Question Tag: Procedures

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  • 8 Marks

AAA – May 2017 – L3 – Q4c – Assurance Engagements

Explain Prospective Financial Information (PFI) and procedures for assurance engagements on profit forecasts.

Traditionally, the role of the auditor has focused on providing assurance on “historical” events, for example, on financial statements relating to a period of time in the past. As business and economic environments have changed, demand has grown for practising accountants to provide assurance on prospective financial information (PFI).

Required:

i. Explain “Prospective Financial Information” (2 Marks)

ii. State and explain SIX procedures you will perform in a PFI assurance engagement on Profit Forecast of a company. (6 Marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q17 – Quality Control in Audit Firms

Identifies the requirement for documenting and communicating quality control policies in audit firms.

Audit firms are required to ensure that their quality control policies and procedures are documented and ……………… to the firm’s personnel.

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  • 15 Marks

AA – Nov 2022 – L2 – Q7 – Audit Planning and Procedures Level: Level 2

This question covers audit planning considerations, benefits of planning, spreading audit work, and final audit procedures.

In order to ensure that an audit is carried out effectively and efficiently, the work needs to be planned, controlled and recorded at each stage of the program.
Required:
a. What matters must be taken into consideration when planning an audit? (3 Marks)
b. What are the benefits of adequate audit planning? (3 Marks)
c. What are the key benefits that would arise from spreading the audit work across interim and final audits? (4 Marks)
d. State FIVE audit procedures that are carried out at the final audit stage. (5 Marks)

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  • 20 Marks

AA – May 2024 – L2 – SA – Q3 – Audit evidence

This question tests knowledge on reasons for obtaining letters of representation from clients' management, steps to take if representations are contradicted, and drafting a letter of representation.

You are the Audit Senior-in-charge of the audit of Edinburg Nigeria Limited. The management of the company made some representations to you, which include:

  • Inventory worth ₦15 million in its only branch in Niger Republic, which you couldn’t visit because of the ongoing civil unrest in that country;
  • A donation of ₦500,000 was made to a motherless babies home by the Chairman but it was not receipted; and
  • The chairman received medical treatment amounting to ₦600,000 during his official visit to Germany to negotiate with equipment vendors, and he did not come back with any documentary evidence.

You have reported these matters to the partner of your firm, Olumisi Oregun & Co.

Required:

a. Explain two reasons for obtaining letters of representation from clients’ management. (4 Marks)

b. Explain three steps you will take if a representation by management is contradicted by other audit evidence. (6 Marks)

c. Draft a letter of representation, which the management of Edinburg Nigeria Limited will present to your firm. (10 Marks)

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  • 8 Marks

AA – Nov 2016 – L2 – Q4c – Regulatory Framework and Audit Responsibilities

Outline the procedures for appointing auditors according to the Companies Act.

Outline the procedures for the appointment of auditors in accordance with the Companies Act 1963 (Act 179). (8 marks)

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  • 4 Marks

PSAF – Nov 2016 – L2 – Q4e – Public Expenditure and Financial Accountability Framework.

Identify four procedures necessary for effective management of public expenditure.

Effective management of public expenditure is an essential mechanism for the effective allocation and the use of public funds to achieve the nation’s policy objectives.

Required:
Identify four procedures necessary for effective management of public expenditure. (4 marks)

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  • 4 Marks

PSAF – Nov 2016 – L2 – Q5a – Public sector fiscal planning and budgeting

Explain revenue management and identify three procedures involved.

i) Explain the term Revenue Management.
ii) Identify three procedures involved in Revenue Management. (4 marks)

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  • 10 Marks

BMIS – May 2017 – L1 – Q5b – Introduction to business strategy

Explain key concepts related to strategic planning, including strategy, policies, procedures, budgets, and rules.

Question:

Strategic planning has been defined as the process of setting objectives for the organisation and laying down the policies which are to govern the acquisition, usage, and disposal of the resources used to achieve those objectives.

