Topic: Regulatory Framework and Professional Standards

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AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

Question

The Companies and Allied Matters Act, 2020 has classifications and responsibilities for various types of companies incorporated under it. A particular class that has received more attention in recent times and in the Act is small companies.

Your audit team has been approached by a few of these small companies for guidance on the issue and your team has been assigned this responsibility. Part of the concerns of your firm is whether or not those small companies merit the concerns of regulatory authorities and the accounting firms that have to be responsible for their audit.

Your team has a number of young assistants who are yet to understand the differences and therefore need enlightenment on this as part of the training programs.

Required:

a. Discuss the arguments for and against the exemption of small companies from audit. (10 Marks)

b. On the basis that an audit may be conducted for a small entity, evaluate the points the auditors would consider. (5 Marks)

Answer

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Tags: Audit Considerations, Audit Exemption, Regulatory Framework, Small Companies, Training and Guidance
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AAA – May 2023 – L3 – Q6 – Regulatory Framework and Professional Standards

Evaluate the principles of the Nigerian Data Protection Regulation and discuss its requirements in an audit context.

Question

The audit of one of your firm’s new clients is ongoing. Review and compliance procedures were being carried out by the audit team. There were unsatisfactory issues with some of the data generated for use in the testing process. These issues were escalated, and it became necessary to bring in the firm’s IT specialists for confirmation purposes. With your competence in this area, you were asked to provide the necessary guidance and assurance needed by the audit team.

Required:

(a) Evaluate the components of the governing principles of the Nigerian Data Protection Regulation, 2019, as applicable in the circumstance. (6 Marks)

(b) Discuss the requirements of the data protection framework. (9 Marks)

Answer

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Tags: Audit Compliance, Data protection, IT Assurance, Nigerian Data Protection Regulation
Level: Level 3

Topic: Regulatory Framework and Professional Standards

AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

Question

In compliance with ISA 250 “Consideration of Laws and Regulations in an Audit of Financial Statements,” the auditor shall conduct the audit in a manner that gives them confidence that the client has met all legal requirements of the country in which it operates.

As the Audit Partner in charge of APB Manufacturing Plc, you are required to:

a. Identify and clarify SIX steps that ISA 250 requires of you in ascertaining that the company complies with all applicable laws and regulations. (9 Marks)
b. State and explain FOUR procedural actions you will take in the event that the company failed to comply, in material areas, with applicable laws and regulations. (6 Marks)

Answer

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Tags: Audit Procedures, Compliance Testing, ISA 250, Legal Requirements, Non-Compliance Actions
Level: Level 3

Topic: Regulatory Framework and Professional Standards

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 – Q9 – Regulatory Framework and Professional Standards

This question tests understanding of the required components of IFRS-compliant financial statements.

Question

Which of the following is NOT required as part of Financial Statements that are International Financial Reporting Standards (IFRS) compliant?
A. Statement of financial position
B. Statement of cash flows
C. Account receivable
D. Chairman’s statement
E. Non-current assets

Answer

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Tags: Financial Statements, IFRS Compliance, Reporting Standards
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2013

AAA – Nov 2013 – L3 – A – Q3 – Regulatory Framework and Professional Standards

This question assesses knowledge of the organizations represented on the Board of the Financial Reporting Council of Nigeria.

Question

Which of the following organisations has no representation on the Board of the Financial Reporting Council of Nigeria?
A. Chartered Institute of Taxation of Nigeria
B. Chartered Institute of Stockbrokers
C. Nigerian Institute of Bankers
D. Nigerian Institute of Estate Surveyors and Valuers
E. National Insurance Commission

Answer

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Tags: Financial Reporting, Governance, Professional Standards, Regulatory Framework
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

Question

One of the major deficiencies of our Local Standards over IFRS’s presentation of Non-current Assets is that our Local Standards do not recognise ……………. process.

Answer

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Tags: Accounting Standards, IFRS, Local Standards, Non-current Assets, Regulatory Differences
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q7 – Regulatory Framework and Professional Standards

Defines the role of a chartered accountant reporting under CAMA and NSE listing requirements.

Question

A chartered accountant in public practice, who is engaged to report under the relevant provisions of the Companies and Allied Matters Act, CAP. C20, LFN 2004, and the listing requirements of the Nigerian Stock Exchange is known as …………….

