a) 1. Safety of unclaimed wages.
• Misappropriation of unclaimed wages.
• The money being used to write off debtors accounts.
• Use of the cash as petty cash and buying office items not authorised.
• Double payments to already paid workers through collusion with clerk.
2. Receipt of cash from customers
• Teeming and lading.
• Misappropriation of cash received.
• Writing off bad debts for customers who have paid.
• Crediting other debtors accounts with the cash after colluding.
3. Company’s cheque books
• Writing cheques for personal purposes.
• Paying for expenses that are non-existent to suppliers after colluding.
• Duplication of cheques such that the clerk has a cheque book for his own purposes that is identical to the company’s businesses.
4. Issue of credit notes to debtors
• Issue of credit notes when no goods are returned or when there is no justification.
• Overstated credit notes.
• Understated credit notes.
b) Controls
• Have serially numbered wages claim form.
• Document all payments made.
• Reconciliation of payroll, paid wages, cashbook and unclaimed wages by an independent clerk.
• Mechanisation of cash collection points.
• Immediate document of the purpose of payment.
• Custody of cheque books by an officer with integrity.
• Bank reconciliation’s should be regular.
• Confirm goods returned are by the debtor in question
Musyoxx answered the question on March 16, 2018 at 16:46
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The Companies Act (Cap.486) sets out the duties of the auditors for a company in respect of his report and other matters.
Required:
a. State four situations under...
(Solved)
The Companies Act (Cap.486) sets out the duties of the auditors for a company in respect of his report and other matters.
Required:
a. State four situations under which the Act requires auditors to qualify their report.
b. State two circumstances in which the auditors may qualify their report owing to inherent uncertainty.
c. State four types of circumstances in which the auditors may qualify their report as a result of disagreement with the directors
Date posted:
March 16, 2018
.
Answers (1)
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The principle objective of the verification of liabilities, commitments and contingencies is to form an opinion as to their completeness, existence, valuation and presentation in...
(Solved)
The principle objective of the verification of liabilities, commitments and contingencies is to form an opinion as to their completeness, existence, valuation and presentation in the financial statements.
Required:
a. Why does the auditor examine statements received from suppliers of goods and services?
b. How would the auditor ensure that at the year end all goods received by a client were included in both inventories and creditor balances?
c. How would the auditor ensure that the amounts accrued for wages and salaries due but unpaid were properly calculated and recorded in the books?
d. What tests would the auditor need to undertake in order to ensure that capital commitments at the year end were fairly stated in the books?
Date posted:
March 16, 2018
.
Answers (1)
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The auditing guideline on ‘planning, controlling and recording’ contains the following statement with regard to working papers: ‘audit working papers should always be sufficiently complete...
(Solved)
The auditing guideline on ‘planning, controlling and recording’ contains the following statement with regard to working papers: ‘audit working papers should always be sufficiently complete and detailed to enable an experience auditor with no previous connection with the audit subsequently to ascertain from them what work was performed and to support the conclusions reached.’
Required:
a) Describe four benefits that the auditor will obtain from working papers that meet the above requirement.
b) If the auditor has discovered that a claim for damages is a significant item requiring exercise of judgement in the financial statements, show what type of evidence on the matter the auditor must record in the current file. Give reasons for the inclusion of such evidence in the current file.
c) List three types of information which is normally retained in the audit file and state why such information should be available for reference in the course of an audit.
d) Comment on the desirability of using standardised working papers and give an example of such working paper and its use.
Date posted:
March 16, 2018
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Answers (1)
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Advantages of maintaining control accounts
(Solved)
Advantages of maintaining control accounts.
Date posted:
March 16, 2018
.
Answers (1)
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a. Briefly explain two practical circumstances when the auditor may be liable for damages arising from material misstatements in published financial statements on which the auditors...
(Solved)
a. Briefly explain two practical circumstances when the auditor may be liable for damages arising from material misstatements in published financial statements on which the auditors have expressed an audit opinion.
b. List the classes of persons who may make a successful legal action against the auditors negligence.
c. Explain how an audit firm can minimise its potential legal liability for professional negligence.
Date posted:
March 14, 2018
.
Answers (1)
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a. Explain why auditors carry out circularisation of debtors
b. Distinguish between ‘positive’ and ‘negative’ debtors circularisation procedures
c. Describe in...
(Solved)
a. Explain why auditors carry out circularisation of debtors
b. Distinguish between ‘positive’ and ‘negative’ debtors circularisation procedures
c. Describe in detail the work you would carry out in scrutinising the replies tothedebtors circularisation and in confirming whether the debtors balances are collectable in the following situations:
• Where the debtor does not agree with the balance and states a difference;
• Where the debtor reports that he cannot confirm the balance;
• Where no reply is received from the debtor
Date posted:
March 14, 2018
.
Answers (1)
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a) Describe the reasons for maintaining proper audit working papers.
b) The documents, records and related information listed below are normally maintained in ‘permanent’ audit...
