Series: NOV 2018

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q7 – Fiscal Policy and Public Finance

Discuss the objectives of an ideal intergovernmental fiscal system and the problems facing intergovernmental fiscal relations in Nigeria.

“There are critical issues and problems with decentralisation of government and intergovernmental fiscal relations in Nigeria.”

Required:
a. The main objectives of an ideal system of fiscal relations among sub-national units in a federation.
(6 Marks)
b. Three problems of intergovernmental fiscal relations in Nigeria.
(9 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q7 – Fiscal Policy and Public Finance

Discuss the objectives of an ideal intergovernmental fiscal system and the problems facing intergovernmental fiscal relations in Nigeria.

“There are critical issues and problems with decentralisation of government and intergovernmental fiscal relations in Nigeria.”

Required:
a. The main objectives of an ideal system of fiscal relations among sub-national units in a federation.
(6 Marks)
b. Three problems of intergovernmental fiscal relations in Nigeria.
(9 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q6 – Fiscal Policy and Public Finance

Discuss the concept of market failure and provide cases justifying government intervention in the economy.

he need for government intervention in the economy is justified on the basis of market failure. In particular, the intervention has become inevitable in view of some practical situations for which the market is rather unhelpful.

Required:
a. Discuss the notion of “market failure” as a basis for government intervention.
(5 Marks)
b. Provide four illustrative cases to justify government intervention in the Nigerian economy.
(10 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q6 – Fiscal Policy and Public Finance

Discuss the concept of market failure and provide cases justifying government intervention in the economy.

he need for government intervention in the economy is justified on the basis of market failure. In particular, the intervention has become inevitable in view of some practical situations for which the market is rather unhelpful.

Required:
a. Discuss the notion of “market failure” as a basis for government intervention.
(5 Marks)
b. Provide four illustrative cases to justify government intervention in the Nigerian economy.
(10 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q5 – Fiscal Policy and Public Finance

Discuss the causes of Nigeria’s public debt increase, along with the benefits and adverse effects of public debt.

For some years, the level of Nigeria’s public debt has maintained an upward trend.

Required:
(a) Discuss four major causes for the increase in public debt.
(7 Marks)
(b) Explain three major benefits and two adverse effects of public debt to the country.
(8 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q5 – Fiscal Policy and Public Finance

Discuss the causes of Nigeria’s public debt increase, along with the benefits and adverse effects of public debt.

For some years, the level of Nigeria’s public debt has maintained an upward trend.

Required:
(a) Discuss four major causes for the increase in public debt.
(7 Marks)
(b) Explain three major benefits and two adverse effects of public debt to the country.
(8 Marks)

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  • 22 Marks

PSAF – Nov 2018 – L2 – Q4 – Government Accounting Concepts and Principles

Evaluate the viability of two local government projects using Pay Back Period and Accounting Rate of Return methods.

Sampolopolo Local Government has identified a vacant land beside its marriage registry building. The director of administration proposed that the land be used either for a cybercafé where the general public can browse, make phone calls, photocopy and carry out other computer services or for the construction of an entertainment event-hall that can be rented out on a commercial basis.
This idea was tabled at the council’s management meeting and unanimously accepted. However, the Finance and General Purposes Committee recommended five years for the project since the council secretariat building will be extended in the future to accommodate more offices for the increased staff strength, and this was approved.

The cost of building the cybercafé and the event-hall with necessary facilities and fittings as well as the expected cash inflows/profits as prepared by the director of administration are as follows:

Required:
As the consultant engaged by Sampolopolo Local Government, advise the Local Government on the more viable project using:
i. Pay Back Period (PBP) (7 Marks)
ii. Accounting Rate of Return (ARR) (13 Marks)

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  • 22 Marks

PSAF – Nov 2018 – L2 – Q4 – Government Accounting Concepts and Principles

Evaluate the viability of two local government projects using Pay Back Period and Accounting Rate of Return methods.

Sampolopolo Local Government has identified a vacant land beside its marriage registry building. The director of administration proposed that the land be used either for a cybercafé where the general public can browse, make phone calls, photocopy and carry out other computer services or for the construction of an entertainment event-hall that can be rented out on a commercial basis.
This idea was tabled at the council’s management meeting and unanimously accepted. However, the Finance and General Purposes Committee recommended five years for the project since the council secretariat building will be extended in the future to accommodate more offices for the increased staff strength, and this was approved.

