NOV 2012 – Page 9

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 – Company Law

Identify the principle that protects shareholders after full payment of shares.

Question

What principle states that once a member of a company has fully paid for his shares, he cannot generally be made liable for the indebtedness of the company again?

Answer

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Tags: Corporate Structure, hareholder Liability
Level: Level 1

Topic: Company Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q12 – Company Law

Identify the type of fact in insurance contracts that influences the insurer’s decision.

Question

Which type of fact in insurance law is of such a nature that it may influence a prudent insurer in determining whether or not he will accept the risk and if so at what premium and on what conditions?

Answer

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Tags: Insurance, Material Fact
Level: Level 1

Topic: Company Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q11 – Hire Purchase

Identify the goods covered under the Hire Purchase Act.

Question

State the type of goods to which the Hire Purchase Act is applicable irrespective of the amount involved.

Answer

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Tags: Hire Purchase, Motor Vehicles
Level: Level 1

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

BL – Nov 2012 – L1 – SA – Q10 – Sale of Goods

Identify the type of goods subject to a contract of sale.

Question

Goods which may be subject matter of a contract of sale of goods may be either existing goods or

Answer

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Tags: Contracts, Future Goods, Goods
Level: Level 1

Topic: Sale of Goods
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q9 – Sale of Goods

Identify the legal maxim for the right of an unpaid seller.

Question

What is the legal maxim for the right of an unpaid seller of goods to retake and retain possession of the goods which are still on the way to the buyer?

Answer

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Tags: Sale of Goods, Seller’s Rights
Level: Level 1

Topic: Sale of Goods
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q8 – Agency Law

Identify the type of principal where the agent reveals the principal’s identity.

Question

State the type of principal involved in a situation where the agent has revealed his identity to the third party right from the inception of the transaction between them.

Answer

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Tags: Agency, Contracts, Principal
Level: Level 1

Topic: Agency Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q7 – Agency Law

Identify the type of agency created in an emergency.

Question

Which type of agency is created in an emergency without the opportunity to contact the principal and get his instruction?

Answer

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Tags: Agency, Emergency, Necessity
Level: Level 1

Topic: Agency Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q6 – Contract Law

Identify a minor term in a contract.

Question

State the term of a contract which is minor or which is ancillary to a major term.

Answer

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Tags: Contracts, Minor Terms, Warranties
Level: Level 1

Topic: Contract Law
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q5 – Law of Tort

Identify the person sued in civil law.

Question

The person who has been sued in civil law is called ____________.

Answer

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Tags: Civil Law, Defendant, Legal Terminology
Level: Level 1

Topic: Law of Tort
Series: NOV 2012

BL – Nov 2012 – L1 – SA – Q4 – Alternative Dispute Resolution

State two organs of government.

Question

State any TWO organs of government as contained in the Nigerian Constitution.

Answer

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Tags: Executive, Government, Judiciary, Legislature
Level: Level 1

Topic: Alternative Dispute Resolution
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.

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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 – Company Law

Identify the principle that protects shareholders after full payment of shares.

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BL – Nov 2012 – L1 – SA – Q12 – Company Law

Identify the type of fact in insurance contracts that influences the insurer’s decision.

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BL – Nov 2012 – L1 – SA – Q11 – Hire Purchase

Identify the goods covered under the Hire Purchase Act.

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BL – Nov 2012 – L1 – SA – Q10 – Sale of Goods

Identify the type of goods subject to a contract of sale.

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BL – Nov 2012 – L1 – SA – Q9 – Sale of Goods

Identify the legal maxim for the right of an unpaid seller.

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BL – Nov 2012 – L1 – SA – Q8 – Agency Law

Identify the type of principal where the agent reveals the principal’s identity.

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BL – Nov 2012 – L1 – SA – Q7 – Agency Law

Identify the type of agency created in an emergency.

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BL – Nov 2012 – L1 – SA – Q6 – Contract Law

Identify a minor term in a contract.

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BL – Nov 2012 – L1 – SA – Q5 – Law of Tort

Identify the person sued in civil law.

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BL – Nov 2012 – L1 – SA – Q4 – Alternative Dispute Resolution

State two organs of government.

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