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  • 5 Marks

AAA – July 2023 – L3 – Q5b – Assurance services | Current issues

Explains appropriate audit procedures for Corporate Social Responsibility (CSR) reports, focusing on assessing impact and stakeholder engagement.

Corporate Social Responsibility (CSR) is the hallmark of every well managed entity. In some cases, cost of CSR may not involve actual expenditure.

Required:

Explain THREE (3) appropriate procedures for audit engagements for CSR reports. (5 marks)

 

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  • 10 Marks

AAA – July 2023 – L3 – Q5a – The regulatory environment | Current issues

Discusses factors influencing new auditing standards and procedures for their development by the International Federation of Accountants (IFAC).

The auditing profession is very dynamic and constantly confronted with new challenges emanating from the political and economic spheres. To meet these challenges the global authority responsible for the regulation of accountancy profession, The International Federation of Accountants (IFAC) has been ensuring that the standards for conduct of audit and assurance engagements are revised and brought up to date all the time.

Required: i) Discuss FOUR (4) factors that influence the development of new Auditing Standards. (5 marks)

ii) Identify the procedures for developing new Auditing Standards. (5 marks)

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  • 10 Marks

AAA – Dec 2023 – L3 – Q5a – Current Issues

Justify why companies should focus on sustainable business practices, given the increasing investor interest in the Sustainable Development Goals (SDGs).

Sustainable Development Goals and Investor Interest
The Sustainable Development Goals (SDGs) are 17 goals tackling major world issues agreed by 193 UN member states to be achieved by 2030. These goals include zero hunger, decent work and economic growth, and reduced inequalities.

Required:
Justify FOUR (4) reasons a company should focus on sustainable business practices in view of investor interest in SDGs. (10 marks)

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  • 10 Marks

AAA – May 2021 – L3 – Q5a – Current issues | Professional responsibility and liability

Assess the global threat of money laundering and discuss Ghana’s efforts to combat money laundering.

a) Money laundering has become a significant threat to the world’s political and economic order. World leaders are collaborating and cooperating in fighting money laundering. However, criminals are maliciously clever and, in some cases, ahead of law enforcement agencies. Every human being has to contribute to the fight against money laundering.

Required:

i) Assess why money laundering poses a big threat to the world’s political and economic order. (5 marks)

ii) Discuss FIVE (5) ways in which Ghana is contributing towards fighting money laundering globally. (5 marks)

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  • 10 Marks

AAA – May 2016 – L3 – Q5b – Audit evidence | Current issues

Discuss factors affecting audit quality according to the IAASB’s recent publication on Audit Quality.

Audit Quality has been a topical issue for discussion in the accountancy profession in recent times. The International Auditing and Assurance Standards Board (IAASB) has recently issued a publication on the Framework for Audit Quality. The objectives of this publication are to raise awareness of the key elements of audit quality; to encourage key stakeholders to explore ways to improve audit quality; and to facilitate greater dialogue between key stakeholders on the topic. Although audit quality is principally the responsibility of auditors, there are many factors that contribute to it. The IAASB describes these other factors as contextual, inputs, outputs, and key interactions.

Required:
Discuss with examples what factors affect Audit Quality according to the recent publication of the IAASB on Audit Quality. (10 marks)

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  • 5 Marks

AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review

Describe the auditor’s responsibility for subsequent events occurring between specific periods in the audit process.

b) In conducting an audit, audit procedures must be planned and performed so as to consider all significant transactions occurring after the reporting period. This means that the audit work does not stop with events only up to the reporting period. There are two key dates after the reporting period: the date of the audit report and the date that the financial statements are issued.

Required: Describe the auditor’s responsibility for subsequent events occurring between:

i) The year-end date and the date the auditor’s report is signed; and (2 marks)

ii) The date the auditor’s report is signed and the date the financial statements are issued. (3 marks)

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  • 10 Marks

AAA – Nov 2023 – L3 – Q5a – Current Issues, Audit Evidence

Explain the stages of money laundering and audit obligations in a scenario involving suspicious transactions.

a) You have commenced the audit of Atika Ltd, a company involved in the importation and sale of plumbing materials. As part of the audit, you have noticed the following:

  1. Atika Ltd does not pay its suppliers in Germany through the bank. It relies mostly on the black market for the transfer of funds to its suppliers.
  2. Atika only sells its goods in Ghana.
  3. On 25 March within the audit year, there was a cash deposit of US$2,500,000.00 into the forex account of Atika Ltd.
  4. On 30 March the company transferred the following:
    • US$499,999.99 to an unknown account in Cameroon
    • US$399,999.99 to an unknown account in Kenya
    • US$499,999.99 to an unknown account in Niger
    • US$250,000.00 to the personal account of the Managing Director
    • US$150,000.00 to an unknown company.
  5. The company’s general ledger shows a revenue of GH¢1,560,000.00.
  6. The import documentation shows purchases of GH¢36,000,000.00. There is no evidence of payment for the goods from Atika Ltd’s bank accounts.
  7. The closing inventory amounted to GH¢2,145,200.00.

