Ican 2021 Audit And Assurance Question 1

Chukwuemeka & Co. (Chartered Accountants) has been auditors to GED Manufacturing Nigeria Plc. There have been some regulatory and compliance issues for which the company was sanctioned and paid penalties to the Financial Reporting Council of Nigeria. At the board of directors meeting to consider the last annual report audited by the firm, some of the previous problems caused by the auditors were raised and discussed. Following the reoccurrence of such issues, it was proposed that another audit firm be engaged in addition to the present firm. To achieve their objective, a bigger firm that has international affiliation was considered to take a leading role in a joint audit arrangement and to ensure appropriate compliance. Your firm has been approached for the appointment. A meeting was scheduled between your firm, Chukwuemeka & Co. and the executive management of GED Manufacturing Nigeria Plc. After the meeting, your firm was subsequently appointed and the necessary formalities were properly followed. Your partner has directed that you liaise with Chukwuemeka & Co, to obtain the necessary materials for the preparation of the audit and that you review the prior year working papers to obtain an understanding of the issues. Your assessment of the documents obtained from the other auditor revealed the following, amongst others: (i) The work done on the process of dispatch of goods and invoicing was not considered sufficient and appropriate; and (ii) The IT operations of the company had weak controls such that it was possible for some staff to over-ride some of the existing controls.