Group Assignment 2:

Question 1:
You are the qualified chartered accountant from the Institute of Chartered Accountants of
Bangladesh (ICAB). Currently, you are working as an audit manager at ABC & Co., Chartered
Accountants. You, as an audit engagement manager, have recently completed a statutory audit
engagement of X2YZ Co. Limited (“the company”) for the year ended 31 March 2021 which is
listed in both Dhaka and Chittagong Stock Exchanges.
As per the requirement of companies Act 1994, the company has invited to attend in its annual
general meeting (AGM). You have attended in the meeting along with the engagement partner.
In the meeting, among other shareholders, Board of directors, employees, lawyers were present.
During the time of approval of financial statements, chairman of the meeting asked for any
comments on the financial statements from shareholders. Below are some comments/questions
raised from various shareholders to auditors:
1. This seems that financial statements of this year are not good in terms of presentation
and format. I understand that this is because of the new audit for this. Why did the auditor
prepare financial statements in this format?
2. Why did the auditor not provide 100% assurance for every items?
3. Why was the audit fee so high for year ended 2021?
4. Why was the earning per share so low for year ended 2021?
5. Though there is dividend, why did the auditor not declare any dividend?
Though most of the questions should ask to the management/board of directors, shareholders
asked these questions to auditors. Shareholders wanted to answer from auditor. It is clear from
the above comments/questions raised from the shareholders that there is a significant expectation
gap in the audit from users.

Now considering the above situation, you are asked to answer the following questions:
A. Describe the concept “expectation gap in audit”.
B. Identify and briefly discuss the factors that create “expectations gap” in the minds
of the assurance users
C. Discuss how these expectation gap in audit can be overcome.

Question 2:
In 2020, Bangladesh bank has published the updated lists of 41 auditors who are eligible to work
for the banks and financial institutions. In previous, the number of the eligible auditors in the
published list of Bangladesh bank was 75. Those 36 banned audit firms have been charged with
several allegations of irregularities which led Bangladesh bank to take such strict initiative. But
such steps have created headache for many listed banks and financial institutions. For example:
ABC bank ltd is a listed public bank which has been formed under the Bangladesh Companies
Act 1994. Its shareholders have appointed Ahmed & Akter as its statutory auditor. But this

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company has been banned by Bangladesh bank recently. So, board of directors has taken the
responsibility to fill the casual vacancy of that auditor position. Here one point to be noted that
beside shareholders, directors as well as government and Securities and Exchange Commission
have the right to appoint statutory auditors. At first, board of directors has decided to appoint
Regin and Co. as the statutory audit firm. However, one auditor of this firm is a director of the
Rimi and Co. which is the managing agent of ABC bank ltd. So, eventually they have moved
away from their decision as Rimi and Co. has been disqualified in accordance to the law. At last,
they have appointed Rahman & Co. as their statutory auditor. Again Government has now started
to check the costs accounts of those companies which financial statements have been audited by
the recently banned audit firms. For that reason, Govt. has appointed an eligible auditor to audit
the cost accounts of ABC bank ltd as well. As we have mentioned before Bangladesh Securities
and Exchange Commission or BSEC has also the power to appoint auditors in public listed
companies if Commission thinks “it necessary for public interests”. Those auditors are
responsible to furnish their reports to the Commission in the prescribed form as well as within
the prescribed time specified by the Commission. Not just only to the auditors, BSEC has
prescribed time and manner to the issuer also- for auditing their financial statements and
submitting them to the BSEC and stock exchange. However, many issuers are found to apply to
the commission for extending the time period of auditing their F/S or submitting those audited
F/S. But in reality, even after getting extra times from Commission, some issuers fail to get their
F/S audited in the specified manner or to submit them within the prescribed time.

Now explain the answers of following questions:

A) What are the rationales behind the appointment of auditors by directors or
government?
B) Who is eligible to conduct cost audit?
C) What steps are taken by the Commission if issuer fails to audit or submit their
audited F/S within the prescribed form and specified time or even in the extended
time period?

Question 3:
Develop 20 Multiple Choice Questions (MCQ) with four alternatives up to the given lecture
6. (Give the correct answer below the question).

For example:
1. Which professional body issues auditing standards?
a) IASB
b) ICAB
c) IFAC
d) FASB
Answer: c)
-The End-