Required: Explain the following:

i) Strategy
ii) Policies
iii) Procedures
iv) Budget
v) Rules
(10 marks)

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  • 20 Marks

AAA – May 2020 – Q2 – Assurance Services

Evaluate the risks, audit implications, and ethical considerations for accepting an engagement to provide assurance on EnvironmentalCare Ghana's Sustainability Report, focusing on environmental and social KPIs.

You are a manager in Sustainability Ghana, an independent member of Sustainability International, a global firm of Chartered Certified Accountants. You are responsible for evaluating proposed engagements and for recommending to a team of partners whether or not an engagement should be accepted by your firm.

EnvironmentalCare Ghana, a listed company, is an existing audit client and is an international energy producing company, with a global network including 220 countries and 300,000 employees. The company offers electricity using renewable resources to individual and corporate customers, as well as storage and logistical services.

EnvironmentalCare Ghana takes its corporate social responsibility seriously, and publishes social and environmental key performance indicators (KPIs) in a Sustainability Report, which is published with the financial statements in the annual report. Partly in response to requests from shareholders and pressure groups, EnvironmentalCare Ghana’s management has decided that in the forthcoming annual report, the KPIs should be accompanied by an independent assurance report. An approach has been made to your firm to provide this report in addition to the audit.

To help in your evaluation of this potential engagement, you have been given an extract from the draft Sustainability Report, containing some of the KPIs published by EnvironmentalCare Ghana. In total, 25 environmental KPIs, and 50 social KPIs are disclosed.

Extract from Sustainability Report Year ended 31 December 2018 Draft Year ended 31 December 2017 Actual
CO2 emissions (million tonnes) 26.8 28.3
Energy use (million kilowatt hours) 4,895 5,250
Charitable donations (GH¢ million) 10.5 8.2
Number of serious accidents in the workplace 60 68
Average annual expenditure on training per employee GH¢180 GH¢175

You have also had a meeting with Kofi Ghana, the manager responsible for the audit of EnvironmentalCare Ghana, and notes of the meeting are given below.

Notes from meeting with audit manager, Kofi Ghana

  • Sustainability Ghana has audited EnvironmentalCare Ghana for three years, and it is a major audit client of the firm, due to its global presence and recent listing on two major stock exchanges. The audit is managed from the Airport office, which is also the location of the global headquarters of EnvironmentalCare Ghana. The audit work is nearly complete, and the annual report is to be published in about four weeks, in time for the company’s meeting, scheduled for 31 January 2019.
  • No work has been done on the KPIs, other than review them for consistency, as we would with any ‘other information’ issued with the financial statements. The KPIs are produced by EnvironmentalCare Ghana’s Sustainability Department, located in Fartown. There has been no visit to EnvironmentalCare Ghana’s offices in Fartown as it is in a remote location overseas, and the department’s based there are not relevant to the audit.
  • Audit procedures were performed on the charitable donations, as disclosed in a note to the financial statements, and our evidence indicates that there have been donations of GH¢9 million this year, which is the amount disclosed in the note. However, the draft KPI has a different figure of GH¢10.5 million, and this is the figure highlighted in the draft Chairman’s Statement as well as the draft Sustainability Report. GH¢9 million is material to the financial statements.
    Your firm has recently established a sustainability reporting assurance team based at the
    Airport office and if the engagement to report on the Sustainability Report is accepted, it
    would be performed by members of that team, who would not be involved with the audit.
    Required:
    a) Identify and explain the matters to be evaluated in making the acceptance decision to
    perform an assurance engagement on the Sustainability Report of EnvironmentalCare
    Ghana. (14 marks)
    b) Recommend procedures that could be used to verify the following draft KPIs:
    i) The number of serious accidents in the workplace; and (3 marks)
    ii) The average annual expenditure on training per employee. (3 marks)
    (Total: 20 marks)

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  • 8 Marks

AAA – May 2017 – L3 – Q4c – Assurance Engagements

Explain Prospective Financial Information (PFI) and procedures for assurance engagements on profit forecasts.

