Question Tag: Internal Controls

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  • 10 Marks

SCS – Nov 2024 – L3 – Q5b – Board Responsibilities in Corporate Governance

Evaluate the role of the board in corporate governance, focusing on responsibilities for strategy, oversight, and ethical leadership.

The role of the board of directors is critical in corporate governance. The National Corporate Governance Code for Ghana (the National Code) issued in November 2022 outlines the board’s core responsibilities.

Required:

Advise the board of BOGML on the FIVE key responsibilities of the board of directors as outlined in the National Code.

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  • 10 Marks

SCS – Nov 2024 – L3 – Q5b – Board Responsibilities in Corporate Governance

Identify and explain the five governance pillars in the National Corporate Governance Code for Ghana 2022.

It is evident that all is not well with the current corporate governance at BOGML. However, for the company to achieve sustainable growth and remain competitive, it must adhere to sound corporate governance principles.

Required:

Using the FIVE governance pillars identified in the National Corporate Governance Code for Ghana 2022 (the National Code), issued in November 2022 by the Institute of Directors-Ghana, advise the company on how to improve upon its current governance structure.

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  • 15 Marks

AAA – Nov 2024 – L3 – Q2a – Audit Risks and Responses for Ecowud Co. LTD

Identifying audit risks in Ecowud Co. LTD and how auditors should respond.

Ecowud Co. LTD (Ecowud) is a sustainable goal-oriented company that develops, manufactures, and sells plywood made from rice husk and plastic waste. The company has a wide customer base, including construction companies and furniture manufacturers across Ghana and West Africa.

You are the Audit Manager of Adomako & Associates and are planning the audit of Ecowud for the year ended 31 December 2023. You and the Audit Engagement Partner attended a planning meeting with Ecowud’s Finance Manager.

You are reviewing the initial meeting notes to develop the audit strategy and plan. The following key matters were captured:

  1. Development Expenditure: Revenue for the year was forecast at GH¢32 million. During the year, Ecowud spent GH¢3.5 million on developing new types of plywood. Some of these are in the early stages of development, while others are nearing completion. The Finance Manager intends to capitalize the entire GH¢3.5 million spent on development since all projects are likely to succeed.

  2. Inventory Valuation: Ecowud uses a standard costing method to value inventory. However, the company has never updated its standard costs since adopting this policy. The company operates multiple warehouses in Ghana and across West Africa, most of which are third-party rented premises.

  3. Accounting Software: A new accounting software was developed internally and implemented in August. The old and new software did not run parallel, as management deemed it burdensome. Two months after implementation, the IT Manager resigned, and a new IT Manager will take over in January 2024.

  4. Long-term Loan and Share Capital: Ecowud restructured its finances, raising GH¢2 million through share issuance and GH¢3.5 million through a long-term loan. The loan has bank-imposed financial conditions, including a minimum total asset level. If breached, the loan becomes immediately repayable.

  5. Revaluation of Land & Buildings: Ecowud follows a revaluation model for land and buildings. The Finance Manager has announced that all land and buildings will be revalued at the year-end.

Required:
Identify FIVE audit risks in relation to Ecowud Co. LTD and for each risk, explain how the auditor should respond.

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  • 4 Marks

AA – Nov 2024 – L2 – Q5a – Tests of Control and Methods for Testing Controls

Explain two tests of control and their corresponding methods of testing.

Oboshie Audit Firm has been engaged to audit the financial statements of Abakah Manufacturing LTD for the year ended December 31, 2023. During the planning phase of the audit, the audit team identified that Abakah Manufacturing LTD relies heavily on its internal control system to ensure the accuracy and completeness of its financial reporting.

Required:
i) Explain TWO tests of control to be performed by Oboshie Audit Firm to evaluate the effectiveness of Abakah Manufacturing LTD’s internal controls over its financial reporting.

ii) Identify a method that should be used under each test of control in (i) above.

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  • 20 Marks

AAA – May 2016 – L3 – Q3 – Internal Audit and Corporate Governance

Identify internal controls for managing risks at KAGM and explain related financial statement risks.

