Money laundering

BCL – L1 – Q102 – Corporate Governance

Identify issues related to corporate governance and the audit committee.

Question

(a). Identify issues relating to Corporate Governance & Audit Committee.

(b). Explain the ethical principles regarding conflict of interest and breach of confidentiality.

(c). Explain in at least 5 points each the nature and legal control over money laundering, tax evasion.

Answer

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Tags: Financial crime, Legal Control, Money laundering, Tax Evasion
Level: Level 1

Topic: Governance and ethical issues relating to business

AAA – L3 – Q20 – Professional responsibility and liability

Discuss ethical and professional issues for MM & Co regarding client Pen Co's tax fraud investigation and Scot family's transactions.

Question

You are senior manager in MM & Co, a firm of Chartered Accountants. Recently, you have been assigned specific responsibility for undertaking annual reviews of existing clients. The following situations have arisen in connection with two clients.

(i) MM & Co was appointed auditor of Pen Co last year, and has recently issued an unmodified opinion on the financial statements for the year ended 31 March 2013. To your surprise, the tax authorities have just launched an investigation into the affairs of Pen Co on suspicion of under-declaring revenue. (7 marks)

(ii) Your firm has provided financial advice to the Scot family for many years and this has sometimes involved your firm carrying out transactions on their behalf. The eldest son, Gino, is to take up a position as a senior government official in a foreign country next month. (3 marks)

Required:
Identify and comment on the ethical and other professional issues raised by each of these matters and state what action, if any, MM & Co should now take.

Answer

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Tags: Audit firm responsibilities, Client Acceptance, Confidentiality, Ethics, Money laundering, Politically exposed persons, Professional conduct
Level: Level 3

Topic: Professional responsibility and liability

AAA – L3 – Q13 – Fraud

Comment on the need for ethical guidance for accountants on money laundering.

Question

(a) Comment on the need for ethical guidance for accountants on money laundering. (b) Explain the difference between fraud and error and how the issues shown here could be categorised as fraud or error. (c) Discuss the role of management and the role of the auditor in the prevention and detection of fraud and error.

Daniel’s Maritime and Harbor (DMH) have a marina in Lagos and a large sales operation dealing in yachts and speedboats. You are responsible for the audit of DMH and have found some potential causes of concern that could indicate fraudulent activity or financial misconduct within the company. In particular:

30% of the yachts on sale by DMH are supplied through one of the major international boating companies with a special finance arrangement deal. However, DMH have also obtained separate finance on these yachts, which are therefore in effect being ‘double financed’.
Ten yachts shown as assets by DMH cannot be located, with no explanation other than that they have not been sold. These yachts together are worth approximately ₦50 million.
Long delays have occurred in performing reconciliations with the last four months of reconciliations still not completed. At the time of the last reconciliation, material differences had been identified upon which no action appears to have been undertaken.
Revenues have been overstated by ₦100 million in the current financial statements.
The finance director has been off sick with stress for the last five months and therefore has not been available to discuss any of the issues identified.

(d) Describe what steps you would take to further investigate and then report on the matters referred to above.

Answer

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Tags: Auditor Responsibility, Ethics, Fraud, Money laundering
Level: Level 3

Topic: Fraud and Error

AAA – L3 – Q8 – Rules of professional conduct

Outline points for a paper on money laundering obligations for an audit firm, including definitions, offenses, and firm responsibilities.

Question

Points to be included in paper for partners re money laundering

Answer

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Topic: Rules of Professional Conduct

Tag (SQ): Money laundering

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BCL – L1 – Q102 – Corporate Governance

Identify issues related to corporate governance and the audit committee.

AAA – L3 – Q20 – Professional responsibility and liability

Discuss ethical and professional issues for MM & Co regarding client Pen Co's tax fraud investigation and Scot family's transactions.

AAA – L3 – Q13 – Fraud

Comment on the need for ethical guidance for accountants on money laundering.

AAA – L3 – Q8 – Rules of professional conduct

Outline points for a paper on money laundering obligations for an audit firm, including definitions, offenses, and firm responsibilities.

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BCL – L1 – Q102 – Corporate Governance

Identify issues related to corporate governance and the audit committee.

You're reporting an error for "BCL – L1 – Q102 – Corporate Governance"

AAA – L3 – Q20 – Professional responsibility and liability

Discuss ethical and professional issues for MM & Co regarding client Pen Co's tax fraud investigation and Scot family's transactions.

You're reporting an error for "AAA – L3 – Q20 – Professional responsibility and liability"

AAA – L3 – Q13 – Fraud

Comment on the need for ethical guidance for accountants on money laundering.

You're reporting an error for "AAA – L3 – Q13 – Fraud"

AAA – L3 – Q8 – Rules of professional conduct

Outline points for a paper on money laundering obligations for an audit firm, including definitions, offenses, and firm responsibilities.

You're reporting an error for "AAA – L3 – Q8 – Rules of professional conduct"

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