Traditionally, the role of the auditor has focused on providing assurance on “historical” events, for example, on financial statements relating to a period of time in the past. As business and economic environments have changed, demand has grown for practising accountants to provide assurance on prospective financial information (PFI).

Required:

i. Explain “Prospective Financial Information” (2 Marks)

ii. State and explain SIX procedures you will perform in a PFI assurance engagement on Profit Forecast of a company. (6 Marks)

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  • 1 Marks

AAA – Nov 2012 – L3 – AII – Q17 – Quality Control in Audit Firms

Identifies the requirement for documenting and communicating quality control policies in audit firms.

Audit firms are required to ensure that their quality control policies and procedures are documented and ……………… to the firm’s personnel.

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  • 15 Marks

AA – Nov 2022 – L2 – Q7 – Audit Planning and Procedures Level: Level 2

This question covers audit planning considerations, benefits of planning, spreading audit work, and final audit procedures.

In order to ensure that an audit is carried out effectively and efficiently, the work needs to be planned, controlled and recorded at each stage of the program.
Required:
a. What matters must be taken into consideration when planning an audit? (3 Marks)
b. What are the benefits of adequate audit planning? (3 Marks)
c. What are the key benefits that would arise from spreading the audit work across interim and final audits? (4 Marks)
d. State FIVE audit procedures that are carried out at the final audit stage. (5 Marks)

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  • 20 Marks

AA – May 2024 – L2 – SA – Q3 – Audit evidence

This question tests knowledge on reasons for obtaining letters of representation from clients' management, steps to take if representations are contradicted, and drafting a letter of representation.

You are the Audit Senior-in-charge of the audit of Edinburg Nigeria Limited. The management of the company made some representations to you, which include:

  • Inventory worth ₦15 million in its only branch in Niger Republic, which you couldn’t visit because of the ongoing civil unrest in that country;
  • A donation of ₦500,000 was made to a motherless babies home by the Chairman but it was not receipted; and
  • The chairman received medical treatment amounting to ₦600,000 during his official visit to Germany to negotiate with equipment vendors, and he did not come back with any documentary evidence.

You have reported these matters to the partner of your firm, Olumisi Oregun & Co.

Required:

a. Explain two reasons for obtaining letters of representation from clients’ management. (4 Marks)

b. Explain three steps you will take if a representation by management is contradicted by other audit evidence. (6 Marks)

c. Draft a letter of representation, which the management of Edinburg Nigeria Limited will present to your firm. (10 Marks)

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  • 8 Marks

AA – Nov 2016 – L2 – Q4c – Regulatory Framework and Audit Responsibilities

Outline the procedures for appointing auditors according to the Companies Act.

Outline the procedures for the appointment of auditors in accordance with the Companies Act 1963 (Act 179). (8 marks)

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  • 4 Marks

PSAF – Nov 2016 – L2 – Q4e – Public Expenditure and Financial Accountability Framework.

Identify four procedures necessary for effective management of public expenditure.

Effective management of public expenditure is an essential mechanism for the effective allocation and the use of public funds to achieve the nation’s policy objectives.

Required:
Identify four procedures necessary for effective management of public expenditure. (4 marks)

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  • 4 Marks

PSAF – Nov 2016 – L2 – Q5a – Public sector fiscal planning and budgeting

Explain revenue management and identify three procedures involved.

i) Explain the term Revenue Management.
ii) Identify three procedures involved in Revenue Management. (4 marks)

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  • 10 Marks

BMIS – May 2017 – L1 – Q5b – Introduction to business strategy

Explain key concepts related to strategic planning, including strategy, policies, procedures, budgets, and rules.

Question:

Strategic planning has been defined as the process of setting objectives for the organisation and laying down the policies which are to govern the acquisition, usage, and disposal of the resources used to achieve those objectives.