The Kuramo Art Gallery and Museum (KAGM) is in the centre of a city that is popular with tourists. About 65% of its income comes from admission fees and annual memberships, and about 30% of its income comes from sponsorship of special exhibitions by companies. Most of the remaining income comes from a small cafe and gift shop in the art gallery and museum.
Admission fees come from sales of tickets to daily visitors and from annual membership subscriptions from ‘Friends of KAGM’ who are entitled to free entry to the art gallery and museum at any time.
Day tickets can be purchased by credit card in advance, by a telephone ‘hotline’ or at KAGM’s website on the Internet. Alternatively, day tickets can be bought with cash or credit card at the ‘door’ on the day of the visit. Reduced prices are available for children, students, and individuals aged over 65, and there are also special reduced-price ‘family tickets’ for two adults and two children.
Sponsorship arrangements are agreed up to 18 months in advance. Some corporate sponsors, particularly transport companies (bus companies and railway companies) sell advertising to KAGM.
The management of KAGM have identified the following applicable risks that need careful attention. They believe that these risks should be managed actively.

(i) There is a failure to attract more visitors because of the poor condition of many of the paintings in the art gallery and of the items in the museum. Paintings must be restored regularly because their condition deteriorates. KAGM has just one specialist restorer, who is unable to keep up with the required volume of work. The management of KAGM recognise that investment in new items and the restoration of existing items is inadequate, but blame the lack of income for the problem.
(ii) Some corporate sponsorship agreements may not be invoiced due to poor communication between the sponsors, KAGM’s sponsorship managers, and the accounts department of KAGM.
(iii) Some sponsorship agreements are not invoiced at their correct amount. This happens often when a sponsor is also a company that provides advertising for KAGM. Normal practice is for these sponsors to deduct their advertising charges from the amount they pay to KAGM in sponsorship. However, the accounts department in KAGM is not given the details of these set-off arrangements.
(iv) Some of the cash received from day visitors at the door may be stolen (or lost, or used by management for business expenses) and does not reach KAGM’s cashier.
(v) The on-line booking system for buying tickets in advance on the KAGM website is not always available because the website is ‘down’.

Required:

(a) Describe appropriate internal controls to manage each of the applicable risks described above. (15 Marks)
(b) Explain the financial statement risks that arise from each of these applicable risks. (5 Marks)

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  • 25 Marks

AAA – May 2021 – L3 – Q1b – Communication with Those Charged with Governance

Evaluation of internal control weaknesses, implications for audit strategy, and governance reporting for Community Microfinance Bank.

Question:

During the audit year, on the review of the audit work done on Community Microfinance Bank (a new significant audit client), you noted the following issues:

  • At the audit strategy stage, it was agreed that the audit of loans and advances would involve reliance on the effectiveness of internal controls. However, during the test of controls, it was noted that five loans were not approved by the appropriate approving officers. Further review indicated that the loans were genuinely issued to customers but were only approved by officers whose approval limit had been exceeded.
  • During the period under review, the tax authority carried out a tax investigation and noted a significant variance between the company’s estimated tax liabilities and the tax authority’s position. From further discussion, it was noted that the previous tax computation was done by a junior staff who does not have the requisite experience and the computations were not duly reviewed by experienced senior officers of the company.
  • The company deployed a new loan disbursement software which is linked to the financial reporting software. From your review of the new software, the initiator of a transaction could approve the same transaction as long as he/she changes the designation to approving authorities after initiation. You have flagged this as a possible control risk.
  • During your review of the receivables account, a variation was noted between the amount in a customer’s receivables balance in the ledger and the client confirmation. However, the variance was considered not material and not adjusted for. During discussion with the Receivables Manager, it came to your attention that the client in focus is a family member of the Managing Director.

The team is considering the impact of the above observations on the audit.

Required:

(i) Draft a report to management evaluating the implications of the above observations on the control environment and the audit strategy/procedures. (15 Marks)
(ii) Comment on whether the issues are to be reported to those charged with governance of the entity. (10 Marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – SA – Q12 – Forensic Auditing

Identifying examples unrelated to revenue-related fraud.

Which of the following is NOT an example of Revenue Related Fraud?

A. Accounting and documentary
B. Lifestyle of employees
C. Related party transactions
D. Management override of significant internal control activities
E. Sale of assets that is very similar to subsequent purchases at similar amounts

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  • 15 Marks

AAA – Nov 2021 – L3 – Q7 – Audit of IT Systems and Data Analytics

Discuss control environment requirements of ISA 315 and evaluate control activities for Egunje Distributors Ltd.

