Series: NOV 2012

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AAA – Nov 2013 – L3 – A – Q20 – Audit of Specialized Industries

This question tests knowledge of reserves that may or may not be reviewed during the audit of a non-life insurance company.

Question

Regarding the audit of a non-life insurance company, which of the following reserves may NOT be reviewed?
A. Reserve for unexpired risks
B. Reserve for outstanding claims
C. Contingent reserve
D. External reserve
E. Statutory reserve

Answer

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Tags: Audit, Non-Life Insurance, Reserves, Specialized Industries
Level: Level 3

Topic: Audit of Specialized Industries
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

Question

Which of the following assignments can be regarded as a continuous audit function?
A. Examining the effectiveness, efficiency, and economy of a cement project
B. Evaluating the adequacy of the security and control measures of the information technology
C. Ascertaining the fairness of the annual financial statements and notes to the accounts
D. Reviewing the internal control procedures before commencing the audit
E. Reviewing the company’s compliance with relevant guidance and release of financial information periodically

Answer

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Tags: Compliance, Continuous Audit, Financial Reporting, Internal Control
Level: Level 3

Topic: Internal Audit and Corporate Governance
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q18 – Audit Reporting

This question assesses knowledge of the main users of financial reports that auditors focus on.

Question

The main users of financial reports that auditors need to be primarily concerned about are:
A. Management and directors of the company
B. The general public
C. Banks and other financial institutions that provide working capital
D. Suppliers
E. Shareholders of the company

Answer

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Level: Level 3

Topic: Audit Reporting
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

Question

Yakubu Chukwu & Co was sued by one of its clients who alleged that the firm failed to satisfy the auditing standards in identifying substandard and obsolete inventory while attending end-of-year stock take. Which of the following is the firm’s best defence?
A. It is quite impossible to expect the firm to identify substandard and obsolete inventory due to the special nature of the inventory
B. Yakubu Chukwu & Co has to prove that its audit has been carried out with reasonable skill, care, and diligence
C. Auditing standards are not legislated, therefore, the client has no right to sue the firm
D. The contributory negligence of the client
E. Identification of substandard and obsolete stock requires an expert opinion

Answer

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Tags: Audit Standards, Auditor Liability, Defence, Obsolete Inventory
Level: Level 3

Topic: Auditor’s Legal Liability
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q16 – Group Audits

This question assesses the appropriate audit procedure for verifying a subsidiary’s accounts before consolidation.

Question

When a client has control over a subsidiary, what is the most appropriate audit procedure to obtain evidence to verify subsidiary accounts before consolidation?
A. Arrange for independent valuation of the assets and liabilities of the subsidiary
B. Be involved in the appointment of the subsidiary auditors
C. Rely on additional work carried out by the internal auditors
D. Send a template of your expectation to subsidiary auditors
E. Provide audit program for the subsidiary auditors

Answer

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Tags: Audit Procedure, Consolidation, Group Audits, Subsidiary Accounts
Level: Level 3

Topic: Group audit
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q15 – Audit Reporting

This question assesses the primary purpose of sending a letter of enquiry to a legal firm regarding client litigation.

Question

The main reasons why auditors send a letter of enquiry to the legal firm handling litigation or claims on behalf of their client is to provide:
A. Auditors with weak position in client litigation and claims
B. Auditors with written submission and statement of claims to the court
C. Information concerning the progress of outstanding cases to date
D. Auditors with corroborative audit evidence
E. Auditors with impact of legal opinion on financial statements

Answer

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Tags: Audit evidence, Legal claims, Letter of Enquiry, Litigation
Level: Level 3

Topic: Audit Reporting
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

Question

Factors that contribute to the weaknesses of local auditing standards include the following EXCEPT:
A. Standard setters being subject to political pressures
B. Having inadequate resources
C. Being insufficiently timed in response to market needs
D. Loss of investment by stakeholders
E. Having sources of fund which raise questions about their independence

Answer

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Tags: Audit Standards, Independence, Local Auditing Standards, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q13 – Environmental and Sustainability Audits

This question assesses the scope of social audit and identifies an area it does not cover.

