Question Tag: Evidence

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  • 1 Marks

BL – May 2015 – L1 – SA – Q12 – Nigerian Legal System

Identify the legal instrument that makes electronic facts admissible in Nigeria.

Electronic facts are now admissible in Nigeria by virtue of the
A. Evidence Act
B. Recommendations from the National Conference
C. Amendment to the 1999 Constitution of the Federal Republic of Nigeria
D. The efforts of forensic experts
E. The efforts and testimonies of computer expert witnesses in court

Answer: A

Explanation:
The correct answer is “A. Evidence Act.” The Nigerian Evidence Act, as amended, allows the admissibility of electronic facts, acknowledging the growing reliance on digital documentation in modern legal proceedings.
  • 8 Marks

AA – Nov 2015 – L2 – Q1b – Audit and Assurance Evidence, Completion Procedures and Reporting

This question covers the audit procedures to confirm inventory existence, completeness, and valuation at the year-end.

Describe the audit procedures that the auditor should perform at the year-end to confirm each of the following:
i. The existence of inventory.
ii. The completeness of inventory.
iii. The valuation of inventory.
(8 marks)

i. Existence of Inventory

  • Observe the inventory count to confirm that the inventory physically exists.
  • Enquire of management whether any inventory is held for third parties.
  • Obtain a copy of the completed inventory sheets and physically verify a sample of items listed on the sheets against the inventory present in the warehouse.
  • For goods delivered on the day of the count, determine whether these goods relate to the year being audited and trace them through to the final inventory figures to ensure correct period recording.

ii. Completeness of Inventory

  • For a sample of product lines, ensure they are included on the inventory sheets and that the quantity is accurately recorded.
  • Perform a sequence check of the inventory sheets to verify they were all returned to the warehouse manager.
  • Ask management whether there are any items of inventory held offsite that are not included in the inventory sheets.

iii. Valuation of Inventory

  • For a sample of finished goods sold after the year-end, compare the sales price to the current price list to ensure they are sold above cost.
  • For work-in-progress inventory, ask management how they determined the percentage completion, recalculate the costs incurred to date, and compare the estimated selling price minus costs to complete to ensure the items’ net realizable value exceeds cost.
  • Review the inventory movement records to identify slow-moving lines and assess the salability of these items, and verify if management made any provision for obsolescence or damaged inventory.
  • 10 Marks

AAA – Nov 2017 – L3 – Q1b – Audit Evidence, The Audit Approach

Describe the auditor's procedures and evidence required in relation to related party transactions.

Central to a number of government investigations in various countries have been companies trading with organisations or individuals other than at arm’s length. Such transactions were made possible by a degree of control or influence exercised by directors over both parties. Directors are responsible for the identification of such related party relationship and transactions, however, the auditor has a responsibility of ensuring good reporting in that area.

You are the audit senior of an audit firm preparing to audit a group company and its subsidiaries and sub-subsidiaries, which also trade with companies owned by some directors of the parent company.

Required:
What procedures and evidence should the auditor consider to discharge his responsibility in relation to related party transactions?

Our procedure and evidence needed to discharge our duties in relation to related parties for this audit will include:

  1. Enquiries of Management:
    • Make enquiries of management to disclose the related parties of the company. The related parties will include the subsidiaries, the directors, the directors’ companies trading with the parent company, and the subsidiaries and sub-subsidiaries.
  2. Identify Related Party Transactions:
    • Identify the related party transactions that occurred between the parent company, its directors, subsidiaries, sub-subsidiaries, and the companies owned by the directors.
  3. Arm’s Length Transactions:
    • Check whether the transactions have been conducted at arm’s length by comparing the terms of trade in respect of prices, discounts, and credit periods.
  4. Accounting Treatment:
    • Verify the treatment of the related transactions in the accounting records and the financial statements to ensure they have been correctly treated.
  5. Presentation and Disclosure:
    • Check the presentation and disclosure of the related party transactions in the financial statements.
  6. Consider Audit Opinion:
    • Consider the evidence obtained and decide on the audit opinion to issue. Depending on whether management has done the right thing and the financial statements give a true and fair view, we may issue an unmodified opinion. If we are unable to obtain the evidence required, we may issue a qualified opinion or a disclaimer of opinion.

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