Egunje Distributors Limited is a private company in which Chief Idowu is the major shareholder. Chief Idowu set up the business to help provide resources for his philanthropic gestures. He has been involved in the major control activities, and the business was achieving its purpose, and things were working well.

After a number of years, Chief Idowu stepped aside from the business and handed over effective management to one of his subordinates, whom he elevated to the rank of General Manager (GM). The GM followed Chief Idowu’s control processes for only one year and then introduced new ideas and processes, resulting in undue amounts being transferred into his private accounts rather than the company’s accounts. This has affected the results of the company.

While Chief Idowu has not decided to take any hasty action, he has decided to bring in your firm, due to its size, so that through your work, he may understand the reasons for the dwindling performance. It has been discussed and agreed that your report on the audit will provide insight into the reasons for the observed decline in performance.

Required:

a. Discuss the control environment, focusing on the requirements of ISA 315 – Identifying and assessing the risk of material misstatement through understanding the entity and its environment, that will be relevant to this situation. (9 Marks)

b. Evaluate the control activities that will require your attention. (6 Marks)

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  • 20 Marks

AAA – Nov 2020 – L3 – Q3 – Audit of Specialized Industries

Audit planning, risk assessment, internal control, audit evidence, and reporting in a not-for-profit organization.

Question:
You are the Audit Manager at HWO, an audit firm. HWO has secured the audit of SIGMA For Africa, a not-for-profit organization. You have been assigned the audit of SIGMA For Africa. An extract of the unaudited financial statements is as follows:

SIGMA For Africa Statement of Financial Position
As at 31 December

Furthermore, you were assigned an audit senior. Based on preliminary discussions with your audit senior, you noted that the senior had no prior experience with audits of not-for-profit entities.

Required:
To help your audit senior understand how to audit a not-for-profit organization, prepare a presentation note summarizing the key considerations in the audit for the following areas:

a. Planning (4 Marks)
b. Risk analysis (4 Marks)
c. Internal control (4 Marks)
d. Audit evidence (4 Marks)
e. Reporting (4 Marks)

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  • 15 Marks

AAA – Nov 2023 – L3 – SC – Q6 – Internal Audit and Corporate Governance

Discusses control activities for Reliable Ltd and external auditor responsibilities in light of control gaps and bank requirements.

Reliable Limited is into wholesale and retail supply and distribution of stationeries to companies and educational institutions. The company maintains business relationships with other enterprises that are owned by close friends and relatives. The books of account of the company were kept manually and in simple Excel. The company had only a staff member in the accounts department since it is a small business operation.

A review of the company’s operations shows that inventory of stationeries purchased was not properly valued due to incomplete recording of purchases made. Although bank statements are obtained, the balances on the bank statements were not reconciled with the cash book.

Cash from sales made was not banked intact, and expenses relating to cash takings from the till were not all recorded or properly monitored. Added to this, goods bought from related parties were sometimes overvalued as suppliers made frivolous claims which could not be disputed due to poor record keeping. The Managing Director and owner of the company has been sick for some time, and the wife concentrated more on her own business, leaving the operations of the company to a relation who is not well educated. Available evidence revealed that invoices and vouchers of the company were approved without management review, and the procedure or selection of suppliers was not transparent.

The company has just won a contract for the supply of stationeries in one of the states in the Federation, and it was found that there was inadequate cash flow to execute the contract. The manager of the company informed the Managing Director’s wife of the development, and it was agreed that a bank loan would be needed. On approaching the bank, updated financial statements of the company were requested to determine the financial health of the business and ability to repay the loan when due.

Your firm has been appointed as auditors of the company with a stipulated deadline to complete the audit so that the company could meet the bank’s conditions. The firm has conducted a preliminary review of the operations of the company, and some control gaps have been noted.

Required:

a. Discuss suitable control activities that will be required in the above scenario and how you will assess the degree of effectiveness of the internal control systems.
(10 Marks)

b. Identify and explain what the external auditors are expected to do during the course of the above audit.
(5 Marks)

Total: 15 Marks

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  • 20 Marks

AAA – Nov 2023 – L3 – SB – Q4 – Internal Audit and Corporate Governance

Evaluate auditor’s rights, management's responsibilities, and reasons for possible auditor resignation at Phil Plc.

