Question Tag: Professional Ethics

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AAA – Nov 2024 – L3 – Q5b – Anti-Money Laundering Regulations and Auditor Responsibilities

Discuss anti-money laundering regulations in Ghana and auditors' responsibilities in compliance.

Question

Lamsey Jewelers is a family-owned business specializing in high-end jewellery, located in Dunkwa-On-Offin in the Central Region of Ghana. The company sources gold from various suppliers in the small-scale mining sector. Recently, the Minerals Commission received anonymous tips suggesting that Lamsey Jewelers may be involved in laundering money through its operations. Authorities suspect that the business could be used to conceal the origins of illicit funds through gold purchases and sales.

To investigate these suspicions, regulatory authorities have appointed Baba Yara and Associates, an independent auditing firm, to conduct a thorough review of Lamsey Jewelers’ operations and financial transactions. During the audit, Baba Yara and Associates discovered that Lamsey Jewelers has been accepting large cash payments for custom jewellery orders without conducting proper due diligence on the customers. Several transactions involving cash payments exceed typical retail amounts, raising suspicions of potential money laundering.

Required:

i) Discuss the key legal and regulatory requirements in Ghana related to anti-money laundering relevant to Lamsey Jewelers.

ii) Discuss the obligations placed on professional firms such as Baba Yara and Associates in relation to money laundering.

Answer

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Tags: Anti-Money Laundering, Audit Procedures, Compliance, Due diligence, Financial Crimes, Professional Ethics, Regulatory Framework, Risk Assessment
Level: Level 3

Topic: Regulatory Framework and Audit Responsibilities
Series: Nov 2024

AA – Nov 2024 – L2 – Q1b – Engagement Letter Contents

Explains the key contents of an audit engagement letter, highlighting the responsibilities and scope of an audit.

Question

A firm or individual having accepted an appointment as an auditor of a client company shall submit an engagement letter to the board of directors of the client company. The engagement letter can be seen as the basis for the contract between the company and the auditor.

Required:
In relation to the above statement, state and explain FIVE contents of the engagement letter.

Answer

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Tags: Audit Contract, Audit Scope, Auditor Responsibilities, Client Expectations, Engagement letter, IAASB, Professional Ethics
Level: Level 2

Topic: Professional and Ethical Considerations
Series: Nov 2024

AAA – May 2019 – L3 – Q1 – Forensic Auditing

Analyze forensic accounting, discuss ethical principles, and outline procedures for Ayeniromo Microfinance Bank forensic investigation.

Question

Ayeniromo Microfinance Bank Limited has been operating for more than five years in Ekemode Local Government area of a state in Nigeria. The bank opened three cash centres in three locations in the local government area in 2013.

Business activities have been very encouraging in one of the cash centres until a sudden change in activities in 2016. This resulted in the negative performance of the cash centre. The managing director thereafter decided to investigate the causes of the problems in the cash centre.

An interim report of the preliminary investigation on the cash centre identified infractions on cash takings from customers by some staff of the cash centre during the year 2016.

The managing director and the board decided to engage your firm as forensic accountants with the following terms of reference:

Investigate whether fraud has actually occurred and if so, to obtain evidence to support that assertion in a court of law.
Identify the individual(s) who has/have committed the fraud and obtain evidence that can be used in a court of law to link them with the fraud.
Estimate the financial loss that has occurred because of the fraud.