The cost of building the cybercafé and the event-hall with necessary facilities and fittings as well as the expected cash inflows/profits as prepared by the director of administration are as follows:

Required:
As the consultant engaged by Sampolopolo Local Government, advise the Local Government on the more viable project using:
i. Pay Back Period (PBP) (7 Marks)
ii. Accounting Rate of Return (ARR) (13 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q3 – Government Expenditure

Calculate loans granted to civil servants, interest on loans, and discuss conditions and requirements for correspondence advances.

In order to ameliorate the transportation challenges being encountered by civil servants, Welfare State of Nigeria gave motor vehicle, tri-cycle, and motorcycle loans and advances for its workers. The workers were granted loans and advances equivalent to their annual basic salary. The total fund available for the loan was N1 billion. The officers that applied for the loans and their grade levels are as follows:

  • 250 officers – GL 01 – 05 at an average annual basic salary of N258,000;
  • 100 officers – GL 06 – 07 at an average annual basic salary of N450,000;
  • 50 officers – GL 08 and above at an average annual basic salary of N650,000.

The interest rate payable on the loans and advances is 12.5% p.a. to take care of the time value of money.

Required:
(a) You are required to calculate:
i. The total loans and advances that were given to the workers, showing the balance of the fund not yet accessed.
(10 Marks)
ii. The aggregate interest paid on the loans and advances.
(2 Marks)

(b) Discuss:
i. Four conditions which have to be fulfilled for the grant of correspondence advance.
(4 Marks)
ii. Two requirements for granting and repaying correspondence advance.
(4 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q3 – Government Expenditure

Calculate loans granted to civil servants, interest on loans, and discuss conditions and requirements for correspondence advances.

In order to ameliorate the transportation challenges being encountered by civil servants, Welfare State of Nigeria gave motor vehicle, tri-cycle, and motorcycle loans and advances for its workers. The workers were granted loans and advances equivalent to their annual basic salary. The total fund available for the loan was N1 billion. The officers that applied for the loans and their grade levels are as follows:

  • 250 officers – GL 01 – 05 at an average annual basic salary of N258,000;
  • 100 officers – GL 06 – 07 at an average annual basic salary of N450,000;
  • 50 officers – GL 08 and above at an average annual basic salary of N650,000.

The interest rate payable on the loans and advances is 12.5% p.a. to take care of the time value of money.

Required:
(a) You are required to calculate:
i. The total loans and advances that were given to the workers, showing the balance of the fund not yet accessed.
(10 Marks)
ii. The aggregate interest paid on the loans and advances.
(2 Marks)

(b) Discuss:
i. Four conditions which have to be fulfilled for the grant of correspondence advance.
(4 Marks)
ii. Two requirements for granting and repaying correspondence advance.
(4 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q2 – International Public Sector Accounting Standards (IPSAS)

Discuss reasons for holding investment properties and IPSAS 16 measurement methods, providing examples of investment and non-investment properties.

In line with the Government’s efforts at promoting accountability and transparency, the Federal Government of Nigeria has adopted and is implementing the International Public Sector Accounting Standards (IPSAS). The IPSAS 16 specifically deals with Investment Property which could be land, building, or both. A public sector entity may be established to manage such property portfolios on a commercial basis. An example of such an entity could be a University or Local Government.

Required:
a. Discuss two reasons for holding investment property and the two methods of measurement as contained in IPSAS 16.
(8 Marks)
b. Illustrate with four examples each of investment property and non-investment property.
(12 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q2 – International Public Sector Accounting Standards (IPSAS)

Discuss reasons for holding investment properties and IPSAS 16 measurement methods, providing examples of investment and non-investment properties.

In line with the Government’s efforts at promoting accountability and transparency, the Federal Government of Nigeria has adopted and is implementing the International Public Sector Accounting Standards (IPSAS). The IPSAS 16 specifically deals with Investment Property which could be land, building, or both. A public sector entity may be established to manage such property portfolios on a commercial basis. An example of such an entity could be a University or Local Government.