Phil Plc has been in business of manufacturing textile materials for about twenty years and has been rendering good returns to shareholders on their investments until about a few years ago, precisely in 2019. The business of the company went down drastically in 2020 due to measures taken to contain the spread of the COVID-19 virus, which included travel bans, quarantines, social distancing, and closures of non-essential services. The COVID-19 pandemic significantly caused disruptions to businesses worldwide, resulting in economic slowdown. The problem was aggravated with the Federal Government of Nigeria enforcing restrictions on movement. All businesses and offices were affected with exceptions of power distribution, oil and gas (petroleum), and retail companies.

COVID-19 pandemic impacted the economy generally, and the following were the impacts on the company:

  • Increase in cost of raw materials as a result of devaluation of the currency due to the drop in the price of crude oil;
  • Shortage in supply of key raw materials sourced from other countries, for example, China; and
  • Increase in ocean freight costs and inland transportation.

The impact of the outbreak of COVID-19 directly caused economic losses through disruptions in supply chains, demand, and financial markets, affecting business investment, household consumption, and international trade. The crisis led to a decline in revenue.

However, despite the challenges, management continued to strive for impressive performance for the shareholders. A board member believed there is an unhealthy relationship between management and the board of directors as she accused management of lack of transparency and threatened to resign. The problem was compounded after the year-end audit when the auditors reported that the company’s internal controls were ineffective and accused management of fraudulent financial reporting. The external auditors also threatened to restate the prior year’s financial statements, believing there were misstatements of certain account balances.

The Managing Director and some directors argued that it is their responsibility to prepare financial statements and that auditors do not have the right to make restatements. However, the Chairman of the audit committee and a few directors supported the auditors and appealed to management to allow the auditors to perform their regulated duties, warning that they may report to the Financial Reporting Council on management’s activities.

The external auditors, surprised by management’s actions, threatened to resign. They were also uncomfortable with the following issues during the audit:

  • The supporting documents from which financial statements were prepared;
  • Review of opening balances revealing omission of some transactions and significant information in disclosures;
  • Misapplication of accounting principles regarding amounts, classifications, presentation, and disclosures.

Added to the above, the external auditors identified risks likely affecting asset valuation and other significant accrued liabilities. Your firm is preparing for a discussion with the audit committee and has instructed your team to review specific sections.

Required:

a. Evaluate the rights and duties of the auditors in a professional engagement. (10 Marks)

b. Enumerate what you consider as the responsibilities of management and those charged with governance in Phil Plc. (5 Marks)

c. Discuss the reason why your firm may resign the appointment as the auditors of the company. (5 Marks)
(Total 20 Marks)

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  • 9 Marks

AA – May 2016 – L2 – Q7b – Risk Assessment and Internal Control

Identify business risks for Moovy Magic’s procurement and suggest control strategies.

You are the internal auditor of Moovy Magic Limited, which runs a chain of video rental stores.

The company guarantees that if a video is not available for rental, the customer will get a free rental when that video comes back into inventory. It is not possible for customers to pre-book videos. The company purchases a number of copies of each video, taking the above policy into account, but has no way of monitoring whether their procurement strategy is effective. Procurement decisions are made and auctioned locally, and no central budgets are produced.

You have been asked by the directors to review the procurement and other strategies of the company.

Required:

Identify and explain the potential business risks arising from the above procurement and other strategies. Suggest controls and strategies that the management of Moovy Magic could instigate to mitigate those business risks. (9 Marks)

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  • 15 Marks

AA – May 2016 – L2 – Q6 – Internal Control Systems

Identify control activities in a trade payables system and the need for substantive procedures.

Control activities may be defined as policies, procedures, and operations that help to enable management directives to be carried out. These activities are detailed procedures designed to prevent, or to detect and correct errors that may arise in processing information.

Required:

a. Set out the five types of control activities and illustrate each one in the context of purchases or trade payables system. (10 Marks)

b. Explain why, even where tests of controls prove satisfactory, substantive procedures can never be completely eliminated. (5 Marks)

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  • 20 Marks

PSAF – May 2017 – L2 – SA – Q3 – Accounting for Government Assets and Liabilities

Discuss store management, accounting officer responsibilities, and preventive actions for stock management in the public sector.

