Answer ANY TWO (2) Questions from this section
QUESTION 1
(A)There are specific regulatory obligations imposed on accountants and
auditors in relation to detecting and reporting money laundering
activities. You have been asked to provide a training session to the new
audit juniors on auditors’ responsibilities in relation to money
laundering.
Required:
Prepare briefing notes to be used at your training session in which
you:
(i) Explain the term ‘money laundering’. Illustrate your
explanation with examples of money laundering offences,
including those which could be committed by the accountant;
and [5 Marks]
(ii) Explain the policies and procedures that a firm of Chartered
Accountants should establish in order to meet its
responsibilities in relation to money laundering. [5 Marks]
(B)You are the auditor of Promise Pl. The Finance Director, Mrs Owusu
has asked for a meeting with you. She recently discovered that the
purchase ledger manager has diverted company funds into his own
bank account. The Finance Director has identified funds of GHS50,000
to date as being diverted and wants an explanation as to why you did
not highlight this issue during the course of your recently completed
audit. The profit for the year was GHS17.5m.
Required
Prepare a set of briefing notes to assist you in your meeting with
the Finance Director. [5 Marks]
(C)You are the auditor of a chain of restaurants. You have noticed a
newspaper report that guests at a wedding have fallen ill after eating at
one of your client’s restaurants.
Required
What impact should this report have on your considerations of
compliance with laws and regulations and what audit procedures
would you perform? [5 Marks]
QUESTION 2
Barima Pl is an independent construction company, dealing with large
scale contracts in Ghana and with some international interest in Liberia
and Serra Leone. Barima Pl has recently established an Audit
Committee, the members of which are very concerned about meeting
corporate governance ‘best practice’, particularly since they are
currently looking at the possibility of obtaining stock exchange listing.
You are an internal auditor with the company and the CEO has asked
you to conduct a review of how well the company is meeting relevant
corporate governance requirements.
You are required to prepare a report that addresses the following:
(A) What is meant by ‘corporate governance’ and why is it
important that companies should comply with relevant
corporate governance requirements? [5 Marks]
(B) What are the key issues for Barima Ple to address to achieve
effective corporate governance? [5 Marks]
(C) What is the role of the Audit Committee in relation to
corporate governance? [6 Marks]
(D)List the types of regular reporting that would be useful for
Barima Ple in the context of establishing sound corporate
governance. [4 Marks]
QUESTION 3
You are the audit senior in charge of the audit of the receivables balance.
For the first time at this client, you have decided to use audit software to
assist with the audit of the receivables balance. Computer staff at Asetenapa
Pic are happy to help the auditor, although they cannot confirm
completeness of systems documentation, and warn that the systems have
very old operating systems in place, limiting file compatibility with more
modern programs. The change in audit approach has been taken mainly to
fully understand Asetenapa Plc’s computer systems prior to new internet
modules being added next year. To limit the possibility of damage to
Aseienapa Plc’s computer files, copy files will be provided by Asetenapa
Pic’s computer staff for the auditor to use with their own audit software.
Required
(A) Explain FOUR audit procedures that should be carried out using
audit software on the receivables balance at Asetenapa Ple. For
each procedure, explain the reason for that procedure [8 Marks]
(B) Explain THREE potential problems of using audit software at
Asetenapa PIc. For each problem, explain how it can be resolved. [6 Marks]
(C)Explain the concept of ‘auditing around the computer’ and discuss
why this increases audit risk for the auditor. [6 Marks]
QUESTION 4
(A) You are the audit manager in In Dauud & Co. One of your new
clients this year is Prosperity Pic, a company having net assets of
GHS 5 million. The audit work has been completed, but there is one
outstanding matter you are currently investigating; the directors have
decided not to provide depreciation on a landed property in the
financial statements, although International Accounting Standards
suggest that depreciation should be provided.
Required:
State the additional audit procedures and actions you should now
take in respect of the above matter. [5 Marks]
(B) You are the manager responsible for three audit clients of Ansah & Co,
a firm of Chartered Certified Accountants. The year end in each case is
30 June 2014. You are currently reviewing the audit working paper files
and the audit seniors’ recommendations for the auditors’ reports. Details
are as follows:
(i) Sea Plc is a subsidiary of Water PIc. Serious going concern problems
– have been noted during this year’s audit. Sea Plc will be unable to trade
for the foreseeable future unless it continues to receive financial support
from the parent company. Sea Pic has received a letter of support
(‘comfort letter’) from Water Pl. The audit senior has suggested that,
due to the seriousness of the situation, the audit opinion must at least be
qualified ‘except for’ [5 Marks]
(ii) Nhyira Co has changed its accounting policy for goodwill during the
year from amortisation over its estimated useful life to annual
impairment testing. No disclosure of this change has been given in the
financial statements. The carrying amount of goodwill in the statement
of financial position as at 30 June 2009 is the same as at 30 June 2008
as management’s impairment test show that it is not impaired. The
audit senior has concluded that a qualification is not required but
suggests that attention can be drawn to the change by way of an
emphasis of matter paragraph. [5 Marks]
(iii) The directors’ report of Sompa Plc states that investment property
rental forms a major part of revenue. However, a note to the financial
statements shows that property rental represents only 1•6% of total
revenue for the year. The audit senior is satisfied that the revenue
figures are correct. The audit senior has noted that an unqualified
opinion should be given as the audit opinion does not extend to the
directors report. [5 Marks]
