Question Tag: Fraud

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AAA – May 2016 – L3 – Q5 – Ethical Issues in Auditing

Identify and discuss fraud and error in the audit of Badagry Yachting and Marina.

Question

Badagry Yachting and Marina (BYM) have a marina on the West Coast of Nigeria and a large sales operation dealing in yachts and speedboats. You are responsible for the audit of BYM and have found some potential causes of concern that could indicate fraudulent activity or financial misconduct within the company. In particular:

(i) 30% of the yachts on sale by BYM are supplied through one of the major international boating companies with a special finance arrangement deal. However, BYM have also obtained separate finance on these yachts, which are therefore in effect being ‘double financed’.
(ii) Ten yachts shown as assets by BYM cannot be located, with no explanation other than that they have not been sold. These yachts are worth approximately N50 million.
(iii) Long delays have occurred in performing reconciliations, with the last four months of reconciliations still not completed. At the time of the last reconciliation, material differences had been identified upon which no action appears to have been undertaken.
(iv) Sales have been overstated by N100 million in the current financial statements.
The finance director has been off sick with stress for the last five months and therefore has not been available to discuss any of the issues identified.

Required:

a. Explain the difference between fraud and error and how the issues shown here could be categorised as fraud or error. (6 Marks)
b. Discuss the role of management and the role of the auditor in the prevention and detection of fraud and error. (3 Marks)
c. Describe what steps you would take to further investigate and then report on the matters referred to above. (6 Marks)

Answer

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Tags: Audit Procedures, Error, Financial Misconduct, Fraud, Investigation
Level: Level 3

Topic: Ethical Issues in Auditing

AAA – Nov 2013 – L3 – AII – Q2 – Audit Evidence

Audit Evidence, Balance Confirmation, Reporting Dates, Discrepancy, Fraud

Question

A reported difference in a confirmation of balances by a debtor to a client due to different reporting date but not due to misstatement or fraud is known as………………….

Answer

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Tags: Audit evidence, Balance Confirmation, Discrepancy, Fraud, Reporting Dates
Level: Level 3

Topic: Audit evidence
Series: MAY 2013, NOV 2013

AAA – Nov 2012 – L3 – SB – Q1 – Ethical Issues in Auditing

This case examines ethical issues in auditing related to fraudulent practices in a company involved in human trafficking.

Question

You have just been appointed the Auditor of Sheerahmog Manufacturing Company Limited, which manufactures 2.0 ml syringes specifically used by veterinary doctors. Recently, it was discovered that the 2.0 ml syringes are used on human beings due to the shortage of syringes for human use.

The Federal Government has decided to phase out the 2.0ml syringe in the next three years. In order to diversify into production of carbonated water, the Finance Director suggested that the company approach a bank for a complementary N1.26 billion required to finance the diversification program.

In spite of their proposal and cashflow to Bank of Akowonjo Plc, which was described as being fantastic, their loan application was not granted. As a result, the company is likely to go into liquidation with its numerous staff disengaged, if viable alternative is not provided to raise the required fund.

In carrying out the analysis of the sources of funds at the end of the year under review, you found that the company made much money from human trafficking to enable it accomplish the proposed plan of diversification.

At the next meeting with management of the company, you brought your findings to their knowledge and threatened to disclose it as an extraordinary item in the income schedule. Management frowned at it and were considering reviewing your appointment including fee which is currently 52% of your annual income.

Required:
a. Identify the ethical issues involved as they relate to the auditor. (2 Marks)
b. What are the THREE elements of fraudulent practices presented in this case? (6 Marks)
c. What are the safeguards for the ethical issues identified? (4 Marks)
d. List the issues that should be brought to the attention of the company by the auditors as regards the disclosure of the illegal act. (3 Marks)
(Total 15 Marks)

Answer

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Tags: Auditing, Disclosure, Ethical Issues, Fraud, Legal Issues
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2012

BL – Nov 2020 – L1 – SB – Q6a – The Nigerian Legal System

List tests to determine intent to steal during taking or conversion.

Question

Taking or conversion with intent to defraud is an element of stealing.

Required:
State FIVE tests of determining whether or not an accused has an intention to steal at the time of taking or converting a thing.

Answer

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Tags: Conversion, Criminal Intent, Criminal Law, Fraud, Theft
Level: Level 1

Topic: The Nigerian Legal System
Series: NOV 2020

BL – Nov 2020 – L1 – SA – Q7 – Law of Tort

Objective question testing understanding of legal terms related to fraudulent taking.