Required:
a. Discuss two reasons for holding investment property and the two methods of measurement as contained in IPSAS 16.
(8 Marks)
b. Illustrate with four examples each of investment property and non-investment property.
(12 Marks)

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  • 30 Marks

PSAF – Nov 2018 – L2 – Q1 – Regulatory and Institutional Framework

Discuss actions against companies with non-compliant financial reports, calculate NEITI unspent funds, outline NEITI functions and procedures for appointing auditors.

The Federal Government of Nigeria is committed to the principle of transparency and accountability in all its financial activities. The country has diverse sources of revenue which include natural resources, ranging from iron-ore, crude oil, zinc, tin-ore, and coal. In order to enhance its agenda of “zero tolerance for corruption,” the country established, among others, the Nigeria Extractive Industry Transparency Initiative Commission (NEITI) with the sole aim of reducing corruption in the extractive industry. The establishment of the commission was backed by an Act of National Assembly in 2007.

The commission normally carries out annual audits of accounts of companies in the extractive industry after obtaining their statements of accounts on a regular basis. Records available to NEITI revealed that five out of fifty-two companies in the industry failed to render their statements of accounts for the year 2016; another eight companies rendered falsified statements of accounts, while thirty-nine companies rendered accurate statements of accounts.

The records of receipts and expenditures of NEITI revealed total receipts of N2,396,581,900 in 2016, out of which N1,998,500,770 was expended on the commission’s activities up to December 31, 2016.
Further scrutiny of the accounts revealed receipts of gratification by some government officials in the eight companies that presented falsified statements of accounts. There were also expenses on frivolous overseas tours allegedly for attending seminars and workshops.

In line with the Act that established the commission, the audit reports on the financial activities of the companies in the extractive industry have been sent to the President and the National Assembly.

Required:
a. Discuss five actions that should be taken against the companies that failed to render their statements of accounts and those that rendered falsified statements of accounts.
(7½ Marks)
b. Calculate the unspent amount by the commission as at December 31, 2016 and the treatment of the unspent amount.
(4 Marks)
c. Outline five functions of NEITI as contained in the Act that established it and indicate the members of the National Stakeholder Working Group (NSWG) as contained in the NEITI Act, 2007.
(12½ Marks)
d. Explain six procedures for the appointment of auditors and publication of reports as contained in Section 4 of NEITI Act, 2007.
(6 Marks)

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  • 30 Marks

PSAF – Nov 2018 – L2 – Q1 – Regulatory and Institutional Framework

Discuss actions against companies with non-compliant financial reports, calculate NEITI unspent funds, outline NEITI functions and procedures for appointing auditors.

The Federal Government of Nigeria is committed to the principle of transparency and accountability in all its financial activities. The country has diverse sources of revenue which include natural resources, ranging from iron-ore, crude oil, zinc, tin-ore, and coal. In order to enhance its agenda of “zero tolerance for corruption,” the country established, among others, the Nigeria Extractive Industry Transparency Initiative Commission (NEITI) with the sole aim of reducing corruption in the extractive industry. The establishment of the commission was backed by an Act of National Assembly in 2007.

The commission normally carries out annual audits of accounts of companies in the extractive industry after obtaining their statements of accounts on a regular basis. Records available to NEITI revealed that five out of fifty-two companies in the industry failed to render their statements of accounts for the year 2016; another eight companies rendered falsified statements of accounts, while thirty-nine companies rendered accurate statements of accounts.

The records of receipts and expenditures of NEITI revealed total receipts of N2,396,581,900 in 2016, out of which N1,998,500,770 was expended on the commission’s activities up to December 31, 2016.
Further scrutiny of the accounts revealed receipts of gratification by some government officials in the eight companies that presented falsified statements of accounts. There were also expenses on frivolous overseas tours allegedly for attending seminars and workshops.

In line with the Act that established the commission, the audit reports on the financial activities of the companies in the extractive industry have been sent to the President and the National Assembly.

Required:
a. Discuss five actions that should be taken against the companies that failed to render their statements of accounts and those that rendered falsified statements of accounts.
(7½ Marks)
b. Calculate the unspent amount by the commission as at December 31, 2016 and the treatment of the unspent amount.
(4 Marks)
c. Outline five functions of NEITI as contained in the Act that established it and indicate the members of the National Stakeholder Working Group (NSWG) as contained in the NEITI Act, 2007.
(12½ Marks)
d. Explain six procedures for the appointment of auditors and publication of reports as contained in Section 4 of NEITI Act, 2007.
(6 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q7 – Internal Audit

Explains internal audit, identifies weaknesses in audit structure, and outlines the differences between internal and external auditors.

