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Auditing Cpa Section 2 Question Paper

Auditing Cpa Section 2

Course:Cpa

Exam Year:2000

QUESTION ONE
Working papers provide the audit evidence. They can be categorized into:
i. Auditors’ prepared working papers.
ii. Client’s schedules used as working papers.
iii. Audit programmes.

Working papers are then organized into files usually referred to as either current files of permanent files.
Required:
a) What details should each working paper which is prepared by an auditor indicate?
(5 marks)
b) What details should each client schedule used as a working paper indicate? (4 marks)
c) What details should an audit programme indicate? (5 marks)
d) With appropriate illustrations, differentiate the use and contents of a permanent file from a current file and write brief notes on the evidence that is provided by working papers. (6 marks)
(Total: 20 marks)
QUESTION TWO
The matters listed below are always included in the internal control of a firm.
You are required to explain the purpose of each of the items listed as (a), (b) and (c) below. Indicate the compliance tests you would carry out in order to ensure that the intended controls were operating properly.
a) A requirement that mail is opened by two responsible employees who must promptly make listings of all receipts. (7 marks)
b) A rule that a fixed asset register must be maintained and updated promptly. (6 marks)
c) A requirement that a bank reconciliation statement is prepared on monthly basis.
(7 marks)
(Total: 20 marks)
QUESTION THREE
Write brief notes on the following auditing techniques:
i. Inspection; (4 marks)
ii. Observation; (3 marks)
iii. Enquiry. (3 marks)
b)
i. Define the term audit programme. (2 marks)
ii. Write in point form an audit programme to cover salary and wages of a small size firm. (8 marks)
(Total: 20 marks)

QUESTION FOUR
During the course of an audit, the auditor attempts to obtain sufficient relevant and reliable evidence to provide the satisfaction that the financial records are completed and accurate. One of the ways that the auditor obtains satisfaction is to select representative samples of transactions and balances for detailed testing, such samples being made using either statistical of non-statistical methods.
Required:
a) Describe the main factors which influence the auditor in determining the size of the sample he will use for his detailed testing. (12 marks)
b) Describe three areas where the judgment will be exercised by the auditor when using statistical sampling. (8 marks)
(Total: 20 marks)
QUESTION FIVE
Your firm audits Clean Paints Ltd. and you are planning the audit of stock and work in progress for the year ended 31 December 2000. Clean Paints Ltd. determines the value of stock in its financial statements by the year-end stocktake. There is no perpetual Stock Inventory System though stock is counted quarterly for the purposes of management accounting.
Stock and work in progress is held at the warehouse which is next to the company’s factory.
Required:
a) State the areas that you will expect the client’s stocktaking instructions to cover.
(12 marks)
b) Describe the work you will perform and the matters you will record at the stocktake attendance. (8 marks)
(Total: 20 marks)
QUESTION SIX
“Most errors in computer based accounting systems can be traced to faulty input. Controls over the completeness and validity of all inputs are vital. Control over data conversions, controls over rejections and their correction and reprocessing, batch controls and computer edit controls affect both completeness and validity”.
Required:
a) Explain the controls that can be established over completeness of input. (6 marks)
b) What controls can be established over validity? (6 marks)
c) Programmed edit checks are probably the most familiar input controls and certainly the most effective. Give examples of these controls bringing out clearly:
i. The name of the edit control. (2 marks)
ii. Description of the control. (3 marks)
iii. The objective of the control. (3 marks)
(Total: 20 marks)

QUESTION SEVEN
Specialists or experts are occasionally required by external auditors mainly in connection with the valuation assets and the determination of liabilities.
Required:
a) The necessity for reliance on specialist. (12 marks)
b) The extent to which the specialist should be independent? (5 marks)
c) Competence of the specialist. (3 marks)
(Total: 20 marks)
QUESTION EIGHT
The auditing standard on subsequent events provide the basic principles and procedures as to the auditor’s responsibilities and deal with:
i. Dating the auditor’s report
ii. Audit procedures
iii. Events after the date of the audit report.
Required:
a) In the context of subsequent events, what is the significance of the data of the auditor’s report? (3 marks)
b) Outline the audit procedures considered necessary between the balance sheet date and the date of the auditor’s report. (8 marks)
c) Summarize the appropriate actions of the auditor regarding events after the date of the audit report. (9 marks)
(Total: 20 marks

Auditing Cpa Section 2 Question Paper

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