Required: Explain the following:

i) Strategy
ii) Policies
iii) Procedures
iv) Budget
v) Rules
(10 marks)

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  • 20 Marks

AAA – May 2020 – Q2 – Assurance Services

Evaluate the risks, audit implications, and ethical considerations for accepting an engagement to provide assurance on EnvironmentalCare Ghana's Sustainability Report, focusing on environmental and social KPIs.

You are a manager in Sustainability Ghana, an independent member of Sustainability International, a global firm of Chartered Certified Accountants. You are responsible for evaluating proposed engagements and for recommending to a team of partners whether or not an engagement should be accepted by your firm.

EnvironmentalCare Ghana, a listed company, is an existing audit client and is an international energy producing company, with a global network including 220 countries and 300,000 employees. The company offers electricity using renewable resources to individual and corporate customers, as well as storage and logistical services.

EnvironmentalCare Ghana takes its corporate social responsibility seriously, and publishes social and environmental key performance indicators (KPIs) in a Sustainability Report, which is published with the financial statements in the annual report. Partly in response to requests from shareholders and pressure groups, EnvironmentalCare Ghana’s management has decided that in the forthcoming annual report, the KPIs should be accompanied by an independent assurance report. An approach has been made to your firm to provide this report in addition to the audit.

To help in your evaluation of this potential engagement, you have been given an extract from the draft Sustainability Report, containing some of the KPIs published by EnvironmentalCare Ghana. In total, 25 environmental KPIs, and 50 social KPIs are disclosed.

Extract from Sustainability Report Year ended 31 December 2018 Draft Year ended 31 December 2017 Actual
CO2 emissions (million tonnes) 26.8 28.3
Energy use (million kilowatt hours) 4,895 5,250
Charitable donations (GH¢ million) 10.5 8.2
Number of serious accidents in the workplace 60 68
Average annual expenditure on training per employee GH¢180 GH¢175

You have also had a meeting with Kofi Ghana, the manager responsible for the audit of EnvironmentalCare Ghana, and notes of the meeting are given below.

Notes from meeting with audit manager, Kofi Ghana

  • Sustainability Ghana has audited EnvironmentalCare Ghana for three years, and it is a major audit client of the firm, due to its global presence and recent listing on two major stock exchanges. The audit is managed from the Airport office, which is also the location of the global headquarters of EnvironmentalCare Ghana. The audit work is nearly complete, and the annual report is to be published in about four weeks, in time for the company’s meeting, scheduled for 31 January 2019.
  • No work has been done on the KPIs, other than review them for consistency, as we would with any ‘other information’ issued with the financial statements. The KPIs are produced by EnvironmentalCare Ghana’s Sustainability Department, located in Fartown. There has been no visit to EnvironmentalCare Ghana’s offices in Fartown as it is in a remote location overseas, and the department’s based there are not relevant to the audit.
  • Audit procedures were performed on the charitable donations, as disclosed in a note to the financial statements, and our evidence indicates that there have been donations of GH¢9 million this year, which is the amount disclosed in the note. However, the draft KPI has a different figure of GH¢10.5 million, and this is the figure highlighted in the draft Chairman’s Statement as well as the draft Sustainability Report. GH¢9 million is material to the financial statements.
    Your firm has recently established a sustainability reporting assurance team based at the
    Airport office and if the engagement to report on the Sustainability Report is accepted, it
    would be performed by members of that team, who would not be involved with the audit.
    Required:
    a) Identify and explain the matters to be evaluated in making the acceptance decision to
    perform an assurance engagement on the Sustainability Report of EnvironmentalCare
    Ghana. (14 marks)
    b) Recommend procedures that could be used to verify the following draft KPIs:
    i) The number of serious accidents in the workplace; and (3 marks)
    ii) The average annual expenditure on training per employee. (3 marks)
    (Total: 20 marks)

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