Get premium membership and access questions with answers, video lessons as well as revision papers.
i) Inspection
This consists of examining records, documents or tangible assets. The reliability of the evidence obtained from inspection of records and documents depends on the nature, source and effectiveness of the internal control system. Inspection of tangible assets provides evidence with respect to their existence but not as to their value and ownership.
ii) Observation
This involves looking at procedures being performed by others. E.g. observing the counting of stock by the client‘s personnel.
iii) Inquiry
Inquiry consists of seeking information of knowledgeable persons inside or outside the entity. This ranges from formal written inquiries addressed to 3rd parties to oral inquiries addressed to persons within the entity. The information may be new to the auditor or may corroborate evidence from other sources.
Wilfykil answered the question on February 21, 2019 at 07:05
- The matter listed below are always included in the internal control of a firm. You are required to explain the purpose of each of the...(Solved)
The matter 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.
b) A rule that a fixed asset register must be maintained and updated promptly.
c) A requirement that a bank reconciliation statement is prepared on monthly basis.
Date posted: February 21, 2019. Answers (1)
- 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...(Solved)
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?
b) What details should each client schedule used as a working paper indicate?
c) What details should an audit programme indicate?
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.
Date posted: February 21, 2019. Answers (1)
- Printa Limited is a large printing company, which has an on-line computer accounting system. The system is based around a central main frame computer, with...(Solved)
Printa Limited is a large printing company, which has an on-line computer accounting system. The system is based around a central main frame computer, with terminals serving individual departments. As part of the interim audit work, you have been asked to carry out a preliminary evaluation of ;
- The effectiveness of the computer controls over sales and debtors
Required:
Set out the points, which you would raise, in your preliminary evaluation of controls over sales and debtors
Date posted: February 21, 2019. Answers (1)
- It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important...(Solved)
It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements.
Required:
a) Under statutory provision, what are the main contents of the auditors‘ report?
b) Explain how the international standards on auditing attempt to ensure that the report of the auditors is clearly understood.
c) Describe clearly the circumstances in which an adverse opinion and a disclaimer of opinion would be appropriate and give two examples, one each, to illustrate your answer. (A full audit opinion is not required).
Date posted: February 21, 2019. Answers (1)
- The cashier of a firm who also acts a bookkeeper has been suspected of dishonesty. The books have not been audited for the last nine...(Solved)
The cashier of a firm who also acts a bookkeeper has been suspected of dishonesty. The books have not been audited for the last nine months. You have been asked to investigate the records to establish whether the cashier has committed a fraud
Required:
Outline how you would proceed with the investigation
Date posted: February 21, 2019. Answers (1)
- You are an audit senior in a firm of practicing accountants and your manager has gone out for an urgent meeting with a partner. Mr....(Solved)
You are an audit senior in a firm of practicing accountants and your manager has gone out for an urgent meeting with a partner. Mr. Charo, a manager with Charo and Company, a wholesale business has come to your office with a request that your firm becomes their auditors
Required:
a) Describe to Mr. Charo the legal, ethical and practical factors your firm would consider before accepting the appointment.
b) Explain to Mr. Charo the qualification and disqualification of an accounting firm under the provisions of the Companies Act to become auditors.
Date posted: February 21, 2019. Answers (1)
- Explain the following terms:
(a) Materiality;
(b) The duty of confidentiality;
(c) Professional indemnity insurance;
(d) Peer review;
(e) Quality Control(Solved)
Explain the following terms:
(a) Materiality;
(b) The duty of confidentiality;
(c) Professional indemnity insurance;
(d) Peer review;
(e) Quality Control
Date posted: February 21, 2019. Answers (1)
- Discuss the proposition that the =expectations gap‘ has arisen because of the public‘s ignorance and should therefore be resolved by the public themselves(Solved)
Discuss the proposition that the ‗expectations gap‘ has arisen because of the public‘s ignorance and should therefore be resolved by the public themselves
Date posted: February 21, 2019. Answers (1)
- Why should the auditor be unwilling to take full responsibility for the detection of fraud during the annual audit? Explain.(Solved)
Why should the auditor be unwilling to take full responsibility for the detection of fraud during the annual audit? Explain.
Date posted: February 21, 2019. Answers (1)
- Does the auditor require a codified definition of ?reasonable care and skill or should this be left to professional judgment? Explain(Solved)
Does the auditor require a codified definition of ―reasonable care and skill or should this be left to professional judgment? Explain
Date posted: February 21, 2019. Answers (1)
- Do you believe that the auditors should be responsible to users other than the shareholders? Give reasons to support your answer.(Solved)
Do you believe that the auditors should be responsible to users other than the shareholders? Give reasons to support your answer.
Date posted: February 21, 2019. Answers (1)
- Explain how you would verify the following:
a) Investment income.
b) Bank balances.
c) Contingent liabilities.
d) Petty cash balances.(Solved)
Explain how you would verify the following:
a) Investment income.
b) Bank balances.
c) Contingent liabilities.
d) Petty cash balances.
Date posted: February 21, 2019. Answers (1)
- Explain the following controlling procedures in a well planned audit:
i. Direction and supervision of work.
ii. Review and co-ordinating of work.
iii. Quality controls(Solved)
Explain the following controlling procedures in a well planned audit:
i. Direction and supervision of work.
ii. Review and co-ordinating of work.
iii. Quality controls
Date posted: February 21, 2019. Answers (1)
- How does audit planning assist in the conduct of an audit?(Solved)
How does audit planning assist in the conduct of an audit?
Date posted: February 21, 2019. Answers (1)
- Explain the auditor‘s planning process when planning for an audit of a new client.(Solved)
Explain the auditor‘s planning process when planning for an audit of a new client.
Date posted: February 21, 2019. Answers (1)