The Audit Manager has raised the issue of money laundering considering the nature of the transactions above.

Required:

i) Explain to the team members the various stages of money laundering and show how the above transactions confirm the client’s engagement in money laundering. (6 marks)

ii) What are the obligations on the firm for money laundering? (4 marks)

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  • 5 Marks

AAA – Aug 2022 – L3 – Q5c – Current issues

Discuss reasons for management’s reluctance to disclose material uncertainty and the auditor's responsibility when going concern assumption is inappropriate.

If indications are identified which suggest that the going concern basis might not be appropriate for preparing financial statements, the auditor is required by ISA 570 (Revised): Going Concern to consider the implications for his audit report. The form of the report will depend on the auditor’s judgement.

There are two possible views:

  1. The use of the going concern is appropriate but material uncertainty exists or
  2. The use of the going concern assumption is inappropriate.

Required:
i) Discuss THREE (3) reasons why management of a client’s company will probably be reluctant to include the disclosure about material uncertainty in relation to the going concern assumption.
(3 marks)

ii) State the auditor’s responsibility where the use of the going concern assumption is inappropriate.
(2 marks)

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  • 20 Marks

AAA – Nov 2023 – L3 – Q3 – Reporting, Current Issues

Brief staff on KAMs, their determination, and their interaction with modifications to the audit report, going concern, emphasis of matter, and other matters.

ISA 701: Communicating Key Audit Matters (KAM) in the Independent Auditor’s Report is a new ISA introduced as part of the International Audit and Assurance Standards Board’s (IAASB) extensive revisions to International Standards on Auditing (ISAs) relating to audit reporting. The objective of the IAASB’s revisions was to make the auditor’s report more detailed and useful for the intended users. ISA 701 applies to audits of complete sets of general purpose financial statements of listed entities.

Subsequently, the Institute of Chartered Accountants, Ghana (ICAG) as the regulator of accountancy profession and practice in Ghana, issued a notice to practitioners and the public which directed that auditor’s report issued on financial statements for periods ending on or after 31 December, 2017 for Public Interest Entities (PIEs) to include a communication on Key Audit Matters as required by ISA 701.

You are the Partner in charge of training with Preko and Associates. An audit team member informed you that one of the clients being audited has an issue which is being contemplated as to whether to report the issue as key audit matter, emphasis of matter paragraph, other matter paragraph, or to modify the audit opinion.

Required: Prepare briefing notes for the staff of your firm regarding the following:

a) KAMs and state TWO (2) categories of entities in Ghana which ISA 701 is applicable as adopted by ICAG. (5 marks)

b) Factors to be considered in determining KAMs.

(3 marks)

c) Interaction between: i) KAMs and ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report
ii) KAMs and ISA 570 (revised): Going Concern
iii) KAMs and Emphasis of Matter
iv) KAMs and Other Matters (12 marks)

 

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  • 10 Marks

AAA – Nov 2019 – L3 – Q5b – Current Issues, Audit-related Services

Discuss the financial reporting implications of a restructuring and recommend auditor actions if financial statements are not amended.

You are the manager responsible for the audit of Obeyeyie Co. Ltd (OCL), a manufacturing company with a year ended 31 December 2018. The audit work has been completed and reviewed and you are due to issue the audit report in three days. The draft audit opinion is unmodified. The financial statements show revenue for the year ended 31 December 2018 of GH¢ 15 million, net profit of GH¢ 3 million, and total assets at the year-end are GH¢ 80 million.

The finance director of OCL e-mailed you this morning in addition to a WhatsApp message to tell you about the announcement yesterday of a significant restructuring of OCL, which will take place over the next six months. The restructuring will involve the closure of a factory and its relocation to another part of the country. There will be some redundancies and the estimated cost of closure is GH¢ 250,000. The financial statements have not been amended in respect of this matter.

Required:

i) Comment on the financial reporting implications, and advise the further audit procedures to be performed. (6 marks)

ii) Recommend the actions to be taken by the auditor if the financial statements are not amended. (4 marks)

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  • 5 Marks

AAA – July 2023 – L3 – Q5b – Assurance services | Current issues

Explains appropriate audit procedures for Corporate Social Responsibility (CSR) reports, focusing on assessing impact and stakeholder engagement.

