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Acct 310: Introduction To Auditing Question Paper

Acct 310: Introduction To Auditing

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2010

INSTRUCTIONS

1. This question paper comprise of four questions
2. Question ONE is compulsory
3. Answer any other two questions
4. Marks for each question are indicated at the end of every question
5. Candidates are advised to organize their response in a logical and orderly manner

QUESTION ONE
(a)
The chairman of ICPAK has requested you to prepare a paper to be presented to members
during their annual seminar covering auditor’s ethics. He has specifically asked you to cover
the following areas;
1) auditor’s independence
2) Advertising by accountants
3) Obtaining new clients
4) Auditor’s liability to third parties
You are required to prepare the paper for presentation to the chairman one day before the
seminar. (15 marks)
(b)Explain the following terms so as to differentiate them;
(i) Errors and frauds
(ii) Auditing and investigations
(iii) Voluntary auditing and statutory auditing (10 marks)

(c) What are the challenges that auditors face in auditing small and micro enterprises?
(5 marks)
QUESTION TWO

Due to the prevailing economic challenges, your auditing firm has been forced to employ some
school leavers to be trained as audit clerks. The firm has appointed you as the training manager
in charge of the new recruits.

Required;
(i) Explain to the young recruits what the field of auditing entails (5 marks)
(ii) The firm intends to use the accounts of one of its old clients to train the recruits.
Using the accounts explain to the recruits the procedures to be used from the time a
new client is obtained to the point of issuing an opinion (15 marks)

QUESTION THREE

Mr. Bidii ni Raha is an old enterprising Kenyan who was unfortunate not to have had the
chance to see the inside of a classroom. However he has managed to accumulate a sizeable
amount of wealth in real estate, construction and farming. Lately Mr. Bidii ni Raha has been
the subject of in-depth auditing by the Kenya Revenue authorities. In the course of discussion
with the Kenya revenue authorities, the following terms featured prominently and he has
come to you for explanation and further instructions. a) Audit report, b) qualified audit report
c) Auditor’s opinion d) Duties of an auditor e) Disclaimer by an auditor f) auditor’s liabilities
to share holders.

Required
Using examples and illustrations explain the meaning of the terms. (20 marks)

QUESTION FOUR
a) Use examples and illustrations to explain the term “audit evidence” (10 marks)

b) Audit evidence must be complete, sufficient and relevant. Explain the meaning of these terms,
assuming that you are addressing a group of people who have no accounting background.
(10 marks)

Acct 310: Introduction To Auditing Question Paper

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