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Auditing And Assurance Section 2 Question Paper

Auditing And Assurance Section 2

Course:Cpa

Exam Year:2001

Answer any FIVE questions. All questions carry equal marks.
QUESTION ONE
a) Give four merits of using a flowchart to record an accounting system. (4 marks)
b) Explain how an Internal Control Evaluation Questionnaire (ICEQ) differs from an Internal Control Questionnaire (ICQ).(4 marks)
c) List six examples of key control questions that would be suitable for inclusion in an ICEQ for a wages accounting system.(6 marks)
d) Explain the meaning of the following audit terms:
i. Tests of control. (3marks)
ii. Substantive tests.(3 marks)
(Total: 20marks)
QUESTION TWO
a) Explain the meaning of the ‘audit evidence’.(4 marks)
b) Write a brief explanatory notes on the following terms in relation to audit evidence:
i. Relevance.(2 marks)
ii. Reliability.(2 marks)
iii. Sufficiency.(2 marks)
c) Describe the various procedures of obtaining audit evidence giving an example of each by way of illustration.(10 marks)
(Total:20 marks)
QUESTION THREE
The director of one of your growing clients have decided to create an internal audit function in their organizational structure.
Required:
a) List and briefly describe the duties you would expect the internal audit staff to perform.(10 marks)
b) List and explain the criteria which you would consider before deciding to rely on the work of the internal audit function.(5 marks)
c) State the extent to which you, as an external auditor, can rely on the work of the internal audit function.(5 marks)
(Total: 20 marks)
QUESTION FOUR
a) Write briefly explanatory notes on the following types of audit:
i. Statutory audit; (2marks)
ii. Private audit; (2marks)
iii. Balance sheet audit; (2marks)
iv. Management audit; (2marks)
b) Explain the value derived from the work of external auditors.(5 marks)
c) Outline the statutory provisions with regard to duties of external auditors. (7 marks)
(Total: 20marks)
QUESTION FIVE
Write brief explanatory notes on the following audit terms:
a) Control procedures;(4 marks)
b) Internal check; (4marks)
c) Vouching audit; (4marks)
d) Walk-through tests (4 marks)
e) Weakness tests; (4marks)
(Total: 20 marks)
QUESTION SIX
You have been asked by your firm to examine the payment vouchers of a company to establish the level of errors and then decide whether better results can be obtained through statistical techniques.
Required:
a) State the steps you would take in order to test the vouchers for the errors. (12 marks)
b) Why is it not satisfactory to pick vouchers from a limited period?(4 marks)
c) State under what circumstances statistical sampling is a good technique. (4 marks)
(Total: 20marks)
QUESTION SEVEN
a) In the context of a computer based accounting system, explain the meaning of the following terms:
i) Application controls (4 marks)
ii) General controls (4 marks)
b) State six examples of controls to prevent unauthorized changes to data files that you would expect to find in a new computer based accounting system (6 marks)
c)A company wishes to change from an old computerized system to a new computer based accounting system. Explain how and why both systems should run parallel prior to the change over the new system (6 marks)
(Total: 20 marks)
QUESTION EIGHT
You have been appointed the auditor of United Millers Company Limited, a medium manufacturing company which is quoted on the stock exchange.
Required:
a) List the important matters which must be included in the letter of engagement.(14 marks)
b) Explain the purpose of such a letter.(6 marks)
(Total: 20 marks)

Auditing And Assurance Section 2 Question Paper

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