Question

Social audit has to do with the extent to which a company gets involved and interacts with the society in which it operates. This means that social audit does not extend to ONE of the following:
A. Corporate code of conduct and business ethics
B. Pricing policy, product safety, and quality control
C. Transaction audit
D. Employee health and safety
E. Environmental pollution

Answer

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Tags: Business Ethics, Corporate Responsibility, Environmental audit, Social Audit
Level: Level 3

Topic: Environmental and Sustainability Audits
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

Question

Which of the following is the primary purpose for obtaining an understanding of client’s internal control?
A. Provide a basis for making constructive suggestions in a management letter
B. Determine the nature, timing and extent of tests to be performed in the audit
C. Obtain sufficient and competent evidential matter to afford a reasonable basis for an opinion on the financial statements under examination
D. Provide information for communication of internal control related matters to management
E. Obtain sufficient evidence to afford a basis for an opinion on the financial statements

Answer

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Tags: Audit Planning, Audit strategy, Internal Control
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2012

AAA – Nov 2013 – L3 – A – Q11 – Advanced Audit Planning and Strategy

This question tests knowledge of analytical procedures used to produce audit evidence.

Question

Which of the following is an analytical procedure generally used to produce audit evidence?
A. Confirmations mailed directly to the auditor by the client’s customers
B. Physical observation of inventories
C. Relationship among current financial balances and prior balances, forecasts, and non-financial data
D. Detailed examination of external and internal documents
E. Circularisation letters to debtors and creditors of the company

Answer

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Tags: Analytical procedures, Audit evidence, Audit Techniques
Level: Level 3

Topic: Advanced Audit Planning and Strategy
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q13 – Agency Law

Identify the meaning of re-insurance.

Question

Which of the following is the meaning of re-insurance?
A. The insurer insures the insurer’s assets
B. The insurer’s registration with the office of the Commissioner for Insurance
C. A reinsurance, effected by an insurer, on the same risk which was before insured, to indemnify the insurer
D. A new insurance with the government of the Federation
E. The insurer’s insurance with a foreign insurer

Answer

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Tags: Insurance Contracts, Re-insurance, Risk Transfer
Level: Level 1

Topic: Agency Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q12 – Hire Purchase

Identify which is NOT a duty of the hirer.

Question

Which of the following is NOT a duty of the hirer?
A. To accept delivery of the goods
B. To ensure that he gives a weekly report to the seller
C. To take reasonable care of the goods
D. To pay the installments when due
E. To redeliver the goods to the owner or his agent, upon the termination of the hire purchase contract

Answer

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Tags: Consumer Rights, Hire Purchase
Level: Level 1

Topic: Hire Purchase and Consumer Credit Transactions
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q11 – Sale of Goods

Identify the description of existing goods.

Question

Which of the following is a description of existing goods?
A. Goods that existed before the contract of sale
B. Goods which the manufacturers had agreed to produce for the seller
C. Goods that the buyer had identified in the market
D. Goods owned or possessed by the seller at the time of sale
E. Goods which the government has classified as marketable

Answer

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Tags: Contract of Sale, Sale of Goods
Level: Level 1

Topic: Sale of Goods
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q10 – Agency Law

Identify which is NOT a condition for valid ratification.

Question

Which of the following is NOT a condition for a valid ratification under agency law?
A. The professed principal must be in existence at the time of the contract
B. The contract must be professedly made on behalf of an identified or identifiable principal
C. The principal must have enough money to finance the transaction
D. The professed principal must have had full knowledge of all the material facts of the contract at the time of ratification
E. Ratification must be made within a reasonable time

Answer

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Tags: Agency Law, Principal-Agent Relationship
Level: Level 1

Topic: Agency Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q9 – Law of Contract

Identify the remedy used to restrain a breach of contract.

Question

An order which the court grants to restrain a breach of contract is called:
A. Interim order
B. Interlocutory order
C. Injunction
D. Enforcement order
E. A sanction

Answer

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Tags: Contracts, Injunctions, Remedies
Level: Level 1

Topic: Law of Contract
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q8 – Law of Contract

Identify which type of contract need not be in writing.

Question

Which of the following contracts needs NOT be in writing?
A. Contracts for the sale or disposition of land
B. Contracts for carriage of goods within the same town
C. Contracts to take a mortgage on a property
D. Contracts of guarantee
E. Moneylenders’ contracts

Answer

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Tags: Contracts of Guarantee, Written Contracts
Level: Level 1

Topic: Law of Contract
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q7 – Law of Contract

Identify which situation does not terminate an offer before acceptance

Question

Which of the following is NOT a situation where an offer may be terminated before acceptance?
A. Where the offer is rejected by the offeree outright or by way of a counteroffer
B. When the offer does not bear the signature of the offeror
C. When the conditions attached to the offer remain unfulfilled
D. When the offer is revoked by the offeror, or the offeree makes acceptance impossible
E. When sufficient time has elapsed since the date of the offer to justify the inference that the offeree did not wish to accept it.