Answer

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Tags: CAMA, Chartered Accountant, Nigerian Stock Exchange, Public Practice, Reporting Requirements
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

Question

The audited financial statements of every company must be filed with the ……………………

Answer

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Tags: Audit Standards, Corporate Governance, Filing Requirements, Financial Statements, Regulatory Compliance
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

Question

According to ISA 320, the auditor is expected to treat information as IMMATERIAL if:

A. Its omission could influence the economic decision of users based on the financial statement
B. Its misstatement could alter the decision of stakeholders based on the financial statements
C. Its omission is within the audit objective
D. Its misstatement will make an audit objective to be defeated
E. Its omission threatens the going concern of the organisation

Answer

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Tags: Audit Standards, Financial Statements, Immaterial Information, ISA 320, Materiality
Level: Level 3

Topic: Regulatory Framework and Professional Standards
Series: NOV 2012

AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

Question

You are a manager in Obuns & Co, a firm of Chartered Accountants, responsible for the audit of Akudre Plc, a listed entity, for the year ended 31 May 2020. The company operates in the textile industry and manufactures a range of goods, including clothing, linen, and soft furnishings. Akudre Plc employs approximately 750 sales staff across the country who sell the company’s products to both households and small to medium-sized businesses. Around 75% of Akudre Plc’s sales transactions are cash-based, and each sales staff member prepares a monthly cash sales report.

According to Akudre Plc’s CEO, Adu Oke, each staff member (including senior management) is encouraged to make cash sales on a commission basis to friends and family. Mr. Oke recently sold products worth N4,000,000 to business associates, depositing these funds into an offshore bank account under his sole control.

Review of Audit Working Papers:
A review of the audit working papers and an initial meeting with Mr. Oke revealed these issues:

Obuns & Co performed tax computations for Akudre Plc and completed tax returns for the company and Mr. Oke, invoiced as part of the total fee for audit and professional services. Mr. Oke’s personal tax return reflects numerous property transactions across international locations, which are detailed in off-shore accounts.

Financing Issue:
The audit committee has requested the audit engagement partner attend a post-audit meeting with the company’s bank officials, including the CFO and a representative from the audit committee, to renegotiate Akudre Plc’s lending facility. The audit partner is expected to confirm the company’s financial stability and verify that going concern procedures, including cash flow forecasts, were audited.

Required:
a. Discuss the policies and procedures which Obuns & Co. should have in place in relation to an anti-money laundering programme. (5 Marks)
b. Evaluate whether there are any indicators of money laundering activities by Akudre Plc or its staff. (4 Marks)
c. Describe the requirements of ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements. (5 Marks)
d. Discuss the actions required when an auditor identifies or suspects material instances of non-compliance by a client under ISA 250. (5 Marks)
e. Identify and evaluate any ethical threats and professional issues arising from the audit committee’s request for the audit engagement partner to attend the financing meeting. (3 Marks)
f. If loan finance is essential for the company’s survival and uncertainty exists regarding agreement finalization, evaluate additional audit procedures to ascertain if a material uncertainty exists. (10 Marks)
g. Evaluate the impact on the audit report in these scenarios:

i. Going concern assumption is appropriate, but material uncertainty exists.
ii. Going concern assumption is appropriate, material uncertainty exists, and disclosures are adequate.
iii. Going concern assumption is appropriate, material uncertainty exists, but disclosures are inadequate.
iv. Going concern assumption is inappropriate. (8 Marks)

Answer

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Tags: Anti-Money Laundering, Audit Procedures, Compliance, Ethical Threats, Going Concern, ISA 250
Level: Level 3

Topic: Regulatory Framework and Professional Standards

Topic: Regulatory Framework and Professional Standards

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AAA – May 2022 – L3 – Q5 – Regulatory Framework and Professional Standards

Discuss arguments for and against audit exemption for small companies and evaluate considerations for auditing small entities.

AAA – May 2023 – L3 – Q6 – Regulatory Framework and Professional Standards

Evaluate the principles of the Nigerian Data Protection Regulation and discuss its requirements in an audit context.

AAA – Nov 2016 – L3 – Q5 – Regulatory Framework and Professional Standards

Identify steps and procedural actions auditors take under ISA 250 to ensure compliance with laws and regulations.

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.

AAA – Nov 2013 – L3 – A – Q9 – Regulatory Framework and Professional Standards

This question tests understanding of the required components of IFRS-compliant financial statements.

AAA – Nov 2013 – L3 – A – Q3 – Regulatory Framework and Professional Standards

This question assesses knowledge of the organizations represented on the Board of the Financial Reporting Council of Nigeria.

AAA – Nov 2012 – L3 – AII – Q15 – Regulatory Framework and Professional Standards

Identifies a major deficiency of local standards compared to IFRS in the presentation of non-current assets.

AAA – Nov 2012 – L3 – AII – Q7 – Regulatory Framework and Professional Standards

Defines the role of a chartered accountant reporting under CAMA and NSE listing requirements.

AAA – Nov 2012 – L3 – AII – Q4 – Regulatory Framework and Professional Standards

Identifies the regulatory authority with which companies must file audited financial statements.

AAA – Nov 2012 – L3 – SA – Q14 – Regulatory Framework and Professional Standards

Determining criteria for immaterial information based on ISA 320.

AAA – Nov 2020 – L3 – Q1 – Regulatory Framework and Professional Standards

Discusses policies for anti-money laundering, indicators of money laundering, ethical issues, and audit procedures for going concern assumptions.

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