Small Companies – Knowsia

AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

Question

The Companies and Allied Matters Act, 2020 has classifications and responsibilities for various types of companies incorporated under it. A particular class that has received more attention in recent times and in the Act is small companies.

Your audit team has been approached by a few of these small companies for guidance on the issue and your team has been assigned this responsibility. Part of the concerns of your firm is whether or not those small companies merit the concerns of regulatory authorities and the accounting firms that have to be responsible for their audit.

Your team has a number of young assistants who are yet to understand the differences and therefore need enlightenment on this as part of the training programs.

Required:

a. Discuss the arguments for and against the exemption of small companies from audit. (10 Marks)

b. On the basis that an audit may be conducted for a small entity, evaluate the points the auditors would consider. (5 Marks)

Answer

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Tags: Audit Considerations, Audit Exemption, Regulatory Framework, Small Companies, Training and Guidance
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Mr. Ajibade, a businessman based in the South West region of Nigeria intends to start a new company. The new company, when formed, will focus solely on the production of face masks and alcohol-based hand sanitisers which are needed to prevent the spread of the novel corona virus. This has been incorporated into the draft Memorandum of Association to be submitted to the Corporate Affairs Commission (CAC).

Mr. Ajibade has heard of section 377 of Companies and Allied Matters Act (CAMA) Cap C20 LFN 2004, which offers exemption from an audit if a company qualifies as a small company as per section 351 of the Act. He thinks that when he starts a small company, he will therefore be exempted from statutory audit and so save cost.

Mr. Ajibade has a growth plan for his prospective company. He has also heard that if the company is to grow bigger in the future, he will require more funding in the form of loans from banks and other financial institutions. The banks will require audited financial statements as a prerequisite to granting his company loan facilities. He is therefore, curious to know more about the importance of audited financial statements.
He has approached you for advice.

Required:
a. What qualifies a company as a small company according to CAMA.
(6 Marks)
b. The benefits and limitations of an audit.
(9 Marks)
c. The eligibility for qualification as external auditor.
(6 Marks)
d. The scope of a statutory audit.
(4 Marks)
e. According to ISA 300: Planning an Audit of Financial Statements, the objective of the auditor is to plan the audit work so that the audit will be performed in an effective manner.
Required:
Explain the benefits of adequate planning of the audit.
(5 Marks)
f. Explain THREE risk assessment procedures required by ISA 315: Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.
(10 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

BL – May 2024 – L1 – SA – Q4 – Company Law

Identifying the maximum turnover for a small company under Nigerian law.

Question

The maximum turnover of a small company is
A. N20 million
B. N50 million
C. N80 million
D. N100 million
E. N120 million

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Law, Company Law, Legal Framework, Small Companies, Turnover
Level: Level 1

Topic: Company Law
Series: MAY 2024

AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

Question

Your team has a number of young assistants who are yet to understand the differences and therefore need enlightenment on this as part of the training programs.

Required:

a. Discuss the arguments for and against the exemption of small companies from audit. (10 Marks)

b. On the basis that an audit may be conducted for a small entity, evaluate the points the auditors would consider. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Considerations, Audit Exemption, Regulatory Framework, Small Companies, Training and Guidance
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Benefits, Audit Exemptions, Audit Requirements, Professional Ethics, Risk Assessment Procedures, Small Companies
Level: Level 2

BL – May 2024 – L1 – SA – Q4 – Company Law

Identifying the maximum turnover for a small company under Nigerian law.

Question

The maximum turnover of a small company is
A. N20 million
B. N50 million
C. N80 million
D. N100 million
E. N120 million

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Law, Company Law, Legal Framework, Small Companies, Turnover
Level: Level 1

Topic: Company Law
Series: MAY 2024

Question Tag: Small Companies

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AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

BL – May 2024 – L1 – SA – Q4 – Company Law

Identifying the maximum turnover for a small company under Nigerian law.

AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

BL – May 2024 – L1 – SA – Q4 – Company Law

Identifying the maximum turnover for a small company under Nigerian law.

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AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

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AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

BL – May 2024 – L1 – SA – Q4 – Company Law

Identifying the maximum turnover for a small company under Nigerian law.

You're reporting an error for "BL – May 2024 – L1 – SA – Q4 – Company Law"

AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

You're reporting an error for "AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards"

AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification

Explanation of the audit requirements and exemptions for small companies, including the benefits and limitations of audits, eligibility for external auditors, and audit planning and risk assessment procedures.

You're reporting an error for "AA – Mar/Jul 2020 – L2 – Q1 – Small Company Qualification"

BL – May 2024 – L1 – SA – Q4 – Company Law

Identifying the maximum turnover for a small company under Nigerian law.

You're reporting an error for "BL – May 2024 – L1 – SA – Q4 – Company Law"

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