be distributed to all the branches and the convention ground.

Given the fact that this contract would increase the fortune of the company, Ogbuefi Okafor, the Chairman of the company, saw the need for the company to grow bigger in the future and would require more funding to finance the expansion. He discussed this with his bank manager who advised him to approach a consultant that would prepare a feasibility study for him on the expansion.

Though he agreed with the bank manager, he however now feels that there is a need to convert the accounting system of the company from manual to computer-based as a result of the level of expansion envisaged. As a first step before conversion to a computer-based system, the company set up an internal control system, including an internal audit department. The internal audit department is headed by a partly qualified accountant who has passed the skills level of ICAN Professional Examinations but has a very wide experience in internal audit. Your firm has been the auditors of the company for the past five years.

a. Explain the computer audit packages that can be used in the audit documentation process and the advantages of these audit packages.
b. State the commonly used computer-assisted audit techniques (CAATs) and explain why they are essential in the audit process of a computer-based accounting system.
c. Explain ten threats to Information Technology (IT) systems, which the auditor should be aware of.

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  • 5 Marks

AA – July 2023 – L2 – Q5b – Audit and Assurance Evidence, Professional and Ethical Considerations

Explanation of five benefits of documenting audit work.

b) ISA 230: Audit Documentation deals with the auditor’s responsibility to prepare audit documentation for an audit of financial statements.

Required:
State FIVE (5) benefits of documenting audit work. (5 marks)

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  • 4 Marks

AA – Nov 2020 – L2 – Q2b – Planning and Approach for Audit and Assurance Engagements

Explain key items to include in an audit strategy document.

ISA 300: Planning an audit of financial statements requires auditors to establish the overall strategy for an audit. An auditor is required to plan the audit by developing an audit strategy to guide the plan itself. Audit planning is necessary for a number of reasons, the foremost of which is to achieve audit efficiency and effectiveness. Audit planning involves risk assessment procedures, further audit procedures, and other audit procedures to obtain sufficient appropriate audit evidence. During the audit, if an auditor concludes that the initial plan requires alteration, the auditor shall consider revising the audit strategy.

Required:
Explain with justification FOUR (4) key items that should be included in an audit strategy document.
(4 marks)

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  • 3 Marks

AA – Nov 2021 – L2 – Q1c – Audit and Assurance Evidence

Explains three purposes of audit documentation in line with ISA 230.

Audit evidence may come in many forms. For instance, enquiries may be verbal, while confirmations may be in written form. Regardless of the form of audit evidence they obtain, auditors need to document their procedures. The process of documenting audit evidence is known as audit documentation.

Required:
Explain THREE (3) purposes of audit documentation in line with ISA 230: Audit Documentation.
(3 marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q16 – Review of Subsequent Events and Going Concern Assumptions

Identifying the appropriate signatories for a Letter of Representation.

The Letter of representation is normally signed by:

A. Managing Director and Chairman of the Board
B. Managing Director and Company Secretary
C. Managing Director and Finance Director
D. Chairman of the Board and Finance Director
E. Chairman of Audit Committee and the Managing Director

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  • 15 Marks

AA – May 2016 – L2 – Q5 – The Role and Responsibilities of Auditors

Steps for auditor replacement when incumbent auditors do not wish to resign, and brief overview of audit documentation.

Alhaji Abubakar Yusuf is the managing director of Nasara Tech Limited, a private company. Nasara Tech is currently audited by Mike and Co. Alhaji Abubakar has informed you that the directors of Nasara Tech wish to appoint your firm, Adewuyi Adeyemi and Co., as auditors in place of Mike and Co., but they consider that Mike and Co. will not be willing to resign.

Required:

a. Assuming that Mike and Co. are not willing to resign, set out the statutory and other procedures which will have to be followed by Nasara Tech Limited, your firm, and which may be adopted by Mike and Co. in connection with this proposed appointment. You should assume that Adewuyi Adeyemi and Co. have adequate resources to take on the audit of Nasara Tech Limited and that there are no issues surrounding independence or client integrity. (6 Marks)

b. Assuming that Mike and Co. are willing to resign part way through their term of office, set out the procedures to be followed by Mike and Co. and Nasara Tech Limited in order to effect the resignations. (4 Marks)

Your office has recently taken on a new trainee, John. You have been asked to explain to John what information is recorded in the audit process and where.

c. Set out a brief explanation for John. (5 Marks)

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  • 20 Marks

AA – Nov 2022 – L2 – Q2a – Audit Documentation Requirements

Overview of audit documentation requirements per ISA 230, including reasons and required contents.

The International Standards on Auditing (ISA) 230 deals with the auditor’s responsibility to prepare audit documentation for an audit of financial statements.

Required:
a. State FIVE reasons for preparing audit documentation. (5 Marks)
b. Highlight the requirements of ISA 230 on audit documentation. (3 Marks)
c. State FIVE contents each of current and permanent files. (10 Marks)
d. Explain who owns audit working papers and why. (2 Marks)

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  • 15 Marks

AA – May 2023 – L2 – SC – Q7 – Risk Assessment and Internal Control

Addressing the impact of record loss on business continuity and methods to manage data recovery.

Indorise Limited has been in business for about 20 years. The company has divisional offices in three locations. The accounting records are kept mainly at the head office, with backup in an adjacent building to the office. The office is located close to a petrol station.

An unfortunate incident occurred in a certain year when the petrol station caught fire, engulfing most offices in the area. The company lost most of the properties in the building, including important accounting records. Consequently, the company relocated its office to another street. However, many of the accounting records were not backed up, leading to disputes from the tax office, customers, and suppliers over balances, with some parties even initiating litigation claims.

