ICAN 2026 Advanced Audit Assurance and Forensics | Mixed

David Copeland and Partners International is a group of professionals that are into accounting and advisory services across audit, tax, regulatory compliance, outsourcing, human resources, and corporate governance. The firm has a team that confronts daily challenges in a highly competitive and fast moving environment by assisting national and international clients to excel in their businesses. The firm has its footprints in major cities worldwide. The geographical network allows the partners to meet international needs of clients. The set-up of the firm allows each member firm to serve its local market independently and effectively. Due to global competition, the partnership is committed to attracting and developing talents in other locations in Africa with diverse workforce that brings innovation and foresight to clients. The firm decided to include in its business operations across the geographical network, insolvency and business recovery services, and have a practice office in Nigeria. Aside from having competent professionals, a major condition for firms in any country that wants to join the global network is the need to ensure a robust quality control review that supports International Standards on Quality Management (ISQM). Your firm, FFO & Co (Chartered Accountants), is interested in joining the global network and with a view to expanding its audit portfolio with multinational clients. You are part of a team saddled with the responsibility of developing a framework to ensure a seamless onboarding with the international firm.

Your firm has recently been appointed as external auditors to the Velvet Bank Limited (VBL) and you are one of the staff saddled with the responsibility to prepare for the engagement. VBL was incorporated under the Companies and Allied Matters Act on August 20, 2007. It obtained a licence from the Central Bank of Nigeria to operate as a commercial bank on December 14, 2007 and commenced business, effective January 1, 2008. The bank is not listed on the Nigerian Exchange Limited. The following have been identified as some of those who have interest in the bank and its financial statements: Shareholders The shareholders’ focus is on the profit before tax, revenue and net assets of the bank, when using the financial statements. Shareholders, in making their decision as to the performance of the bank would generally review the operating income of the bank to ascertain its growth and reduction in costs, while achieving its set objectives (maintaining the profitability of the bank). They will also check the relevant investment ratios that exhibit the profitability of the bank. Regulators The regulators such as Central Bank of Nigeria and Nigerian Deposit Insurance Corporation are interested in protecting customers' deposits and ensuring that the bank meets regulatory requirements as well as growing its revenue from the disbursement of loans to customers. Other relevant statutory authorities, including Nigeria Revenue Services (NRS), Financial Reporting Council of Nigeria (FRC), Nigeria Deposit Insurance Cooperation (NDIC), the tax authorities are interested in the banks revenue growth as it translates to increased value added tax. They are also interested in improved profitability which translates to increased companies income tax and other tax responsibilities. Key ratios in the regulatory returns were identified to be the loan to deposit ratio, capital adequacy ratio and liquidity ratio. Highlights of performance December 31, 2024 December 31, 2023 Profit before tax 870,109,115 108,249,465 Revenue 18,442,124,018 11,131,048,112 Net assets 99,010,444,232 42,104,122,068 Loans 110,022,112,044 85,022,444,000.

ABC Manufacturing Plc. is a large Nigerian company listed on the Nigerian Exchange Limited (NGX). In line with the provisions of the Companies and Allied Matters Act (CAMA) 2020, the company appointed Obed Ijahdulah & Co. (Chartered Accountants), as its statutory auditor. During the planning stage of the audit, the Audit Manager noted that: (i) some members of the management were reluctant to provide certain internal control documentation; (ii) the internal audit department exists but seems under-resourced, performing mainly compliance checks without focusing on risk management; (iii) the company recently faced shareholders’ complaints regarding late and unreliable financial reporting; and (iv) during testing, the auditors discovered evidence of inventory obsolescence that management had not disclosed.

Omuoru Bottling Company Limited has been producing carbonated water and other soft drinks since 2019. The company produces high-quality drinks and markets the products aggressively to make enough profit to sustain the business and meet the needs of various stakeholders. The company has about three hundred staff and an impressive market share. The products have various brands and flavours including carbonated water, juice, banana, pineapple and other carbonated drinks. The annual sales of the company have been within the range of N380million and N790million. The profit after tax moved from N150million in 2019 to N367million in 2024. The company pays tax and other levies as and when due. The details of the contributions made by the company to the community during the year 2024 are as follows: The directors of the company have not been making a disclosure of the various corporate social responsibilities in the financial statements. The Managing Director has intimated your firm of the threat of the pressure group during the pre-audit meeting for the current audit due to non-discussion of the company’s special responsibility in the financial statements. As a result of the foregoing, your firm has decided to intimate your firm’s expert to conduct sustainability assurance for reporting in the financial statements.