Good Weather Nigeria Plc is a company engaged in the business of manufacturing detergents with an annual turnover of N7 billion. It carries out its operations from six locations: Abuja, Enugu, Benin, Port-Harcourt, and Jos, with its head office in Lagos. The company has an internal audit function with three staff. The Chief Internal Auditor was recruited by the Executive Finance Director to facilitate a good working relationship between the finance and audit functions. All the staff in the unit are graduates and members of the Institute of Chartered Accountants of Nigeria (ICAN). The staff of internal audit have been in the unit for over eight years. The Chief Internal Auditor reports to the Executive Finance Director.

Required:
a. Explain the term “internal audit.”
(2 Marks)

b. Identify and explain the weaknesses in the above scenario.
(8 Marks)

c. Enumerate the differences between the roles of an internal auditor and an external auditor.
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q7 – Internal Audit

Explains internal audit, identifies weaknesses in audit structure, and outlines the differences between internal and external auditors.

Good Weather Nigeria Plc is a company engaged in the business of manufacturing detergents with an annual turnover of N7 billion. It carries out its operations from six locations: Abuja, Enugu, Benin, Port-Harcourt, and Jos, with its head office in Lagos. The company has an internal audit function with three staff. The Chief Internal Auditor was recruited by the Executive Finance Director to facilitate a good working relationship between the finance and audit functions. All the staff in the unit are graduates and members of the Institute of Chartered Accountants of Nigeria (ICAN). The staff of internal audit have been in the unit for over eight years. The Chief Internal Auditor reports to the Executive Finance Director.

Required:
a. Explain the term “internal audit.”
(2 Marks)

b. Identify and explain the weaknesses in the above scenario.
(8 Marks)

c. Enumerate the differences between the roles of an internal auditor and an external auditor.
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q6 – Audit Evidence

Explains the factors auditors consider for sufficient evidence, reliability principles, and steps to take when audit evidence is insufficient.

The auditor is required by ISA 500 to design and perform appropriate audit procedures for obtaining sufficient and appropriate audit evidence.

Required:
a. Identify five factors that an auditor will consider in determining what constitutes sufficient audit evidence.
(5 Marks)

b. Explain five principles that would assist the auditor in assessing the reliability of audit evidence.
(5 Marks)

c. What steps must the auditor take if he discovers that the evidence obtained is insufficient to form an opinion?
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q6 – Audit Evidence

Explains the factors auditors consider for sufficient evidence, reliability principles, and steps to take when audit evidence is insufficient.

The auditor is required by ISA 500 to design and perform appropriate audit procedures for obtaining sufficient and appropriate audit evidence.

Required:
a. Identify five factors that an auditor will consider in determining what constitutes sufficient audit evidence.
(5 Marks)

b. Explain five principles that would assist the auditor in assessing the reliability of audit evidence.
(5 Marks)

c. What steps must the auditor take if he discovers that the evidence obtained is insufficient to form an opinion?
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q5 – Audit Evidence

Outline the audit tests for purchased goodwill and development projects, and the conditions for recognizing development projects in financial statements.

The intangible assets that can be recognized in the statement of financial position are purchased goodwill, intangibles having a readily ascertainable market value, and development costs.

Required:
a. State five audit tests required to obtain audit evidence on purchased goodwill.
(5 Marks)

b. Identify five audit tests relevant to obtaining evidence on development projects.
(5 Marks)

c. Itemize five conditions that must be fulfilled before development projects can be recognized in the financial statements.
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q5 – Audit Evidence

Outline the audit tests for purchased goodwill and development projects, and the conditions for recognizing development projects in financial statements.

The intangible assets that can be recognized in the statement of financial position are purchased goodwill, intangibles having a readily ascertainable market value, and development costs.

Required:
a. State five audit tests required to obtain audit evidence on purchased goodwill.
(5 Marks)

b. Identify five audit tests relevant to obtaining evidence on development projects.
(5 Marks)

c. Itemize five conditions that must be fulfilled before development projects can be recognized in the financial statements.
(5 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q7 – Fiscal Policy and Public Finance

Discuss the objectives of an ideal intergovernmental fiscal system and the problems facing intergovernmental fiscal relations in Nigeria.