You are required to:
a. Discuss the concept of forensic accounting and explain the nature of forensic investigation and forensic audit. (10 Marks)
b. Analyse and apply the FIVE fundamental principles of the IFAC’s Code of Ethics for professional accountants to forensic investigation. (10 Marks)
c. Explain the procedures to be followed in a forensic investigation engagement for Ayeniromo Microfinance Bank Limited. (10 Marks)

Answer

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Tags: Forensic Accounting, Fraud investigation, Investigation procedures, Professional Ethics
Level: Level 3

Topic: Forensic Auditing

AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

Question

Blackmart Plc is one of your listed audit clients which offers property management, property financing, and mortgage services to its clients. During the audit of the company, the following matters came to your attention:

(i) Grace Sadiku, one of the audit team members, has provisionally agreed to take out a mortgage facility with a duration of 10 years using the facility of Blackmart Plc to finance her first residential property. In the area where the property is located, the first residential property gets a full tax waiver on the entire installments paid within the first 5 years, which is usually a significant tax incentive. The mortgage facility would be secured by the property and it has been defined as the best offer available in the market.

(ii) Also, during the period, the Human Resources (HR) Manager of Blackmart Plc resigned, and the company had reached out to your firm to provide a staff on secondment till a substantive HR Manager is appointed.

(iii) The management of Blackmart has also informed your audit team that the company maintains only two bank accounts and there will be no need to circularise the banks as the auditors can rely on the balances as generated from the bank’s portal as at the end of the year.

(iv) The audit committee has asked your firm to work with the internal audit team to design internal controls over the part of the accounting system which deals with revenue, and also evaluate the operating effectiveness of the internal controls.

Required:
Prepare a memo to your Manager, commenting on the professional and ethical issues arising from the audit of Blackmart Plc and also suggest to him/her on how to manage the identified issues. (15 Marks)

Answer

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Tags: Auditor Behavior, Bank Circularisation, Independence, Internal Control, Professional Ethics
Level: Level 3

Topic: Ethical Issues in Auditing

AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability

Discuss criminal charges against accountants, reasons auditors prefer out-of-court settlements, and the disadvantages of such settlements.

Question

Auditors’ liabilities may arise under common law and statute. Statutory liability may be civil or criminal. Professional accountants are increasingly guiding against incidences of litigation that may impact negatively on their work.

You are required to:

(a) Outline SIX ways through which accountants may be charged for criminal offenses. (6 Marks)

(b) Explain SIX reasons why auditors are willing to settle legal matters with their clients out of court. (6 Marks)

(c) State THREE disadvantages of an out-of-court settlement. (3 Marks)

(Total: 15 Marks)

Answer

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Tags: Auditor Liability, criminal offenses, legal considerations, Litigation, Out of Court Settlement, Professional Ethics
Level: Level 3

Topic: Auditor’s Legal Liability
Series: MAY 2013

AAA – Nov 2013 – L3 – AII – Q19 – Ethical Issues in Auditing

Identify the term for codified moral rules and regulations guiding professional behavior.

Question

The codified rules and regulations which are mainly based on moral duties and obligations on how professionals should carry out their duties and how to behave in the society are known as……………….

Answer

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Tags: Code of Conduct, Morals, Professional Ethics
Level: Level 3

Topic: Ethical Issues in Auditing
Series: NOV 2013

CR – May 2021 – L3 – Q7a – Ethical Issues in Corporate Reporting

Discuss unethical organizational acts and recommend the actions the Chief Accountant should take in a scenario of misrepresentation in financial reporting.

Question

Femmy PLC operates in a city where a major insurance company has just announced a restructuring that will lay off 4,000 employees. For Femmy PLC, accounts receivable represents one of the major assets of the company. Although the company’s annual uncollectible accounts are not out of line, they are material in size. The company is about to submit its application for a bank loan. Sales and net income have declined in the past year, and some customers are falling behind in settling their accounts.

A steady financial performance is necessary to be able to secure the anticipated bank loan. Therefore, management felt there is the need to underestimate the uncollectible accounts this year to show a small growth in earnings. They believe that future successful years will average out the losses.

More so, since the company has a history of success, the adjustments are seen as mere accounting measures and estimates. The Chief Accountant viewed management’s action as unethical.