Clement Nigeria Limited was incorporated as a private limited liability company on October 4, 2020 under the Companies and Allied Matters Act. The company commenced commercial production on January 20, 2021, and currently engages in the manufacturing, distribution, and selling of foods and related products. In 2023, the entity recognised a revenue of N3,128,444,186 (2022: N2,544,182,062), and a loss of N3,555,104,123 (2022: N2,722,942,805.14). The entity has, however, continued to make recurring losses in the years, which has led to an increase in the accumulated losses and the erosion of its equity. The entity’s current working capital position is a net liability position of N19.660 billion (2022: net liability of N16.105 billion); and positive cashflows of N0.333 billion (2022: 0.201billion). Also, the entity’s shareholder’s equity has been eroded in the current year to N1.102 billion (2022: N894 million). The direct parent company, Wagge Limited, is also not in a financially viable position to provide support to Clement Nigeria Limited. However, the parent company and beneficial shareholders have provided letters of comfort explaining that they would support Clement Nigeria Limited for a period of 12 months from the date of the financial statements for the year ended December 31, 2024. They expect that this would enable the company to continue as a going concern and meet their obligations as and when they fall due, for at least 12 months from that date. The letter is irrevocable and would remain in force for 12 months from the date of the audited financial statements. The comfort letter was signed by a director (Stephen Konibaje), on the strength of which management believes that there is no further threat to the going concern assumption of the company. You are the partner in charge of the audit of Clement Nigeria Limited in your firm.

Gubico Limited was incorporated to carry on haulage business, chartering of trawlers, trawling, and fishing. It commenced business in the same month. The company acquired another entity as its subsidiary which is into the business of hospitality, indoor and outdoor catering services in 2022. Both the parent and subsidiary have December 31, as the year-end for the preparation of their financial statements. The company, in 2022, decided to embark on a large scale fish production. It, therefore, acquired a piece of land for fish and shrimps farming. The farm is located on a vast expanse of 250 hectares of land around the beach and utilises 150 hectares of the land for production. The subsidiary in hospitality and catering business also patronise Gubico Limited on normal business terms instead of patronising third party companies which might largely charge heavily for same products (mainly fish and shrimps). The company’s tropical fish and shrimps are distributed worldwide in over 20 countries. The company aims to substantially increase her export volumes overtime. FIK Professional Services has completed six years as Gubico’s auditors and in line with good practice, the company is, therefore, opening doors of opportunity to another firm to be appointed auditors for the group, but this time as a joint auditor. The subsidiary has a separate audit firm. The current auditors are also formally invited to submit their proposal for the audit. The successful external auditors will express opinion on the group financial statements, which shall be prepared in accordance with International Financial Reporting Standards (IFRS). Eligible audit firms should meet the following criteria: i. compliance with relevant legal and regulatory requirements for external audit firms; ii. experience with audit reporting under International Financial Reporting Standards and International Standards on Auditing (“ISA”); iii. evidence of having performed similar audits within the last five years; and iv. the curriculum vitae for the partner, manager and key staff proposed for the audit team. Your firm has received the request for proposal and has indicated interest in the audit. You are the proposed engagement partner for the audit.

Jovial Limited was incorporated on November 10, 2022 to carry on the business of investment in real estate. The company’s set up enables it to acquire by purchase, exchange or otherwise, any interest in land and buildings and any form of real estate. The company has a large expanse of land which it currently carries at cost value and in the event of winding up, the value of the land is sufficient to settle the company's liabilities (if any). The trade and other payables mainly comprise of the Directors’ Current Accounts, which were incurred at incorporation of the company. Due to pressing demand from customers for short-let apartments, especially during festive periods, the company has some properties on lease. In the prior period, the lease arrangement had always been treated as an operating lease, whereby periodic lease payments are treated as operating expenses and are expensed on the income statements, and the amounts not paid are treated as payable. In the current year, as part of the risk assessment, the lease payable was reassessed to verify whether it qualifies as an operating or a finance lease. The result of this assessment had an impact on prior year balances, as the standard requires a right-of-use asset and lease liability to be recognised via amortisation and interest expense. The directors of the company have shortlisted some external audit firms for the audit, of which your firm is one. As part of the preparation for presentation to those charged with governance on the audit proposal, some questions that might likely come up have been structured out and your team has been requested to come up with responses.