“There are critical issues and problems with decentralisation of government and intergovernmental fiscal relations in Nigeria.”

Required:
a. The main objectives of an ideal system of fiscal relations among sub-national units in a federation.
(6 Marks)
b. Three problems of intergovernmental fiscal relations in Nigeria.
(9 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q7 – Fiscal Policy and Public Finance

Discuss the objectives of an ideal intergovernmental fiscal system and the problems facing intergovernmental fiscal relations in Nigeria.

“There are critical issues and problems with decentralisation of government and intergovernmental fiscal relations in Nigeria.”

Required:
a. The main objectives of an ideal system of fiscal relations among sub-national units in a federation.
(6 Marks)
b. Three problems of intergovernmental fiscal relations in Nigeria.
(9 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q6 – Fiscal Policy and Public Finance

Discuss the concept of market failure and provide cases justifying government intervention in the economy.

he need for government intervention in the economy is justified on the basis of market failure. In particular, the intervention has become inevitable in view of some practical situations for which the market is rather unhelpful.

Required:
a. Discuss the notion of “market failure” as a basis for government intervention.
(5 Marks)
b. Provide four illustrative cases to justify government intervention in the Nigerian economy.
(10 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q6 – Fiscal Policy and Public Finance

Discuss the concept of market failure and provide cases justifying government intervention in the economy.

he need for government intervention in the economy is justified on the basis of market failure. In particular, the intervention has become inevitable in view of some practical situations for which the market is rather unhelpful.

Required:
a. Discuss the notion of “market failure” as a basis for government intervention.
(5 Marks)
b. Provide four illustrative cases to justify government intervention in the Nigerian economy.
(10 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q5 – Fiscal Policy and Public Finance

Discuss the causes of Nigeria’s public debt increase, along with the benefits and adverse effects of public debt.

For some years, the level of Nigeria’s public debt has maintained an upward trend.

Required:
(a) Discuss four major causes for the increase in public debt.
(7 Marks)
(b) Explain three major benefits and two adverse effects of public debt to the country.
(8 Marks)

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  • 15 Marks

PSAF – Nov 2018 – L2 – Q5 – Fiscal Policy and Public Finance

Discuss the causes of Nigeria’s public debt increase, along with the benefits and adverse effects of public debt.

For some years, the level of Nigeria’s public debt has maintained an upward trend.

Required:
(a) Discuss four major causes for the increase in public debt.
(7 Marks)
(b) Explain three major benefits and two adverse effects of public debt to the country.
(8 Marks)

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  • 22 Marks

PSAF – Nov 2018 – L2 – Q4 – Government Accounting Concepts and Principles

Evaluate the viability of two local government projects using Pay Back Period and Accounting Rate of Return methods.

Sampolopolo Local Government has identified a vacant land beside its marriage registry building. The director of administration proposed that the land be used either for a cybercafé where the general public can browse, make phone calls, photocopy and carry out other computer services or for the construction of an entertainment event-hall that can be rented out on a commercial basis.
This idea was tabled at the council’s management meeting and unanimously accepted. However, the Finance and General Purposes Committee recommended five years for the project since the council secretariat building will be extended in the future to accommodate more offices for the increased staff strength, and this was approved.

The cost of building the cybercafé and the event-hall with necessary facilities and fittings as well as the expected cash inflows/profits as prepared by the director of administration are as follows:

Required:
As the consultant engaged by Sampolopolo Local Government, advise the Local Government on the more viable project using:
i. Pay Back Period (PBP) (7 Marks)
ii. Accounting Rate of Return (ARR) (13 Marks)

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  • 22 Marks

PSAF – Nov 2018 – L2 – Q4 – Government Accounting Concepts and Principles

Evaluate the viability of two local government projects using Pay Back Period and Accounting Rate of Return methods.

Sampolopolo Local Government has identified a vacant land beside its marriage registry building. The director of administration proposed that the land be used either for a cybercafé where the general public can browse, make phone calls, photocopy and carry out other computer services or for the construction of an entertainment event-hall that can be rented out on a commercial basis.
This idea was tabled at the council’s management meeting and unanimously accepted. However, the Finance and General Purposes Committee recommended five years for the project since the council secretariat building will be extended in the future to accommodate more offices for the increased staff strength, and this was approved.