Corporate Social Responsibility (CSR) is the hallmark of every well managed entity. In some cases, cost of CSR may not involve actual expenditure.

Required:

Explain THREE (3) appropriate procedures for audit engagements for CSR reports. (5 marks)

 

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  • 10 Marks

AAA – July 2023 – L3 – Q5a – The regulatory environment | Current issues

Discusses factors influencing new auditing standards and procedures for their development by the International Federation of Accountants (IFAC).

The auditing profession is very dynamic and constantly confronted with new challenges emanating from the political and economic spheres. To meet these challenges the global authority responsible for the regulation of accountancy profession, The International Federation of Accountants (IFAC) has been ensuring that the standards for conduct of audit and assurance engagements are revised and brought up to date all the time.

Required: i) Discuss FOUR (4) factors that influence the development of new Auditing Standards. (5 marks)

ii) Identify the procedures for developing new Auditing Standards. (5 marks)

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  • 10 Marks

AAA – Dec 2023 – L3 – Q5a – Current Issues

Justify why companies should focus on sustainable business practices, given the increasing investor interest in the Sustainable Development Goals (SDGs).

Sustainable Development Goals and Investor Interest
The Sustainable Development Goals (SDGs) are 17 goals tackling major world issues agreed by 193 UN member states to be achieved by 2030. These goals include zero hunger, decent work and economic growth, and reduced inequalities.

Required:
Justify FOUR (4) reasons a company should focus on sustainable business practices in view of investor interest in SDGs. (10 marks)

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  • 10 Marks

AAA – May 2021 – L3 – Q5a – Current issues | Professional responsibility and liability

Assess the global threat of money laundering and discuss Ghana’s efforts to combat money laundering.

a) Money laundering has become a significant threat to the world’s political and economic order. World leaders are collaborating and cooperating in fighting money laundering. However, criminals are maliciously clever and, in some cases, ahead of law enforcement agencies. Every human being has to contribute to the fight against money laundering.

Required:

i) Assess why money laundering poses a big threat to the world’s political and economic order. (5 marks)

ii) Discuss FIVE (5) ways in which Ghana is contributing towards fighting money laundering globally. (5 marks)

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  • 10 Marks

AAA – May 2016 – L3 – Q5b – Audit evidence | Current issues

Discuss factors affecting audit quality according to the IAASB’s recent publication on Audit Quality.

Audit Quality has been a topical issue for discussion in the accountancy profession in recent times. The International Auditing and Assurance Standards Board (IAASB) has recently issued a publication on the Framework for Audit Quality. The objectives of this publication are to raise awareness of the key elements of audit quality; to encourage key stakeholders to explore ways to improve audit quality; and to facilitate greater dialogue between key stakeholders on the topic. Although audit quality is principally the responsibility of auditors, there are many factors that contribute to it. The IAASB describes these other factors as contextual, inputs, outputs, and key interactions.

Required:
Discuss with examples what factors affect Audit Quality according to the recent publication of the IAASB on Audit Quality. (10 marks)

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  • 5 Marks

AAA – Nov 2023 – L3 – Q5b – Audit Evidence, Evaluation and Review

Describe the auditor’s responsibility for subsequent events occurring between specific periods in the audit process.

b) In conducting an audit, audit procedures must be planned and performed so as to consider all significant transactions occurring after the reporting period. This means that the audit work does not stop with events only up to the reporting period. There are two key dates after the reporting period: the date of the audit report and the date that the financial statements are issued.

Required: Describe the auditor’s responsibility for subsequent events occurring between:

i) The year-end date and the date the auditor’s report is signed; and (2 marks)

ii) The date the auditor’s report is signed and the date the financial statements are issued. (3 marks)

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  • 10 Marks

AAA – Nov 2023 – L3 – Q5a – Current Issues, Audit Evidence

Explain the stages of money laundering and audit obligations in a scenario involving suspicious transactions.

a) You have commenced the audit of Atika Ltd, a company involved in the importation and sale of plumbing materials. As part of the audit, you have noticed the following:

  1. Atika Ltd does not pay its suppliers in Germany through the bank. It relies mostly on the black market for the transfer of funds to its suppliers.
  2. Atika only sells its goods in Ghana.
  3. On 25 March within the audit year, there was a cash deposit of US$2,500,000.00 into the forex account of Atika Ltd.
  4. On 30 March the company transferred the following:
    • US$499,999.99 to an unknown account in Cameroon
    • US$399,999.99 to an unknown account in Kenya
    • US$499,999.99 to an unknown account in Niger
    • US$250,000.00 to the personal account of the Managing Director
    • US$150,000.00 to an unknown company.
  5. The company’s general ledger shows a revenue of GH¢1,560,000.00.
  6. The import documentation shows purchases of GH¢36,000,000.00. There is no evidence of payment for the goods from Atika Ltd’s bank accounts.
  7. The closing inventory amounted to GH¢2,145,200.00.