Engineer Paul Maihala assumed duty as the Managing Director/CEO of FCT Abuja Water Authority (FAWA) – a company fully owned by the Federal Government of Nigeria. FAWA is responsible for the supply of water to the Federal Capital. Engr. Maihala, before resuming at FAWA in October 2015, was the Director (General Services) at the Federal Ministry of Works and Housing. Upon resumption, he was determined to put an end to the shortage of water supply in the Federal Capital in fulfillment of the mandate given to him on his appointment.

At a meeting with his directors, the new Managing Director/CEO asked for a list of challenges facing the Authority and suggestions on how to solve them. Top on the list of challenges were the issues of unreliable public power supply and the excessive cost of running generators due to the high cost of diesel. There was also the case of shortage of raw materials such as chlorine (Sodium Hypochlorite) and other essential chemicals used for water treatment.

The Director, (Maintenance) decried the incessant cases of non-availability of essential chemicals and materials. He also said that there were cases of low-quality and unusable chemicals supplied to the store.

The Managing Director directed that adequate stock of diesel and essential chemicals must be kept at all times and that he would not tolerate any case of stock-out, diversion, or theft of diesel, chemicals, and other store items.

The Director, (General Services), stated that the major challenge he faced was that the Authority’s store was porous and that the controls in the store were inadequate. He blamed the Finance and Accounts department for inadequate record-keeping, leading to frequent stock-outs and non-documentation of store discrepancies. He said that “he would have preferred a situation where the accounts department would leave his stores alone.”

The Director, Finance and Accounts, said in his presentation that he had no control over the store as the storekeeper reports to the Director, General Services. He said he was only responsible for the store accounting function and that the officer-in-charge of stores accounting had his office in the Accounts section. He further said that the storekeeper was not cooperating with the accounts staff and saw them as an unnecessary disturbance as they often presented themselves as “policemen.” The argument between the two directors was heated to the extent that the meeting had to be adjourned.

Required:

a. According to Government Financial Regulation (2009 Edition), explain the term “STORES” (2 Marks)

b. In line with the Treasury’s objective of ensuring an effective system of internal control in the management of stores, what are the responsibilities of the Accounting Officer? (4 Marks)

c. State SIX actions the Accounting Officer could take to prevent cases of: i. Stock-outs (6 Marks) ii. Diversion or theft of diesel or other store items. (6 Marks)

d. State TWO measures necessary to ensure that chemicals and other store materials meet the required standards. (2 Marks)

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  • 12 Marks

AA – Nov 2016 – L2 – Q3a – Internal Control Systems

his question identifies and evaluates internal control issues at Clear View Cinemas, including cash handling, ticketing, and reconciliation processes.

Clear View Cinemas Nigeria Limited operates in the entertainment industry in five different locations. Access into the Cinema Hall is based on tickets purchased at the point of entry. The entity’s ticketing process is manually driven. At the beginning of every day, the ticketing staff collects and signs for manual tickets from the Accountant. Unused tickets are returned to the Accountant, while the ticketing staff prepares a sales report for the day, which is reviewed and signed off by the Accountant. Concession items such as popcorn and soft drinks are also sold to customers. Both the ticketing and concession transactions are paid for in cash. All cash received is handed over to the Accountant who posts the transactions to SAGE Line 50 Application at the end of every day’s transactions. In view of the Company’s prime location and level of awareness, it records a high volume of transactions daily.
To ensure there are no delays in payment of routine bills and also reduce exposure to bank charges, the Accountant disburses cash from daily collections and the balance is lodged into the bank on an irregular basis. Bank reconciliation statements are prepared at the end of the financial year in readiness for the audit.

Required:
As the Auditor in charge of this engagement, identify and evaluate the relevant internal control issues in the above scenario.

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  • 15 Marks

AA – May 2022 – L2 – SC – Q5 – Audit of Public Sector Entities

Advise on physical inventory count procedures, records to retain, and how to value inventory items.