The cost of building the cybercafé and the event-hall with necessary facilities and fittings as well as the expected cash inflows/profits as prepared by the director of administration are as follows:

Required:
As the consultant engaged by Sampolopolo Local Government, advise the Local Government on the more viable project using:
i. Pay Back Period (PBP) (7 Marks)
ii. Accounting Rate of Return (ARR) (13 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q3 – Government Expenditure

Calculate loans granted to civil servants, interest on loans, and discuss conditions and requirements for correspondence advances.

In order to ameliorate the transportation challenges being encountered by civil servants, Welfare State of Nigeria gave motor vehicle, tri-cycle, and motorcycle loans and advances for its workers. The workers were granted loans and advances equivalent to their annual basic salary. The total fund available for the loan was N1 billion. The officers that applied for the loans and their grade levels are as follows:

  • 250 officers – GL 01 – 05 at an average annual basic salary of N258,000;
  • 100 officers – GL 06 – 07 at an average annual basic salary of N450,000;
  • 50 officers – GL 08 and above at an average annual basic salary of N650,000.

The interest rate payable on the loans and advances is 12.5% p.a. to take care of the time value of money.

Required:
(a) You are required to calculate:
i. The total loans and advances that were given to the workers, showing the balance of the fund not yet accessed.
(10 Marks)
ii. The aggregate interest paid on the loans and advances.
(2 Marks)

(b) Discuss:
i. Four conditions which have to be fulfilled for the grant of correspondence advance.
(4 Marks)
ii. Two requirements for granting and repaying correspondence advance.
(4 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q3 – Government Expenditure

Calculate loans granted to civil servants, interest on loans, and discuss conditions and requirements for correspondence advances.

In order to ameliorate the transportation challenges being encountered by civil servants, Welfare State of Nigeria gave motor vehicle, tri-cycle, and motorcycle loans and advances for its workers. The workers were granted loans and advances equivalent to their annual basic salary. The total fund available for the loan was N1 billion. The officers that applied for the loans and their grade levels are as follows:

  • 250 officers – GL 01 – 05 at an average annual basic salary of N258,000;
  • 100 officers – GL 06 – 07 at an average annual basic salary of N450,000;
  • 50 officers – GL 08 and above at an average annual basic salary of N650,000.

The interest rate payable on the loans and advances is 12.5% p.a. to take care of the time value of money.

Required:
(a) You are required to calculate:
i. The total loans and advances that were given to the workers, showing the balance of the fund not yet accessed.
(10 Marks)
ii. The aggregate interest paid on the loans and advances.
(2 Marks)

(b) Discuss:
i. Four conditions which have to be fulfilled for the grant of correspondence advance.
(4 Marks)
ii. Two requirements for granting and repaying correspondence advance.
(4 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q2 – International Public Sector Accounting Standards (IPSAS)

Discuss reasons for holding investment properties and IPSAS 16 measurement methods, providing examples of investment and non-investment properties.

In line with the Government’s efforts at promoting accountability and transparency, the Federal Government of Nigeria has adopted and is implementing the International Public Sector Accounting Standards (IPSAS). The IPSAS 16 specifically deals with Investment Property which could be land, building, or both. A public sector entity may be established to manage such property portfolios on a commercial basis. An example of such an entity could be a University or Local Government.

Required:
a. Discuss two reasons for holding investment property and the two methods of measurement as contained in IPSAS 16.
(8 Marks)
b. Illustrate with four examples each of investment property and non-investment property.
(12 Marks)

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  • 20 Marks

PSAF – Nov 2018 – L2 – Q2 – International Public Sector Accounting Standards (IPSAS)

Discuss reasons for holding investment properties and IPSAS 16 measurement methods, providing examples of investment and non-investment properties.

In line with the Government’s efforts at promoting accountability and transparency, the Federal Government of Nigeria has adopted and is implementing the International Public Sector Accounting Standards (IPSAS). The IPSAS 16 specifically deals with Investment Property which could be land, building, or both. A public sector entity may be established to manage such property portfolios on a commercial basis. An example of such an entity could be a University or Local Government.

