Study Question
- 20 Marks
BMF – Nov 2024 – L1 – Q1 – Group cohesion and organisational concepts
Describe group cohesion, explain five characteristics of an effective team, and briefly explain concepts: formal organization, organization structure, flat organization, outsourcing, shared services.
Question
a. Describe the term ‘group cohesion’ b. Briefly explain FIVE characteristics of an effective team c. Briefly explain the following concepts: i. Formal organization ii. Organization structure iii. Flat organization iv. Outsourcing v. Shared services
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- 20 Marks
BL – Nov 2024 – L1 – Q6 – Law of Contract
Multi-part question on insurance contribution conditions, contract vitiating factors, employee dismissal grounds, and trust fund investment securities under Nigerian law.
Question
a. Where an insurer has settled a claim on behalf of another insurer, certain insurable interests apply. Required: State FOUR conditions for contribution to take place. b. The validity of a contract may be vitiated by some factors known to law. Required: State TWO factors that may vitiate a contract. c. An employee may be dismissed for justifiable reasons. Required: State FOUR grounds upon which an employee may be dismissed. d. The Trustee Investments Act stipulates securities in which trustees may invest. Required: State THREE categories of securities in which trust funds may be invested
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- 20 Marks
BL – Nov 2024 – L1 – Q5 – Alternative Dispute Resolution, Trusts, Hire Purchase, Ethics
State advantages of ADR, elements and types of charitable trusts, ways to terminate hire purchase contracts, and explain ethics and ethical codes.
Question
a. Alternative Dispute Resolution (ADR) as a mode of resolving commercial disputes enjoys an edge over court litigation. Required: State SIX advantages of ADR. b. A trust is an equitable relationship for the benefits of persons or objects. Required: i. State THREE essential elements or certainties of a trust. ii. State THREE types of charitable trust. c. Hire purchase is a contract of possession with an option to the hirer to purchase the goods in due course. Required: State FIVE ways of terminating a hire purchase contract. d. Ethics and ethical codes differ from legal rules. Required: Explain ethics and ethical codes.
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- 1 Marks
AAA – L3 – SA – Q5.9 – Audit-related services
Which term is not associated with prospective financial information?
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- 1 Marks
AAA – L3 – SA – Q5.8 – Audit-related services
What type of engagement is due diligence work for a client?
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- Tags: Direct reporting, Due diligence, Engagement types, Professional services
- Level: Level 3
- Topic: Audit-Related Services
- 1 Marks
AAA – L3 – SA – Q5.7 – Audit evidence
Which statements about related party transactions are correct?
Question
Which of the following statements are correct?
1 With related party transactions, there is some risk of collusion and fraud.
2 A focus of audit attention with regard to related party transactions shall be on significant non-routine transactions.
A Statement 1 only is correct.
B Statement 2 only is correct.
C Both statements are correct.
D Neither statement is correct.
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- Tags: Disclosures, Fraud Risk, Non-routine transactions, Related Party Transactions
- Level: Level 3
- Topic: Audit Evidence
- 1 Marks
AAA – L3 – SA – Q5.6 – Audit evidence
What factors influence an auditor’s materiality decision?
Question
Which of the following will influence an auditor’s decision as to whether a matter is material?
1 Degree of approximation
2 Losses or low profits
3 Time of occurrence during the year
4 Offset and aggregation
A 1,2 and 3 only
B 1,3 and 4 only
C 2,3 and 4 only
D 1,2 and 4 only
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- Tags: Aggregation, Approximation, Audit judgment, Materiality, Profitability
- Level: Level 3
- Topic: Audit Evidence
- 1 Marks
AAA – L3 – SA – Q5.5 – The audit approach
Why use a business risk approach for auditing large companies?
Question
What is the main justification for the use of a business risk approach to an audit of large companies?
A A systems-based approach and a substantive testing approach are unlikely to detect material misstatements in the financial statements of large companies.
B This approach forces the auditors to understand the client’s business in depth.
C It is more effective than other approaches to audit in detecting deficiencies in internal control.
D Major audit problems in large companies are more likely to result from business-related problems than from deficiencies in internal control.
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- 1 Marks
AAA – L3 – SA – Q5.4 – Evaluation and review
What is the key objective of an engagement quality review?
Question
The key objective of an engagement quality review is to:
A monitor the firm’s system of quality management
B ensure the audit procedures were carried out in accordance with professional standards
C ensure the auditor’s report issued is appropriate in the circumstances
D perform an objective evaluation of the significant judgments made by the audit team and the conclusions reached
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- 1 Marks
AAA – L3 – SA – Q5.3 – Professional responsibility and liability
What should an auditor do upon suspecting fraudulent activity by a director?
Question
An audit engagement partner suspects that a director of a client company has been carrying out fraudulent activity. What would be the most appropriate immediate course of action?
A Challenge the suspected individual
B Report the suspicions to the audit committee of the client company
C Report the suspicions to the chairman of the board of the client company
D Seek legal advice
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