Question

7. A person who fraudulently takes anything for his own use is guilty of
A. Trespass
B. Stealing
C. Conversion
D. Hijacking
E. Trickery

Answer

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Tags: Criminal Law, Fraud, Legal Terminology, Theft
Level: Level 1

Topic: Law of Tort
Series: NOV 2020

PSAF – Nov 2016 – L2 – Q4a – Government Expenditure

This question identifies various sources of loss of public funds in the public sector, focusing on misappropriation and fraud.

Question

Loss or shortage of public funds is depletion in government funds at a given time.

Enumerate SIX sources through which loss of funds may arise in the public sector.

Answer

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Tags: Financial management, Fraud, Losses in Public Sector, Misappropriation, Public Funds
Level: Level 2

Topic: Government Expenditure
Series: NOV 2016

AA – Nov 2020 – L2 – Q1c – Internal Control Systems

Discuss the limitations of internal controls and how they affect an organization’s ability to prevent errors and fraud.

Question

Explain the limitations of internal controls.

Answer

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Tags: Fraud, Human Error, Internal Controls, Limitations
Level: Level 2

Topic: Internal Control Systems
Series: NOV 2020

BL – Nov 2015 – L2 – SB – Q4c – Business Ethics and Corporate Governance

List three items that may constitute fraudulent false accounting under Nigerian laws.

Question

statement prepared by him and should not engage in any fraudulent false accounting.

Required:

Enumerate THREE items that may constitute fraudulent false accounting under Nigerian laws.
(6 Marks)

Answer

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Tags: Corporate Ethics, False Accounting, Fraud, Nigerian Law
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: NOV 2015

BL – Nov 2015 – L2 – SB – Q3a – Law of Contract

Explain three types of fraud-related offences under the Criminal Code.

Question

The Criminal Code does not create a single general offence of fraud, instead, there are a number of offences that are fraud related.

Required:

Explain briefly THREE offences of fraud.
(15 Marks)

Answer

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Tags: Criminal Code, Fraud, Fraudulent Acts, Offenses of Fraud
Level: Level 1

Topic: Law of Contract
Series: NOV 2015

MI – Nov 2015 – L1 – SB – Q6a – Information Systems

Identifies areas where computers serve as instruments and targets of crime.

Question

a. In a computer environment, it is a common occurrence that data is lost, manipulated, or tampered with by unauthorized individuals for selfish reasons.

Required:
Enumerate FOUR areas where computers are used as instruments of crime and FOUR areas as targets of crime. (8 Marks)

Answer

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Tags: Computer Crime, Cybercrime, Data Theft, Fraud, Hacking, Information security, Information Systems
Level: Level 1

Topic: Information Systems Development and Security
Series: NOV 2015

BL – Nov 2014 – L1 – SB – Q4b – Law of Tort

Explain one penalty for theft or fraud and state two consequences of conviction for a criminal offence.

Question

“Today, the ethical value of a lot of professionals is nothing to write home about. They sometimes unlawfully convert their client’s money to personal use without placing premium on the consequences of such a criminal action on their part.”

Required:
i. Explain briefly one penalty that may be imposed by the court on a person convicted of the offence of theft, fraud, or deception.
(2 Marks)

ii. State the TWO consequences of conviction for an offence.
(2 Marks)

Answer

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Tags: Consequences of Conviction, Criminal Law, Fraud, Penalties, Theft
Level: Level 1

Topic: Law of Tort
Series: NOV 2014

BL – Nov 2014 – L1 – SA – Q9 – Law of Tort

Identifying the basic law related to theft, fraud, and deception in Nigeria

Question

The basic law relating to theft, fraud, and deception in Nigeria is
A. International law
B. Labour law
C. Constitutional law
D. Criminal law
E. Law of contract

Answer

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Tags: Criminal Law, Fraud, Nigerian Law, Theft
Level: Level 1

Topic: Law of Tort
Series: NOV 2014

BL – May 2017 – L1 – SA – Q8 – Business Ethics and Corporate Governance

Identifying an exception to fraudulent intents.

Question

Fraudulent intents include the following EXCEPT an intent to
A. Permanently deprive the owner of the thing
B. Use the thing as a pledge or security
C. Part with a thing on a condition as to its return that the person taking it may be unable to perform
D. Deal with the thing in such manner that it cannot be returned in substantially the same condition as it was when it was taken
E. Use it for a limited time

Answer

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Tags: Business Ethics, Fraud, Legal Intent
Level: Level 1

Topic: Business Ethics and Corporate Governance
Series: MAY 2017

BL – May 2015 – L1 – SA – Q10 – Nigerian Legal System

Identify the law that does not encompass basic laws on theft, fraud, and deception in Nigeria.

