Marks will be awarded for clarity in expression of ideas, good spellings, tidy and logical presentation of work. Q1.Abubakar owned and operated 40 Discount shops in Abuja City center and its environment and he operates them on a cash and carry basis. As the business grew, he could no longer visit each one, empty the cash boxes, and deposit the cash receipts. Each location grossed about N1400 to N1600 per day, operating 360 days per year, gross receipts of about N23 Million naira per year. Each of his four part-time employees visited 10 locations, collecting the cash boxes and delivering them to Abubakar's office where he would count the cash (generated from the whole shops) and prepare a bank deposit. One of the employees skimmed N500 to N1000 from each location visited each day. The daily theft does not seem like much, but at an average of N750 per day from each of 10 locations, totaled about N2.7 Million per year. If all four of the employees had stolen the same amount, the loss could have been N10.8 Million per year. Required: As an audit expert hired by Abubakar, prepare a report that highlights some of the problems eminent in the case and suggest ways to overcome them. (50 Marks) Q2. Your neighbor John Chukwu invited you to dinner yesterday. As expected, it was no "free Dinner" because John wanted to discuss the Annual Report (Financial Statements) of Rainbow Company Plc. He owns Rainbow stocks and just received the annual report. John says "Our auditors prepared the audited financial statements and gave an unqualified opinion, so my investment in Rainbow Company must be safe" Required: What misconception does John Chukwu seem to have about the auditor's role with respect to Rainbow Company Plc. (30 Marks) Q3. Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptable low level. Required: List eight different types of procedures auditors can use during an audit of financial statements and give an example of each. (20 Marks) Q4. What are the primary and secondary objectives of financial statements audit? (20 Marks)