Required:
a. Discuss two reasons for holding investment property and the two methods of measurement as contained in IPSAS 16.
(8 Marks)
b. Illustrate with four examples each of investment property and non-investment property.
(12 Marks)

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  • 30 Marks

PSAF – Nov 2018 – L2 – Q1 – Regulatory and Institutional Framework

Discuss actions against companies with non-compliant financial reports, calculate NEITI unspent funds, outline NEITI functions and procedures for appointing auditors.

The Federal Government of Nigeria is committed to the principle of transparency and accountability in all its financial activities. The country has diverse sources of revenue which include natural resources, ranging from iron-ore, crude oil, zinc, tin-ore, and coal. In order to enhance its agenda of “zero tolerance for corruption,” the country established, among others, the Nigeria Extractive Industry Transparency Initiative Commission (NEITI) with the sole aim of reducing corruption in the extractive industry. The establishment of the commission was backed by an Act of National Assembly in 2007.

The commission normally carries out annual audits of accounts of companies in the extractive industry after obtaining their statements of accounts on a regular basis. Records available to NEITI revealed that five out of fifty-two companies in the industry failed to render their statements of accounts for the year 2016; another eight companies rendered falsified statements of accounts, while thirty-nine companies rendered accurate statements of accounts.

The records of receipts and expenditures of NEITI revealed total receipts of N2,396,581,900 in 2016, out of which N1,998,500,770 was expended on the commission’s activities up to December 31, 2016.
Further scrutiny of the accounts revealed receipts of gratification by some government officials in the eight companies that presented falsified statements of accounts. There were also expenses on frivolous overseas tours allegedly for attending seminars and workshops.

In line with the Act that established the commission, the audit reports on the financial activities of the companies in the extractive industry have been sent to the President and the National Assembly.

Required:
a. Discuss five actions that should be taken against the companies that failed to render their statements of accounts and those that rendered falsified statements of accounts.
(7½ Marks)
b. Calculate the unspent amount by the commission as at December 31, 2016 and the treatment of the unspent amount.
(4 Marks)
c. Outline five functions of NEITI as contained in the Act that established it and indicate the members of the National Stakeholder Working Group (NSWG) as contained in the NEITI Act, 2007.
(12½ Marks)
d. Explain six procedures for the appointment of auditors and publication of reports as contained in Section 4 of NEITI Act, 2007.
(6 Marks)

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  • 30 Marks

PSAF – Nov 2018 – L2 – Q1 – Regulatory and Institutional Framework

Discuss actions against companies with non-compliant financial reports, calculate NEITI unspent funds, outline NEITI functions and procedures for appointing auditors.

The Federal Government of Nigeria is committed to the principle of transparency and accountability in all its financial activities. The country has diverse sources of revenue which include natural resources, ranging from iron-ore, crude oil, zinc, tin-ore, and coal. In order to enhance its agenda of “zero tolerance for corruption,” the country established, among others, the Nigeria Extractive Industry Transparency Initiative Commission (NEITI) with the sole aim of reducing corruption in the extractive industry. The establishment of the commission was backed by an Act of National Assembly in 2007.

The commission normally carries out annual audits of accounts of companies in the extractive industry after obtaining their statements of accounts on a regular basis. Records available to NEITI revealed that five out of fifty-two companies in the industry failed to render their statements of accounts for the year 2016; another eight companies rendered falsified statements of accounts, while thirty-nine companies rendered accurate statements of accounts.

The records of receipts and expenditures of NEITI revealed total receipts of N2,396,581,900 in 2016, out of which N1,998,500,770 was expended on the commission’s activities up to December 31, 2016.
Further scrutiny of the accounts revealed receipts of gratification by some government officials in the eight companies that presented falsified statements of accounts. There were also expenses on frivolous overseas tours allegedly for attending seminars and workshops.

In line with the Act that established the commission, the audit reports on the financial activities of the companies in the extractive industry have been sent to the President and the National Assembly.

Required:
a. Discuss five actions that should be taken against the companies that failed to render their statements of accounts and those that rendered falsified statements of accounts.
(7½ Marks)
b. Calculate the unspent amount by the commission as at December 31, 2016 and the treatment of the unspent amount.
(4 Marks)
c. Outline five functions of NEITI as contained in the Act that established it and indicate the members of the National Stakeholder Working Group (NSWG) as contained in the NEITI Act, 2007.
(12½ Marks)
d. Explain six procedures for the appointment of auditors and publication of reports as contained in Section 4 of NEITI Act, 2007.
(6 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q7 – Internal Audit

Explains internal audit, identifies weaknesses in audit structure, and outlines the differences between internal and external auditors.