Garkuwa Nigeria Limited is a newly incorporated company that deals in building materials. The Managing Director is engaged on a full-time basis in the running of the business. Other employees are: the accounts officer who keeps the books, the cashier, and two laborers. The company does not maintain inventory records, and inventory is a material item in the financial statements. The Managing Director wants you to advise him on inventory count procedures with a view to ensuring that the methods used at arriving at the inventory value will be satisfactory. The first financial statements of the company are to be made up for the 12 months to December 31, 2021.

a. Advise the Managing Director on how he should organize and carry out the physical inventory count. (9 Marks)
b. State the records and information he should retain in connection with the count. (3 Marks)
c. How should he arrive at the individual values for the various inventory items? (3 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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  • 4 Marks

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.

Explain the limitations of internal controls.

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  • 30 Marks

PSAF – May 2018 – L2 – Q1 – Introduction to Public Sector Accounting

Preparation of adjusted cash book and bank reconciliation, and reporting procedures for fraud in a public sector context.

It has become a very important task for Accounting Officers of Ministries, Departments, and Agencies (MDAs) to pay more attention to and make regular checks on their corporation’s cash books and bank accounts.

Internal control systems are usually put in place to prevent the possibility of committing errors and fraud. This has been more challenging and requires all accounting officers to be more knowledgeable in the act of keeping records. Every organization has to keep a close watch on its bank account transactions to guard against fraud or the infiltration of extraneous entries. This is done through regular preparation of bank reconciliation statements.

As a result of widespread internet fraud, the Accounting Officer of the Ministry of Land and Housing, Alhaji Maito Garba, has been concerned with the Ministry’s banking transactions. In recent times, there have been challenges reconciling the Ministry’s banking transactions. There was no time when the Ministry’s bank balance agreed with the cash book balance. However, there was no adequate information to suggest that there was fraud or misappropriation of funds. Nonetheless, Alhaji Maito Garba invited you to his office for professional advice.

He informed you that the Director of Finance of the Ministry had been avoiding him on matters relating to the Ministry’s bank and cash positions.

He also informed you that he was able to retrieve some of the finance department’s data, which he handed over to you as detailed below:

Transactions recorded in the books for the year ended December 31, 2017
(Amount in N’000)

Description N’000
Subvention received 55,000.00
Interest from investment 3,501.68
Rent on property 11,300.35
Ground rent 16,801.00
Saving deposits interest 6,281.00
Grants for construction of estates 51,301.50
Deposits for land 19,000.60
Personnel costs 36,801.00
Travel and transport 7,000.40
Telephone services 2,401.50
Repairs of property 4,868.25
Stationery 901.86
Provision of water for estate 14,300.60
Consultancy services 3,001.26
Training and staff development 1,001.56
Auditing and staff development 1,500.00
Entertainment and hospitality 500.00
Construction of estate 35,607.58
Construction of access roads 8,400.60
Cash book balance as at 1/1/2017 21,500.00

Preliminary investigations revealed the following information:

  1. 1,370 prospective landowners deposited N10,000 each, while 580 deposited N20,000 for high- and low-density areas of the estate, respectively.
  2. Included in the payments for the construction of the estate were various duplicated vouchers amounting to N9 million.
  3. The bank balance as per the statement on December 31, 2017, was N39,560,600.
  4. Uncredited cheques amounted to N6.9 million, while unpresented cheques stood at N4,337,800.
  5. There were some falsifications in the bills for items bought for the provision of water for the estate.

Required:

a. Prepare the adjusted cash book for the Ministry of Land and Housing for the year ended December 31, 2017. (10 Marks)

b. Prepare the bank reconciliation statement for the Ministry of Land and Housing as of December 31, 2017. (10 Marks)

c. Identify FOUR statutory institutions that the suspicious case(s) of fraud in (b) above could be reported to. (4 Marks)

d. State FOUR procedures that should be followed by the Accounting Officer in reporting the case(s) of fraud to the statutory institutions in (c) above. (4 Marks)

e. Identify TWO related offenses that two of the statutory institutions in (c) above can deal with in this case. (2 Marks)

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SCS – Nov 2019 – L3 – Q2d – Ethics and social responsibility

Discuss the ethical operations of Ghanalux and recommend internal controls to enhance customer safety and service.

i) Discuss whether the company is operating in an ethical manner.
(5 marks)

ii) Recommend internal controls that might be implemented by the company to improve customer safety and security, and to deal with the problems of poor service to customers.
(7 marks)

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