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- Obtain a schedule of payables, with appropriate age analysis and check this with the control account and purchase ledger
- Separate debit and credit balances, debit balances being included in receivables. This is called grossing up
- Review the individual accounts with the largest throughput of transactions during the period – not necessarily the largest balances at the end of the year
- Review year end cut off procedures for purchases
- Review internal control over purchase system which ensures that all goods received are properly recognized as liabilities of the company
- Select a sample of supplier balances which should be based on the reciprocal of purchases turnover in which case monetary sampling unit should be used.
- Check whether all the liability balances are made up of specifications outstanding within a reasonable period
- Check whether all items have been authorized for payment
- Agree the liability amounts, reconcile with supplier statements
- Consider the need to perform a circularization of accounts payable, seeking direct confirmation of amounts due
- Review payments to payables and other liabilities just after the year end
Wilfykil answered the question on February 23, 2019 at 07:24
- Your audit firm, Kimani and Associates has been contracted by the government to audit the procurement system followed by the government.(Solved)
Your audit firm, Kimani and Associates has been contracted by the government to audit the procurement system followed by the government.
Required:
i) Identify the likely risk areas that your firm may encounter in the audit
ii) Suggest possible measures the government can implement to strengthen the internal control system on procurements.
Date posted: February 23, 2019. Answers (1)
- Your audit senior has assigned you the responsibility of auditing the stock of your client, XYZ Supermarket Ltd. for the year ending 31 December 2005....(Solved)
Your audit senior has assigned you the responsibility of auditing the stock of your client, XYZ Supermarket Ltd. for the year ending 31 December 2005. The company‘s stock take is carried out once a year in the month of November simultaneously for all the retail outlets.
Required:
a) State the audit assurances you would seek to obtain in the audit of stock.
b) Describe the audit procedures that you would perform in order to be satisfied as to the validity of the amount attributed to stock in the balance sheet of XYZ Supermarket Ltd.
c) Define the word ―bar coding and explain its importance to XYZ Supermarket Ltd.
Date posted: February 23, 2019. Answers (1)
- Explain two reasons why an auditor should consider materiality when selecting a sample size.(Solved)
Explain two reasons why an auditor should consider materiality when selecting a sample size.
Date posted: February 23, 2019. Answers (1)
- Identify the cases where an auditor is required to conduct a complete check of all the transactions and balances of a business(Solved)
Identify the cases where an auditor is required to conduct a complete check of all the transactions and balances of a business
Date posted: February 23, 2019. Answers (1)
- Explain the reasons why an auditor is not required to carry out a complete check of all the transactions and balances of a business(Solved)
Explain the reasons why an auditor is not required to carry out a complete check of all the transactions and balances of a business
Date posted: February 23, 2019. Answers (1)
- Briefly explain how the auditor can use each of the following methods of sample selection when carrying out his audit assignment(Solved)
Briefly explain how the auditor can use each of the following methods of sample selection when carrying out his audit assignment
i) Stratified sampling
ii) Cluster sampling
iii) Haphazard sampling
iv) Block sampling
Date posted: February 23, 2019. Answers (1)
- Highlight the possible defences available to an auditor in a court of law who has been sued for failure to detect fraud in client‘s company(Solved)
Highlight the possible defences available to an auditor in a court of law who has been sued for failure to detect fraud in client‘s company
Date posted: February 23, 2019. Answers (1)
- Explain the ways in which an auditor can minimize his potential liability for professional negligence(Solved)
Explain the ways in which an auditor can minimize his potential liability for professional negligence
Date posted: February 23, 2019. Answers (1)
- Highlight the qualities required of the final accounts prepared by a client company(Solved)
Highlight the qualities required of the final accounts prepared by a client company
Date posted: February 23, 2019. Answers (1)
- The final stage of an audit includes an overall review of the financial statements.
Explain the procedures that the auditor should adopt for the final review(Solved)
The final stage of an audit includes an overall review of the financial statements.
Explain the procedures that the auditor should adopt for the final review
Date posted: February 23, 2019. Answers (1)
- Outline the ways in which an auditor acquires knowledge about the client‘s business and industry(Solved)
Outline the ways in which an auditor acquires knowledge about the client‘s business and industry
Date posted: February 23, 2019. Answers (1)
- Explain the matters that an auditor should take into account at the planning stage of an audit exercise(Solved)
Explain the matters that an auditor should take into account at the planning stage of an audit exercise
Date posted: February 23, 2019. Answers (1)
- Your are currently engaged in planning the audit of the payroll system of Ujenzi Ltd a manufacturing company, for the year ending 30 June 2005,...(Solved)
Your are currently engaged in planning the audit of the payroll system of Ujenzi Ltd a manufacturing company, for the year ending 30 June 2005, Ujenzi Ltd‘s payroll system is fully computerized
Required:
(a) Explain four ways in, which the use of a computerized payroll system by Ujenzi Ltd, would affect your work as the auditor.
(b) Explain three controls which should be instituted by Ujenzi Ltd to ensure that only authorized persons are allowed access to information on personal files and to input updates for the calculation of wages.
(c) Outline how audit tests could be performed ―around the computer in relation to Ujenzi Ltd‘s payroll
(d) List any two fraudulent activities likely to be perpetrated in relation to Ujenzi Ltd‘s payroll
Date posted: February 22, 2019. Answers (1)
- 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)