Answer

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Tags: Contracts, Offer and Acceptance
Level: Level 1

Topic: Law of Contract
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q6 – Law of Tort

Identify which is NOT a type of tort.

Question

Which of the following is NOT a type of tort?
A. Wrongs to the person
B. Wrongs to reputation
C. Wrongs to property
D. Injury to persons
E. Wrongs to government

Answer

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Tags: Tort Law, Types of Wrongs
Level: Level 1

Topic: Law of Tort
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q5 – The Nigerian Legal System

Identify the main difference between inferior and superior courts.

Question

Which of the following is the major difference between inferior and superior courts?
A. Inferior courts are presided over by laymen
B. Superior courts are presided over by learned men
C. Inferior courts handle important matters
D. Superior courts handle Federal cases
E. Inferior courts have limited jurisdiction whereas superior courts generally have unlimited jurisdiction.

Answer

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Tags: Court Systems, Jurisdiction, Nigerian Legal System
Level: Level 1

Topic: The Nigerian Legal System
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q4 – Law of Contract

Identify which business does not fall under general insurance in Nigeria.

Question

Which of the following does NOT fall under general insurance business in Nigeria?
A. Health insurance business
B. General accident insurance business
C. Fire insurance business
D. Engineering insurance business
E. Motor vehicle insurance business

Answer

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Tags: General Business, Insurance
Level: Level 1

Topic: Law of Contract
Series: NOV 2012

Series: NOV 2012

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AAA – Nov 2013 – L3 – A – Q20 – Audit of Specialized Industries

This question tests knowledge of reserves that may or may not be reviewed during the audit of a non-life insurance company.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q20 – Audit of Specialized Industries"

AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance

This question identifies assignments that qualify as continuous audit functions.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q19 – Internal Audit and Corporate Governance"

AAA – Nov 2013 – L3 – A – Q18 – Audit Reporting

This question assesses knowledge of the main users of financial reports that auditors focus on.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q18 – Audit Reporting"

AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability

This question examines the best defence an audit firm can present when accused of failing to identify substandard and obsolete inventory.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q17 – Auditor’s Legal Liability"

AAA – Nov 2013 – L3 – A – Q16 – Group Audits

This question assesses the appropriate audit procedure for verifying a subsidiary’s accounts before consolidation.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q16 – Group Audits"

AAA – Nov 2013 – L3 – A – Q15 – Audit Reporting

This question assesses the primary purpose of sending a letter of enquiry to a legal firm regarding client litigation.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q15 – Audit Reporting"

AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards

This question assesses knowledge of factors that weaken local auditing standards and identifies an unrelated factor.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q14 – Regulatory Framework and Professional Standards"

AAA – Nov 2013 – L3 – A – Q13 – Environmental and Sustainability Audits

This question assesses the scope of social audit and identifies an area it does not cover.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q13 – Environmental and Sustainability Audits"

AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy

This question assesses the primary purpose of understanding a client’s internal control system.

You're reporting an error for "AAA – Nov 2013 – L3 – A – Q12 – Advanced Audit Planning and Strategy"

AAA – Nov 2013 – L3 – A – Q11 – Advanced Audit Planning and Strategy

This question tests knowledge of analytical procedures used to produce audit evidence.

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BL – Nov 2012 – L1 – SA – Q13 – Agency Law

Identify the meaning of re-insurance.

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BL – Nov 2012 – L1 – SA – Q12 – Hire Purchase

Identify which is NOT a duty of the hirer.

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BL – Nov 2012 – L1 – SA – Q11 – Sale of Goods

Identify the description of existing goods.

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BL – Nov 2012 – L1 – SA – Q10 – Agency Law

Identify which is NOT a condition for valid ratification.

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BL – Nov 2012 – L1 – SA – Q9 – Law of Contract

Identify the remedy used to restrain a breach of contract.

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BL – Nov 2012 – L1 – SA – Q8 – Law of Contract

Identify which type of contract need not be in writing.

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BL – Nov 2012 – L1 – SA – Q7 – Law of Contract

Identify which situation does not terminate an offer before acceptance

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BL – Nov 2012 – L1 – SA – Q6 – Law of Tort

Identify which is NOT a type of tort.

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BL – Nov 2012 – L1 – SA – Q5 – The Nigerian Legal System

Identify the main difference between inferior and superior courts.

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BL – Nov 2012 – L1 – SA – Q4 – Law of Contract

Identify which business does not fall under general insurance in Nigeria.

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