Question

The following encompasses Nigerian basic laws on theft, fraud, and deception, EXCEPT
A. Criminal Code
B. Penal Code
C. Corrupt Practices and Other Related Offences Act
D. Economic and Financial Crimes Commission Act
E. Bankruptcy Act

Answer

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Tags: Fraud, Nigerian Laws, Theft
Level: Level 1

Topic: Nigerian Legal System
Series: MAY 2015

AA – July 2023 – L2 – Q1c – Audit and Assurance Evidence, Professional and Ethical Considerations

Explanation of fraud risk factors in risk assessment procedures according to ISA 240.

Question

c) ISA 240 (Redrafted): The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements requires the Auditor to perform procedures to identify the risk of material misstatement due to fraud. The Auditor must evaluate information obtained from other risk assessment procedures to see if any fraud risk factors are present.

Required:
Explain FIVE (5) risk factors in risk assessment procedures with regard to fraud. (5 marks)

Answer

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Tags: Fraud, ISA 240, Misstatement, Risk Assessment
Level: Level 2

Topic: Audit and Assurance Evidence, Professional and Ethical Considerations
Series: JULY 2023

AA – Nov 2023 – L2 – Q4a – Audit Failure and Expectation Gap, Audit and Assurance Evidence

This question distinguishes between fraud and error in the audit of financial statements.

Question

ISA 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, distinguishes fraud from error and provides significant guidance on the auditor’s responsibilities to consider fraud in an audit of financial statements.

Required:
Distinguish between fraud and error giving an example of each.
(4 marks)

Answer

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Tags: Audit Responsibility, Error, Financial Statements, Fraud, ISA 240
Level: Level 2

Topic: Audit and Assurance Evidence, Audit Failure and Expectation Gap
Series: NOV 2023

AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment

Discuss the auditor’s responsibilities concerning fraud and the procedures to follow when fraud risks are identified.

Question

ISA 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements recognizes that financial statements’ misrepresentation can occur as a result of either fraud or error. The distinction is whether the underlying activity that caused the misrepresentation was deliberate or unintentional. An auditor’s job is not to determine whether or not fraud has happened. The external auditor is concerned with getting reasonable assurance that the financial statements as a whole are free of material misstatement, whether due to fraud or error.

Required:
i) Describe TWO (2) ways by which the external auditor may report fraud in an engagement. (2 marks)
ii) Discuss TWO (2) types of fraud in relation to the financial statements. (2 marks)
iii) State SIX (6) audit procedures that the auditor is required to perform in light of the risk of fraud. (6 marks)

Answer

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Tags: Audit Procedures, Auditors' responsibilities, Financial Statements, Fraud, ISA 240
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: MAR 2023

AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

Question

According to ISA 240: The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements, the term “Fraud” refers to an intentional act by one or more individuals among management, those charged with governance, employees, or third parties involving the use of deception to obtain an unjust or illegal advantage.

Required:
i) State the TWO (2) types of fraud as identified by ISA 240.
ii) For each type of fraud, list THREE (3) examples.

Answer

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Tags: Asset Misappropriation, Auditor Responsibility, Financial Statements, Fraud, Fraudulent Reporting, ISA 240
Level: Level 2

Topic: Audit and Assurance Risk Environment
Series: DEC 2022

FR – Nov 2021 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting

Advising a Chartered Accountant on how to handle an ethical dilemma in relation to confidentiality and fraudulent acts in compliance with IFAC’s code of ethics.

Question

Ata Kwaku, a Chartered Accountant, signed a confidentiality agreement with his employer, Therry Ltd, before accepting the offer of employment. Unfortunately, Ata Kwaku inadvertently came across a fraudulent act perpetrated by the shareholders of Therry Ltd. The shareholders also managed the business, and before Ata Kwaku’s appointment, one of the shareholders managed the accounts. The auditors of the Ghana Revenue Authority’s tax compliance unit are asking for documents that might expose the fraudulent act.

Required:

In accordance with IFAC’s Code of Ethics, advise Ata Kwaku on how to respond appropriately in relation to the ethical principles that apply. (5 marks)

Answer

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Tags: Confidentiality, Ethical dilemma, Fraud, IFAC Code of Ethics, Professional Ethics
Level: Level 2

Topic: Professional and Ethical Issues in Financial Reporting
Series: NOV 2021

FR – Nov 2016 – L2 – Q2d – Financial Statement Analysis

Discuss the effects of two events on the financial statements in accordance with IAS 10 Events after the Reporting Period.

