Anything Goes Microfinance Bank Limited was incorporated in 2018 to meet the financial needs of low level customers. The Management Accounts of 2019, revealed that the bank has a shareholders fund of N2.1 billion, total assets of over N5 billion, and customer deposits of N2 billion. It is the largest Microfinance bank in Kito. Today, the bank continues to be the core banker for small and medium scale enterprises and accounts for over 70% of the business turnover in Kito. It is the only indigenous microfinance bank that is fully owned by Kito shareholders. The bank directors are elected by key shareholders and they represent all the shareholders both in the public and private sectors.
The bank currently has a total employee establishment of over 350. With liberalisation of the economy and globalisation of businesses, the bank embraced the new challenges by becoming commercial bank in 2020 and changed its name to Anything Goes Bank Limited. The change of Chief Executive Officer and the management at Anything Goes Bank Limited in early 2020 ushered in a new era where new ideas are adopted and managers reclaiming managerial responsibilities. The main objective then, was to come up with innovative business strategies that would ensure the bank serve its core customers effectively. However, to reposition, the bank embarked on reviewing its corporate strategic plan which builds on the existing strengths specifically addressing growth and development, information technology and business management, enhanced service delivery, profitability and capital growth. The strategic plan for the bank has been drawn up with the theme “Managing for Value”. The strategies are based on four perspectives: people, customers, financial performance, and risk and control. The goal of the plan is to ensure that the bank meets the shareholders’ expectations, provide the bank with a common language and clearly understood objectives, guarantee satisfaction to its chosen customer segments and business partners. A focus on these four perspectives would result in customer satisfaction, efficient and effective processes, motivated and prepared staff.
The bank in an effort to ensure it continues to be relevant and meet the needs of customers, believes it needs to revisit the operating structure and expand its business. The bank is interested in becoming a globally acclaimed commercial bank in Africa. Management believes a review of approach to strategic change practices and performance must be dynamic, flexible and innovative, particularly when confronted with discontinuities and turbulence in its operating environment. The review of operations shows that the environment in which Anything Goes Bank Limited exists and with which it interacts is increasing in complexity and the rate of change is accelerating. There is increasing pressure to perform from the government, public and other stakeholders. To attract foreign investors, the bank is interested in early reporting but the software in place cannot drive the volume of transactions being processed currently. Most of the staff are not skilled enough in International Financial Reporting Standards, especially in complex accounting issues on financial instruments. The tax audit has just been conducted and it has back duty assessment and other queries to be sorted out. Added to this, the bank is affected by inefficient service delivery, people’s distrust for the banking sector, weak corporate governance structure and rising bad loans.
The bank’s management has prepared a master plan which contains grand strategies, such as product development, market development, turn-around and joint venture strategies. To facilitate the achievement of these grand strategies, functional strategies, namely marketing, operations, organisational and management, and financial strategies are also detailed in the master plan. It attributes a myriad of stumbling blocks to successful implementation of the strategies including; government policies, poor leadership, limited IT capacity, lack of funds, staff capability and a supporting corporate culture as the main challenges. The bank has an audit committee but has not been performing optimally because the operation is not properly structured. It is also in arrears of some of its reporting requirements at this stage and is paying appropriate fines to regulatory authorities. Although the bank believes it is still a small bank, it still requires an auditor to examine the books of account with a view to expressing an opinion. Management is concerned with the need to change its auditors because of the transition to a commercial bank, hence it has decided to send out a request for proposal for appointment of new auditors. The bank has been facing delay in rendering attestation and assurance reports to regulators for which it has been paying fines.
One of your friends whose father is a management staff of the company and a student of accountancy has intimated you of this development and was asking you to provide some explanations to enlighten management before they send out proposal for audit services.
Required:
a. Discuss the key features needed in an audit report which should be included in the proposal for audit services of Anything Goes Bank Limited. (10 Marks)
b. Explain the type of assurance service that the auditor of the bank should provide.
(6 Marks)
c. List the duties the audit committee of the bank ought to be performing.
(8 Marks)
d. Distinguish amongst audit, assurance and attestation engagements.
(6 Marks)