Required:
i. Discuss the meaning of unethical acts by organizations. (5 Marks)
ii. What should the Chief Accountant do under this circumstance? (5 Marks)

Answer

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Tags: Earnings Management, Financial Reporting Ethics, Professional Ethics, Unethical Accounting Practices
Level: Level 3

Topic: Ethical Issues in Corporate Reporting

AAA – Nov 2021 – L3 – Q5 – Ethical Issues in Auditing

Evaluate ICAN requirements on advertising for competing firms and discuss the tendering process, including the concept of "low balling."

Question

Yeye Oge Limited has decided to change its auditors after the current year’s audit. The present auditor has served for a number of years, and there is a mutual agreement on the change. The relationship between the company’s key officials and the partner of the present audit firm had become so cordial that both parties are now concerned about a potential deviation from a professional relationship, hence the mutual agreement for the change of auditors.

You work for the present audit firm, and your partner involved in this case has been asked to participate in the selection of a new audit firm for this client. Both the Chief Executive of the company and your partner have agreed to follow due processes in selecting the new auditor. To ensure proper understanding, certain background processes required for professional selection need to be provided to the chief executive of the company.

Required:

a. Evaluate the requirements of the Institute on advertising and publicity that need to be focused on while considering the competing firms. (5 Marks)

b. Discuss the approved tendering process and evaluation of tenders as a guide, giving proper meaning to the term “Low balling.” (10 Marks)

Answer

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Tags: Advertising and publicity, Audit firm evaluation, Auditor selection, Low-balling, Professional Ethics, Tendering process
Level: Level 3

Topic: Ethical Issues in Auditing

AAA – Nov 2011 – L3 – SA – Q14 – Regulatory Investigations and Disciplinary Actions

Identifies a sanction not applicable for ICAN members' misconduct.

Question

Which ONE of the following sanctions may NOT be imposed by The Institute of Chartered Accountants of Nigeria on its members for misconduct?

A. Reprimand
B. Suspension from membership
C. Expulsion from membership
D. Sealing off practice office
E. Payment of costs

Answer

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Tags: Disciplinary Actions, ICAN, Member Misconduct, Professional Ethics, Sanctions
Level: Level 3

Topic: Regulatory Investigations and Disciplinary Actions
Series: NOV 2011

AAA – May 2018 – L3 – SB – Q4 – Ethical Issues in Auditing

Educate staff on IFAC’s Code of Ethics principles, types of independence, and general sources of ethical threats in accounting.

Question

You are the HR partner in Ekemode & Company (Chartered Accountants). As part of the continuous training program of your firm, you are to organize an in-house seminar to educate the staff of your firm on Rules of Professional Conduct. You have decided to emphasize the IFAC’s Code of Ethics for Professional Accountants published by the International Ethics Standard Board for Accountants (IESBA), which was recently adopted by ICAN into their localized code called “The Professional Code of Conduct and Guide for Members.”

Required:

a. Explain briefly the FIVE fundamental principles of the IFAC’s Code of Ethics for Professional Accountants. (7½ Marks)

b. Explain independence of mind and independence of appearance to the staff. (5 Marks)

c. Explain briefly THREE general sources of threat to the fundamental principles of the IFAC’s Code of Ethics for Professional Accountants. (7½ Marks)

(Total 20 Marks)

Answer

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Tags: Ethical Threats, Fundamental Principles, ICAN Code, IESBA, IFAC Code of Ethics, Independence, Professional Conduct, Professional Ethics
Level: Level 3

Topic: Ethical Issues in Auditing
Series: MAY 2018

BMIS – Nov 2021 – L1 – Q2c – Professional ethics in accounting and business

Outline actions by accountants that demonstrate acting in the public interest.

Question

Although a professional code of ethics does not clearly define ‘public interest’, an Accountant would be deemed to be acting in the public interest when he takes certain actions to perform his duties.

