Get premium membership and access questions with answers, video lessons as well as revision papers.
(a)
- The auditor will have to gain an understanding of the programs to be tested otherwise he will not do a good job. This will call for some kind of training, which in consequence will affect the audit plan.
- The auditor will have to seek other means of following up transactions from initiation to final recording, since use of audit trail may not be practical
- When evaluating the system of control, the auditor should avoid becoming too immersed in detail. He must obtain an overall view of the system, including the user-accounting staff and the computer department who maintain the payroll system. These are primary controls which cover completeness i.e. all input data is processed and accuracy.
- Having identified the primary controls, the auditor will know at which point the system controls is being established. In most cases, most of the work will be of clerical nature and that done by the computer is of secondary importance. In this
case, it will be unnecessary to examine the program and system development controls in details and administrative controls will only become important if clerical controls are exercised in the computer department
- When the system of control is largely dependent on program control, it becomes necessary to review those in details and in addition to examine the system development and administrative controls so as to ensure that the program control have been designed and implemented correctly.
- Use of test packs: This consists of test data which will be processed in the same way as actual data. By using them in the payroll system, the program being tested will process normal data correctly and react correctly to deliberately invalid data.
(b)
- Issuing of passwords to the staff that process personal files will prevent other parties not concerned with the process from gaining access to the files.
- These passwords should be changed frequently since it is possible for others to crack the existing ones with time.
- Any update on the wage system e.g. to incorporate overtime rate should be authorized by a higher authority.
- Constant review of the personal files should be carried out to verify that only authorized alterations have been effected. This could be checked against the master file.
(c)
1. Checking authorization: Here, the auditor is only interested in verifying whether a certain entry was authorized or not, for instance whether a given pay increment was authorized before being effected in the payroll.
2. Checking output totals for reasonableness. Here, the auditor may compare the total salaries to staff between two or more periods.
3. Checking the output against source documents and clerical control totals.
4. Verifying consistency in the system of coding, for the various departments in the organization.
(d)
- Existence of ghost workers. In this case, there could be workers who've passed away but their names still appear on the payroll. Some party somewhere could be benefiting from the remissions without knowledge of the company.
- The absence of an audit trail may be a loophole for the accountants to embezzle some money and alter the programs to disguise the fraud.
Wilfykil answered the question on February 22, 2019 at 13:20
- Outline the procedures an external auditor should follow if he suspects that fraud; or error have been perpetrated(Solved)
Outline the procedures an external auditor should follow if he suspects that fraud; or error have been perpetrated
Date posted: February 22, 2019. Answers (1)
- Outline the respective responsibilities of an entity‘s management and the external auditor with respect to the prevention and detection of fraud and error(Solved)
Outline the respective responsibilities of an entity‘s management and the external auditor with respect to the prevention and detection of fraud and error
Date posted: February 22, 2019. Answers (1)
- List the procedures you would follow to verify the following items:
(i) Petty cash balance.
(ii) Revaluation reserve.
(iii) Copyrights(Solved)
List the procedures you would follow to verify the following items:
(i) Petty cash balance.
(ii) Revaluation reserve.
(iii) Copyrights
Date posted: February 22, 2019. Answers (1)
- Cash in hand and cash at bank are commonly referred to as liquid assets. Because of this liquidity, these assets represent the most vulnerable of...(Solved)
Cash in hand and cash at bank are commonly referred to as liquid assets. Because of this liquidity, these assets represent the most vulnerable of all the assets of an entity. You have recently been employed by Korir and Associates (Certified Public
– Accountants) as an audit assistant. During your first audit assignment at Viwanda Ltd you have been allocated the audit of cash in hand and cash at bank.
Required
(i) State and explain any the audit procedures you would undertake in order to determine whether or not there has been any misappropriation of cash.