(Solved)
a) Describe the reasons for maintaining proper audit working papers.
b) The documents, records and related information listed below are normally maintained in ‘permanent’ audit file.
In each case indicate the importance of maintaining the respective document, record and
information.
• Memorandum and articles of association:
• Principal activities and locations;
• Specific legislation and regulations
• History including summary of results;
• Key staff;
• Description of accounting systems and internal control
• Organisation charts;
• Copy of letter of engagement
Date posted:
March 14, 2018
.
Answers (1)
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Your firm has been approached by the directors of UB Bank Ltd. a newly formed commercial bank to undertake the audit for its first complete...
(Solved)
Your firm has been approached by the directors of UB Bank Ltd. a newly formed commercial bank to undertake the audit for its first complete financial year ended 31 December 1996. Your manager has assigned you the responsibility for leading the team. You have had various discussions with the directors about the timetable and the respective responsibilities of management and the auditor. You have drafted a letter of engagement and have sent it to the managing director for approval and acceptance but the management has not yet responded to your letter.
Required:
a) Explain why a letter of engagement is sent before any new audit appointment is accepted.
b) Set out the main contents of a letter of engagement.
c) Itemise the actions you would take in response to the non-reply by the management to your draft engagement letter.
d) State when it might be necessary to re-draft an engagement letter and have it re-affirmed by the client’s management.
Date posted:
March 14, 2018
.
Answers (1)
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Why is an external audit necessary for companies registered under the companies act?
(Solved)
Accounting, principles of auditing for bachelor of commerce
Date posted:
March 6, 2018
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Answers (1)
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Explain the matters that have to be considered in respect of a system of internal control for cash sales in a service station that sells...
(Solved)
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Date posted:
March 5, 2018
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Answers (1)
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What are the disadvantages of rigidly adhering to a system of internal control?
(Solved)
What are the disadvantages of rigidly adhering to a system of internal control?
Date posted:
March 5, 2018
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Answers (1)
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Outline the basic elements of an unqualified audit report
(Solved)
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Date posted:
March 5, 2018
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Answers (1)
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List the principal matters which auditors consider when forming an opinion on the financial statements
(Solved)
List the principal matters which auditors consider when forming an opinion on the financial statements
Date posted:
March 5, 2018
.
Answers (1)
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List and briefly explain the qualifications available to the auditor in drafting his audit report stating the circumstance in which each qualification is appropriate. Give...
(Solved)
Financial accounting, auditing
Date posted:
March 5, 2018
.
Answers (1)
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Explain key differences between financial accounting and cost accounting
(Solved)
Introduction to Financial accounting
Date posted:
March 5, 2018
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Answers (1)
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Define accounting and explain six users of accounting information
(Solved)
Define accounting and explain six users of accounting information.
Date posted:
March 2, 2018
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Answers (1)
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Define the following concepts in accounting(a) Money measurement concept(b) Separate valuation concept(c) Separate entity concept
(Solved)
Define the following concepts in accounting (a) Money measurement concept (b) Separate valuation concept (c) Separate entity concept
Date posted:
February 21, 2018
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Answers (1)
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Outline the circumstances under which a person may cease to be a member of a cooperative society
(Solved)
Outline the circumstances under which a person may cease to be a member of a cooperative society
Date posted:
January 15, 2018
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Answers (1)
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Define the following investment rules. In your definition state the criteria for accepting or rejecting an investment. (a) Payback period (b) Internal rate of return
(Solved)
Define the following investment rules. In your definition state the criteria for accepting or rejecting an investment.
a) Payback period
b) Internal rate of return
c) Profitability index
Date posted:
December 27, 2017
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Answers (1)
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Write brief notes on( i) Hire purchase (ii) Credit sale (iii) Effects of goods repossessed on hire purchase transactions
(Solved)
a) Write brief notes on
i) Hire purchase
ii) Credit sale
iii) Effects of goods repossessed on hire purchase transactions
b) Fiona Limited bought Motor Vehicle on hire purchase terms. The transactions involved
the following:
i) The cash price Sh.800,000
ii) Hire purchase interest 25%
iii) Deposit 20% of cash price
iv) 5 annual equal installments.
The purchase was effected on 1st January 2015.All payments were made. Depreciation is at a rate of 10% per annum on straight line.
Required:
Asset account (3marks)
Hire purchase company account (4 marks)
Hire purchase interest account (3marks)
C In relation to investment accounting , distinguish the following terms
i) Cum – dividend and Ex – dividend (2 Marks)
ii) Bonus issue and Rights issue (2Marks)
d) ABC Ltd bought sh. 60,000, 10% loan stock of Expo ltd on 1st March 2008 at 90 cum- interest. Interest is payable half yearly on 30th June and 31st December.
Required:
Show the entries in ABC Ltd’s ledger for the year ended 31st December 2008. Ignore income tax. (6 Marks)
Date posted:
November 24, 2017
.
Answers (1)