Required:
Outline FIVE (5) of such actions. (5 marks)

Answer

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Tags: Accounting, Professional Conduct, Professional Ethics, Public Interest
Level: Level 1

Topic: Professional ethics in accounting and business
Series: NOV 2021

BMIS – Nov 2021 – L1 – Q2b – Professional ethics in accounting and business

Differentiate between a business code of ethics and a professional code of ethics for accountants.

Question

You have been invited as the Chief Operating Officer of Your Trusted Associates, a reputable Accounting and Management Consulting firm, to deliver the keynote address at a graduation ceremony for newly qualified Accountants.

Required:
In your address, differentiate between a “business code of ethics” and a “professional code of ethics” for Professional Accountants. (5 marks)

Answer

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Tags: Accountants, Business Ethics, Code of Conduct, Professional Ethics
Level: Level 1

Topic: Professional ethics in accounting and business
Series: NOV 2021

AAA – Nov 2015 – L3 – Q2 – Internal audit and outsourcing

Considerations for appointing an internal auditor, expected briefing issues, and comparing assurance and consulting activities.

Question

The Afigya Sekyere District Assembly has appointed Ms. Afi Kakrabah as the Internal Auditor. She was appointed by the District Chief Executive (DCE) after he attended a seminar at GIMPA for newly appointed DCEs, where the importance of pre-auditing of all payments by Internal Auditors for expenditures incurred by all Government Ministries, Departments, Municipal, and District Assemblies (MMDAs) was stressed.

Ms. Kakrabah has just completed National Service at the Internal Audit Agency, holds an HND in Accounting, and is a native of the same village as the DCE of Afigya Sekyere District.

Ms. Kakrabah will report to the District Finance Officer.

At the first meeting after the appointment of the DCE, the District Assembly had set up its standing committees, and one of them was the Audit and Finance Sub-Committee. The first meeting of the sub-committee requested Ms. Kakrabah to prepare briefing notes to show her vision and approach to the Internal Audit function at the District Assembly and to discuss how she will maintain her independence as well as her knowledge and understanding of Internal Audit Practices recommended by the Institute of Internal Auditors (IIA) as in the IIA’s International Professional Practices Framework (IPPF).

You are an Auditor in Public Practice, and the Auditor General of Ghana has appointed you to perform the statutory audit of the Afigya Sekyere District Assembly. The Audit and Finance Sub-Committee of the District Assembly has requested that you attend the meeting at which the Internal Auditor will brief them and help them in assessing the Internal Auditor’s briefing.

Required:

a) Comment on the matters that you will consider on the appointment of Ms. Kakrabah and her reporting lines as discussed above. (5 marks)

b) State the issues that you should expect Ms. Kakrabah to discuss in her briefing to the Audit and Finance Sub-Committee of the District Assembly. (10 marks)

c) The IIA’s definition of Internal Auditing states, among others, that:
“Internal Auditing is an independent, objective assurance and consulting activity….”
Compare and contrast an Assurance and a Consulting Audit activity.

Answer

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Tags: Audit Committee, Auditor Independence, Internal Audit, Internal Audit Practices, Professional Ethics
Level: Level 3

Topic: Internal audit and outsourcing
Series: NOV 2015

Question Tag: Professional Ethics

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AAA – Nov 2024 – L3 – Q5b – Anti-Money Laundering Regulations and Auditor Responsibilities

Discuss anti-money laundering regulations in Ghana and auditors' responsibilities in compliance.

AA – Nov 2024 – L2 – Q1b – Engagement Letter Contents

Explains the key contents of an audit engagement letter, highlighting the responsibilities and scope of an audit.

AAA – May 2019 – L3 – Q1 – Forensic Auditing

Analyze forensic accounting, discuss ethical principles, and outline procedures for Ayeniromo Microfinance Bank forensic investigation.

AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability

Discuss criminal charges against accountants, reasons auditors prefer out-of-court settlements, and the disadvantages of such settlements.