(ii) Explain any five controls over cash you would expect to be instituted by a business entity in order to minimize cases of embezzlement of cash
Date posted: February 22, 2019. Answers (1)
- The auditor should prepare working papers which are sufficiently complete and detailed to provide an overall understanding of the audit.(Solved)
The auditor should prepare working papers which are sufficiently complete and detailed to provide an overall understanding of the audit.
Required:
(a) State four benefits that an auditor would obtain from working papers that satisfy the above requirement.
(b) List five items of information you would expect to be contained in a permanent audit file and explain why each of these items of information should be readily available.
(c) In the audit or purchases, list four examples of the type of information that would be contained in the detailed audit working papers.
(d) Give any two reasons why a director should examine the directors‘ minute book
Date posted: February 22, 2019. Answers (1)
- Explain five circumstances under which an auditor can disclose information to an appropriate authority without client‘s permission....(Solved)
Explain five circumstances under which an auditor can disclose information to an appropriate authority without client‘s permission.....
Date posted: February 22, 2019. Answers (1)
- Briefly explain the methods which an auditor might use to ascertain a client‘s internal control system.(Solved)
Briefly explain the methods which an auditor might use to ascertain a client‘s internal control system.
Date posted: February 22, 2019. Answers (1)
- State the factors that the external auditor should consider before placing reliance on the work of the internal auditor(Solved)
State the factors that the external auditor should consider before placing reliance on the work of the internal auditor
Date posted: February 22, 2019. Answers (1)
- Outline and briefly explain the procedures that the internal auditor can conduct on behalf of the external auditor.(Solved)
Outline and briefly explain the procedures that the internal auditor can conduct on behalf of the external auditor.
Date posted: February 22, 2019. Answers (1)
- Identify and explain the functions of the internal audit department in an organization.(Solved)
Identify and explain the functions of the internal audit department in an organization.
Date posted: February 22, 2019. Answers (1)
- List and briefly explain the main functions of an audit committee(Solved)
List and briefly explain the main functions of an audit committee
Date posted: February 22, 2019. Answers (1)
- Explain five circumstances under which an auditor can disclose information to an appropriate authority without client‘s permission(Solved)
Explain five circumstances under which an auditor can disclose information to an appropriate authority without client‘s permission
Date posted: February 22, 2019. Answers (1)
- Outline the ways in which an auditor may be held criminally liable in the course of his audit duties(Solved)
Outline the ways in which an auditor may be held criminally liable in the course of his audit duties
Date posted: February 22, 2019. Answers (1)
- Explain the challenges that auditors face in the process of being independent(Solved)
Explain the challenges that auditors face in the process of being independent
Date posted: February 22, 2019. Answers (1)
- Suggest how the independence of an auditor may be strengthened(Solved)
Suggest how the independence of an auditor may be strengthened
Date posted: February 22, 2019. Answers (1)
- Briefly explain the meaning of the following terms in relation to audit reports:
(i) Except for opinion.
(ii) Disclaimer of opinion(Solved)
Briefly explain the meaning of the following terms in relation to audit reports:
(i) Except for opinion.
(ii) Disclaimer of opinion
Date posted: February 22, 2019. Answers (1)
- Identify and briefly explain any three procedures for obtaining audit evidence.(Solved)
Identify and briefly explain any three procedures for obtaining audit evidence.
Date posted: February 22, 2019. Answers (1)
- In the context of the Companies Act (Cap. 486), outline the procedure for the removal of an auditor(Solved)
In the context of the Companies Act (Cap. 486), outline the procedure for the removal of an auditor
Date posted: February 22, 2019. Answers (1)
- Identify the program controls which should be inbuilt in a computerized accounting system(Solved)
Identify the program controls which should be inbuilt in a computerized accounting system
Date posted: February 22, 2019. Answers (1)
- State and control objectives generally associated with the processing of data in a computerized accounting environment.‘(Solved)
State and control objectives generally associated with the processing of data in a computerized accounting environment.‘
Date posted: February 22, 2019. Answers (1)