Good Weather Nigeria Plc is a company engaged in the business of manufacturing detergents with an annual turnover of N7 billion. It carries out its operations from six locations: Abuja, Enugu, Benin, Port-Harcourt, and Jos, with its head office in Lagos. The company has an internal audit function with three staff. The Chief Internal Auditor was recruited by the Executive Finance Director to facilitate a good working relationship between the finance and audit functions. All the staff in the unit are graduates and members of the Institute of Chartered Accountants of Nigeria (ICAN). The staff of internal audit have been in the unit for over eight years. The Chief Internal Auditor reports to the Executive Finance Director.

Required:
a. Explain the term “internal audit.”
(2 Marks)

b. Identify and explain the weaknesses in the above scenario.
(8 Marks)

c. Enumerate the differences between the roles of an internal auditor and an external auditor.
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q7 – Internal Audit

Explains internal audit, identifies weaknesses in audit structure, and outlines the differences between internal and external auditors.

Good Weather Nigeria Plc is a company engaged in the business of manufacturing detergents with an annual turnover of N7 billion. It carries out its operations from six locations: Abuja, Enugu, Benin, Port-Harcourt, and Jos, with its head office in Lagos. The company has an internal audit function with three staff. The Chief Internal Auditor was recruited by the Executive Finance Director to facilitate a good working relationship between the finance and audit functions. All the staff in the unit are graduates and members of the Institute of Chartered Accountants of Nigeria (ICAN). The staff of internal audit have been in the unit for over eight years. The Chief Internal Auditor reports to the Executive Finance Director.

Required:
a. Explain the term “internal audit.”
(2 Marks)

b. Identify and explain the weaknesses in the above scenario.
(8 Marks)

c. Enumerate the differences between the roles of an internal auditor and an external auditor.
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q6 – Audit Evidence

Explains the factors auditors consider for sufficient evidence, reliability principles, and steps to take when audit evidence is insufficient.

The auditor is required by ISA 500 to design and perform appropriate audit procedures for obtaining sufficient and appropriate audit evidence.

Required:
a. Identify five factors that an auditor will consider in determining what constitutes sufficient audit evidence.
(5 Marks)

b. Explain five principles that would assist the auditor in assessing the reliability of audit evidence.
(5 Marks)

c. What steps must the auditor take if he discovers that the evidence obtained is insufficient to form an opinion?
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q6 – Audit Evidence

Explains the factors auditors consider for sufficient evidence, reliability principles, and steps to take when audit evidence is insufficient.

The auditor is required by ISA 500 to design and perform appropriate audit procedures for obtaining sufficient and appropriate audit evidence.

Required:
a. Identify five factors that an auditor will consider in determining what constitutes sufficient audit evidence.
(5 Marks)

b. Explain five principles that would assist the auditor in assessing the reliability of audit evidence.
(5 Marks)

c. What steps must the auditor take if he discovers that the evidence obtained is insufficient to form an opinion?
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q5 – Audit Evidence

Outline the audit tests for purchased goodwill and development projects, and the conditions for recognizing development projects in financial statements.

The intangible assets that can be recognized in the statement of financial position are purchased goodwill, intangibles having a readily ascertainable market value, and development costs.

Required:
a. State five audit tests required to obtain audit evidence on purchased goodwill.
(5 Marks)

b. Identify five audit tests relevant to obtaining evidence on development projects.
(5 Marks)

c. Itemize five conditions that must be fulfilled before development projects can be recognized in the financial statements.
(5 Marks)

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  • 15 Marks

AA – Nov 2018 – L2 – Q5 – Audit Evidence

Outline the audit tests for purchased goodwill and development projects, and the conditions for recognizing development projects in financial statements.

The intangible assets that can be recognized in the statement of financial position are purchased goodwill, intangibles having a readily ascertainable market value, and development costs.

Required:
a. State five audit tests required to obtain audit evidence on purchased goodwill.
(5 Marks)

b. Identify five audit tests relevant to obtaining evidence on development projects.
(5 Marks)

c. Itemize five conditions that must be fulfilled before development projects can be recognized in the financial statements.
(5 Marks)

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