AAA – Nov 2013 – L3 – AII – Q19 – Ethical Issues in Auditing

Identify the term for codified moral rules and regulations guiding professional behavior.

CR – May 2021 – L3 – Q7a – Ethical Issues in Corporate Reporting

Discuss unethical organizational acts and recommend the actions the Chief Accountant should take in a scenario of misrepresentation in financial reporting.

AAA – Nov 2021 – L3 – Q5 – Ethical Issues in Auditing

Evaluate ICAN requirements on advertising for competing firms and discuss the tendering process, including the concept of "low balling."

AAA – Nov 2011 – L3 – SA – Q14 – Regulatory Investigations and Disciplinary Actions

Identifies a sanction not applicable for ICAN members' misconduct.

AAA – May 2018 – L3 – SB – Q4 – Ethical Issues in Auditing

Educate staff on IFAC’s Code of Ethics principles, types of independence, and general sources of ethical threats in accounting.

BMIS – Nov 2021 – L1 – Q2c – Professional ethics in accounting and business

Outline actions by accountants that demonstrate acting in the public interest.

BMIS – Nov 2021 – L1 – Q2b – Professional ethics in accounting and business

Differentiate between a business code of ethics and a professional code of ethics for accountants.

AAA – Nov 2015 – L3 – Q2 – Internal audit and outsourcing

Considerations for appointing an internal auditor, expected briefing issues, and comparing assurance and consulting activities.

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AAA – Nov 2024 – L3 – Q5b – Anti-Money Laundering Regulations and Auditor Responsibilities

Discuss anti-money laundering regulations in Ghana and auditors' responsibilities in compliance.

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AA – Nov 2024 – L2 – Q1b – Engagement Letter Contents

Explains the key contents of an audit engagement letter, highlighting the responsibilities and scope of an audit.

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AAA – May 2019 – L3 – Q1 – Forensic Auditing

Analyze forensic accounting, discuss ethical principles, and outline procedures for Ayeniromo Microfinance Bank forensic investigation.

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AAA – May 2021 – L3 – Q1a – Ethical Issues in Auditing

Discussion of ethical issues and professional challenges in the audit of Blackmart Plc, and recommendations for addressing them.

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AAA – Nov 2013 – L3 – SB – Q6 – Auditor’s Legal Liability

Discuss criminal charges against accountants, reasons auditors prefer out-of-court settlements, and the disadvantages of such settlements.

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AAA – Nov 2013 – L3 – AII – Q19 – Ethical Issues in Auditing

Identify the term for codified moral rules and regulations guiding professional behavior.

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CR – May 2021 – L3 – Q7a – Ethical Issues in Corporate Reporting

Discuss unethical organizational acts and recommend the actions the Chief Accountant should take in a scenario of misrepresentation in financial reporting.

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AAA – Nov 2021 – L3 – Q5 – Ethical Issues in Auditing

Evaluate ICAN requirements on advertising for competing firms and discuss the tendering process, including the concept of "low balling."

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AAA – Nov 2011 – L3 – SA – Q14 – Regulatory Investigations and Disciplinary Actions

Identifies a sanction not applicable for ICAN members' misconduct.

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AAA – May 2018 – L3 – SB – Q4 – Ethical Issues in Auditing

Educate staff on IFAC’s Code of Ethics principles, types of independence, and general sources of ethical threats in accounting.

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BMIS – Nov 2021 – L1 – Q2c – Professional ethics in accounting and business

Outline actions by accountants that demonstrate acting in the public interest.

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BMIS – Nov 2021 – L1 – Q2b – Professional ethics in accounting and business

Differentiate between a business code of ethics and a professional code of ethics for accountants.

You're reporting an error for "BMIS – Nov 2021 – L1 – Q2b – Professional ethics in accounting and business"

AAA – Nov 2015 – L3 – Q2 – Internal audit and outsourcing

Considerations for appointing an internal auditor, expected briefing issues, and comparing assurance and consulting activities.

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