Question

Suame Ltd is a listed telecommunication company which prepares its financial statements for the year ended 31 October 2015 in accordance with IFRS. The financial statements are due to be authorised for issue on 15 January 2016.

i) Suame Ltd holds an investment in the shares of a listed company, Asafo Ltd. During November 2015 there was a material fall in the value of Asafo Ltd’s shares. Analysts attribute the fall in value principally to a fraud dating back to December 2014 that was discovered by Asafo Ltd’s management and announced publicly in November 2015.
ii) In December 2015, the directors of Suame Ltd publicly announced a plan to reduce the workforce by 10% as a result of worsening economic conditions.

Required:
Discuss the effects of each of the above items on the financial statements of Suame Ltd for the year ended 31 October 2015 in accordance with IAS 10 Events after the Reporting Period.

Answer

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Tags: Adjusting Events, Fraud, IAS 10, Non-adjusting Events, Post-reporting events, Restructuring
Level: Level 2

Topic: Financial Statement Analysis
Series: NOV 2016

Question Tag: Fraud

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AAA – May 2016 – L3 – Q5 – Ethical Issues in Auditing

Identify and discuss fraud and error in the audit of Badagry Yachting and Marina.

Required:

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AAA – Nov 2013 – L3 – AII – Q2 – Audit Evidence

Audit Evidence, Balance Confirmation, Reporting Dates, Discrepancy, Fraud

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AAA – Nov 2012 – L3 – SB – Q1 – Ethical Issues in Auditing

This case examines ethical issues in auditing related to fraudulent practices in a company involved in human trafficking.

You're reporting an error for "AAA – Nov 2012 – L3 – SB – Q1 – Ethical Issues in Auditing"

BL – Nov 2020 – L1 – SB – Q6a – The Nigerian Legal System

List tests to determine intent to steal during taking or conversion.

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BL – Nov 2020 – L1 – SA – Q7 – Law of Tort

Objective question testing understanding of legal terms related to fraudulent taking.

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PSAF – Nov 2016 – L2 – Q4a – Government Expenditure

This question identifies various sources of loss of public funds in the public sector, focusing on misappropriation and fraud.

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AA – Nov 2020 – L2 – Q1c – Internal Control Systems

Discuss the limitations of internal controls and how they affect an organization’s ability to prevent errors and fraud.

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BL – Nov 2015 – L2 – SB – Q4c – Business Ethics and Corporate Governance

List three items that may constitute fraudulent false accounting under Nigerian laws.

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BL – Nov 2015 – L2 – SB – Q3a – Law of Contract

Explain three types of fraud-related offences under the Criminal Code.

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MI – Nov 2015 – L1 – SB – Q6a – Information Systems

Identifies areas where computers serve as instruments and targets of crime.

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BL – Nov 2014 – L1 – SB – Q4b – Law of Tort

Explain one penalty for theft or fraud and state two consequences of conviction for a criminal offence.

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BL – Nov 2014 – L1 – SA – Q9 – Law of Tort

Identifying the basic law related to theft, fraud, and deception in Nigeria

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BL – May 2017 – L1 – SA – Q8 – Business Ethics and Corporate Governance

Identifying an exception to fraudulent intents.

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BL – May 2015 – L1 – SA – Q10 – Nigerian Legal System

Identify the law that does not encompass basic laws on theft, fraud, and deception in Nigeria.

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AA – July 2023 – L2 – Q1c – Audit and Assurance Evidence, Professional and Ethical Considerations

Explanation of fraud risk factors in risk assessment procedures according to ISA 240.

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AA – Nov 2023 – L2 – Q4a – Audit Failure and Expectation Gap, Audit and Assurance Evidence

This question distinguishes between fraud and error in the audit of financial statements.

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AA – Mar 2023 – L2 – Q2c – Audit and Assurance Risk Environment

Discuss the auditor’s responsibilities concerning fraud and the procedures to follow when fraud risks are identified.

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AA – Dec 2022 – L2 – Q1b – Audit and Assurance Risk Environment

Defines fraud under ISA 240 and provides examples of two types of fraud: fraudulent financial reporting and misappropriation of assets

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FR – Nov 2021 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting

Advising a Chartered Accountant on how to handle an ethical dilemma in relation to confidentiality and fraudulent acts in compliance with IFAC’s code of ethics.

You're reporting an error for "FR – Nov 2021 – L2 – Q5b – Professional and Ethical Issues in Financial Reporting"

FR – Nov 2016 – L2 – Q2d – Financial Statement Analysis

Discuss the effects of two events on the financial statements in accordance with IAS 10 Events after the Reporting Period.

You're reporting an error for "FR – Nov 2016 – L2 – Q2d – Financial Statement Analysis"

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