Required:

a. Explain the importance of maintaining adequate backup for accounting records. (5 Marks)

b. Identify measures that Indorise Limited could implement to prevent future data loss. (5 Marks)

c. Discuss the role of internal controls in ensuring business continuity in cases of disaster. (5 Marks)

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  • 15 Marks

AA – May 2023 – L2 – SC – Q6 – Audit Documentation

Types, importance, and determining conditions for audit working paper files.

At one of the seminars you attended on legal and regulatory frameworks of financial reporting, it was stated that one of the duties of the Financial Reporting Council of Nigeria (FRC) is to provide legal and regulatory frameworks for minimum practice guidelines for auditors in Nigeria. To do this, the FRC ensures that all activities of Registered Auditors, other Assurance Providers, and Audit Committee members are regulated to sustain best ethical practices and promote quality audit services.

It is part of the obligations of the Financial Reporting Council of Nigeria to conduct practice reviews of registered professionals. You learned that, for effective monitoring, the Audit Regulation mandates external auditors to create an audit file for each statutory audit carried out and to retain the working papers and other materials supporting the audit report conclusions for a minimum of seven years.

A classmate from university, now a banker, attended the seminar with you and has asked for further clarification on what is meant by “working paper” and why regulators are concerned with audit file reviews.

Required:

a. Identify the different types of audit working paper files. (5 Marks)

b. Outline the importance of audit working paper files. (5 Marks)

c. Explain briefly the conditions that determine the size of audit working papers. (5 Marks)

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  • 15 Marks

AA – Nov 2015 – L2 – Q6 – Audit Documentation

Discussing the retention of working papers, justification for retaining them, and types of information found in audit files.

Delta, Gamma, and Co. are the auditors to Hope Limited. The firm proposes to move their office to new premises and wishes to destroy old audit working papers beyond six years while others are to be converted into electronic copies by using scanners. Hope Limited, having decided to discontinue with Delta, Gamma & Co. as its auditors, has requested that the firm should hand over to their new auditors all the audit working papers of the previous years and the permanent audit file.

Required:
a. Advise Delta, Gamma & Co. on the above scenarios. (5 Marks)
b. Justify why it is important to maintain and keep audit working papers. (5 Marks)
c. State FIVE types of information you would expect to see in each of the following:
i. Permanent audit file
ii. Current working paper file (5 Marks)

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  • 30 Marks

AA – May 2022 – L2 – SA – Q1 – Auditing in a Computerized Environment

Discuss computer audit packages, CAATs, and threats to IT systems in a computerized auditing environment.

Quality Plastic Manufacturing Company Limited has been operating for about a decade. The company is into the production of plastic chairs, bowls, tables, and other related products. It was awarded a contract to produce chairs for a Pentecostal church that has branches across 36 states of the country, including Abuja. The church has its convention ground that occupies large hectares of land along Lagos-Abeokuta expressway. The number of chairs, which are in millions, would be produced and delivered to the headquarters of the church from where they would be distributed to all the branches and the convention ground.

Given the fact that this contract would increase the fortune of the company, Ogbuefi Okafor, the Chairman of the company, saw the need for the company to grow bigger in the future and would require more funding to finance the expansion. He discussed this with his bank manager who advised him to approach a consultant that would prepare a feasibility study for him on the expansion.

Though he agreed with the bank manager, he however now feels that there is a need to convert the accounting system of the company from manual to computer-based as a result of the level of expansion envisaged. As a first step before conversion to a computer-based system, the company set up an internal control system, including an internal audit department. The internal audit department is headed by a partly qualified accountant who has passed the skills level of ICAN Professional Examinations but has a very wide experience in internal audit. Your firm has been the auditors of the company for the past five years.

a. Explain the computer audit packages that can be used in the audit documentation process and the advantages of these audit packages.
b. State the commonly used computer-assisted audit techniques (CAATs) and explain why they are essential in the audit process of a computer-based accounting system.
c. Explain ten threats to Information Technology (IT) systems, which the auditor should be aware of.

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  • 5 Marks

AA – July 2023 – L2 – Q5b – Audit and Assurance Evidence, Professional and Ethical Considerations

Explanation of five benefits of documenting audit work.

b) ISA 230: Audit Documentation deals with the auditor’s responsibility to prepare audit documentation for an audit of financial statements.

Required:
State FIVE (5) benefits of documenting audit work. (5 marks)

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You're reporting an error for "AA – July 2023 – L2 – Q5b – Audit and Assurance Evidence, Professional and Ethical Considerations"

  • 4 Marks

AA – Nov 2020 – L2 – Q2b – Planning and Approach for Audit and Assurance Engagements

Explain key items to include in an audit strategy document.

ISA 300: Planning an audit of financial statements requires auditors to establish the overall strategy for an audit. An auditor is required to plan the audit by developing an audit strategy to guide the plan itself. Audit planning is necessary for a number of reasons, the foremost of which is to achieve audit efficiency and effectiveness. Audit planning involves risk assessment procedures, further audit procedures, and other audit procedures to obtain sufficient appropriate audit evidence. During the audit, if an auditor concludes that the initial plan requires alteration, the auditor shall consider revising the audit strategy.

Required:
Explain with justification FOUR (4) key items that should be included in an audit strategy document.
(4 marks)

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  • 3 Marks

AA – Nov 2021 – L2 – Q1c – Audit and Assurance Evidence

Explains three purposes of audit documentation in line with ISA 230.

Audit evidence may come in many forms. For instance, enquiries may be verbal, while confirmations may be in written form. Regardless of the form of audit evidence they obtain, auditors need to document their procedures. The process of documenting audit evidence is known as audit documentation.

Required:
Explain THREE (3) purposes of audit documentation in line with ISA 230: Audit Documentation.
(3 marks)

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