- 15 Marks
AAA – May 2017 – L3 – Q6 – Group Audits
Draft a memorandum describing challenges, procedures, and instructions for a group audit engagement involving subsidiaries and associates in different countries.
Question
You are an Audit Senior in ABC firm of Chartered Accountants, a Pan-African audit firm. You just resumed from your examination leave and received the following email from Mrs. Chidi, an Audit Manager in your firm.
Dear Audu,
Welcome back from leave and best of luck in your examination.
We have just been appointed as financial statements auditors to Gbogbonise Plc., a conglomerate having its head office in Lagos. Our preliminary discussion with the group Chief Financial Officer (CFO) indicates that the company has five subsidiaries and two associates. One of the subsidiaries is incorporated and operates in Ghana while one of the associates is incorporated and operates in The Gambia. The other members of the group are incorporated and operate in Nigeria. The group operations cover automobiles, agriculture, and manufacturing.
We will be meeting with the audit committee in three weeks to present our audit plan and strategy for the assignment.
Required:
a. Challenges that may be encountered in this engagement. (5 Marks)
b. General procedures that may be performed on significant and non-significant components. (3 Marks)
c. Salient items to be included in the group audit instructions. (3 Marks)
d. Procedures to be performed relating to the consolidation of the group. (4 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Audit Procedures, Consolidation, Group Audit, Group Instructions, Significant Components
- Level: Level 3
- Topic: Group audits