The Audit Manager has raised the issue of money laundering considering the nature of the transactions above.

Required:

i) Explain to the team members the various stages of money laundering and show how the above transactions confirm the client’s engagement in money laundering. (6 marks)

ii) What are the obligations on the firm for money laundering? (4 marks)

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  • 5 Marks

AAA – Aug 2022 – L3 – Q5c – Current issues

Discuss reasons for management’s reluctance to disclose material uncertainty and the auditor's responsibility when going concern assumption is inappropriate.

If indications are identified which suggest that the going concern basis might not be appropriate for preparing financial statements, the auditor is required by ISA 570 (Revised): Going Concern to consider the implications for his audit report. The form of the report will depend on the auditor’s judgement.

There are two possible views:

  1. The use of the going concern is appropriate but material uncertainty exists or
  2. The use of the going concern assumption is inappropriate.

Required:
i) Discuss THREE (3) reasons why management of a client’s company will probably be reluctant to include the disclosure about material uncertainty in relation to the going concern assumption.
(3 marks)

ii) State the auditor’s responsibility where the use of the going concern assumption is inappropriate.
(2 marks)

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  • 20 Marks

AAA – Nov 2023 – L3 – Q3 – Reporting, Current Issues

Brief staff on KAMs, their determination, and their interaction with modifications to the audit report, going concern, emphasis of matter, and other matters.

ISA 701: Communicating Key Audit Matters (KAM) in the Independent Auditor’s Report is a new ISA introduced as part of the International Audit and Assurance Standards Board’s (IAASB) extensive revisions to International Standards on Auditing (ISAs) relating to audit reporting. The objective of the IAASB’s revisions was to make the auditor’s report more detailed and useful for the intended users. ISA 701 applies to audits of complete sets of general purpose financial statements of listed entities.

Subsequently, the Institute of Chartered Accountants, Ghana (ICAG) as the regulator of accountancy profession and practice in Ghana, issued a notice to practitioners and the public which directed that auditor’s report issued on financial statements for periods ending on or after 31 December, 2017 for Public Interest Entities (PIEs) to include a communication on Key Audit Matters as required by ISA 701.

You are the Partner in charge of training with Preko and Associates. An audit team member informed you that one of the clients being audited has an issue which is being contemplated as to whether to report the issue as key audit matter, emphasis of matter paragraph, other matter paragraph, or to modify the audit opinion.

Required: Prepare briefing notes for the staff of your firm regarding the following:

a) KAMs and state TWO (2) categories of entities in Ghana which ISA 701 is applicable as adopted by ICAG. (5 marks)

b) Factors to be considered in determining KAMs.

(3 marks)

c) Interaction between: i) KAMs and ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report
ii) KAMs and ISA 570 (revised): Going Concern
iii) KAMs and Emphasis of Matter
iv) KAMs and Other Matters (12 marks)

 

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  • 10 Marks

AAA – Nov 2019 – L3 – Q5b – Current Issues, Audit-related Services

Discuss the financial reporting implications of a restructuring and recommend auditor actions if financial statements are not amended.

You are the manager responsible for the audit of Obeyeyie Co. Ltd (OCL), a manufacturing company with a year ended 31 December 2018. The audit work has been completed and reviewed and you are due to issue the audit report in three days. The draft audit opinion is unmodified. The financial statements show revenue for the year ended 31 December 2018 of GH¢ 15 million, net profit of GH¢ 3 million, and total assets at the year-end are GH¢ 80 million.

The finance director of OCL e-mailed you this morning in addition to a WhatsApp message to tell you about the announcement yesterday of a significant restructuring of OCL, which will take place over the next six months. The restructuring will involve the closure of a factory and its relocation to another part of the country. There will be some redundancies and the estimated cost of closure is GH¢ 250,000. The financial statements have not been amended in respect of this matter.

Required:

i) Comment on the financial reporting implications, and advise the further audit procedures to be performed. (6 marks)

ii) Recommend the actions to be taken by the auditor if the financial statements are not amended. (4 marks)

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