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Confidential information
Information obtained during an audit is normally held to be confidential; that is it will not be disclosed to a third party.
However, client information may be disclosed where:
– Consent has been obtained from the client
– There is a public duty to disclose or
– There is a legal or professional right or duty to disclose.
Wilfykil answered the question on April 12, 2019 at 08:35
- You are a recently qualified Chartered Certified Accountant in charge of the internal audit
department of ZX, a rapidly expanding company.(Solved)
You are a recently qualified Chartered Certified Accountant in charge of the internal audit
department of ZX, a rapidly expanding company. Turnover has increased by about 20% p.a.
for the last five years, to the current level of Kshs50 million. Net profits are also high, with an
acceptable return being provided for the four shareholders. The internal audit department was
established last year to assist the board of directors in their control of the company and to
prepare for a possible listing on the stock exchange. The Managing Director is keen to follow
the principles of good corporate governance with respect to internal audit. However, he is also
aware that the other board members do not have complete knowledge of corporate governance
or detailed knowledge of International Auditing Standards.
Required:
Write a memo to the board of ZX that:
Explains how the internal audit department can assist the board of directors in fulfilling
their obligations under the principles of good corporate governance.
Date posted: April 12, 2019. Answers (1)
- a) Describe the matters to consider within your firm and the other procedures that must be
undertaken before accepting the appointment as auditor to a new...(Solved)
a) Describe the matters to consider within your firm and the other procedures that must be
undertaken before accepting the appointment as auditor to a new client.
b) Explain why it would be inappropriate to commence the audit before consideration of
the matters and the procedures referred to in (a) above have been completed.
Date posted: April 12, 2019. Answers (1)
- The objectivity of the external auditor may be threatened or appear to be threatened where:(Solved)
The objectivity of the external auditor may be threatened or appear to be threatened where:
i. There is undue dependence on any audit client or group of clients.
ii. The firm, its partners or staff have any financial interest in an audit client.
iii. There are family or other close personal or business relationships between the firm, its
partners or staff and the audit client.
iv. The firm provides other services to audit clients.
Required:
a) For each of the four examples given above, explain why the objectivity of the external
auditor may be threatened, or appear to be threatened, and why the threat is important.
b) Describe requirements that reduce the threats to auditor objectivity for each of the four examples given above.
Date posted: April 12, 2019. Answers (1)
- 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...(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) Itemize 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 reaffirmed by the client’s management.
Date posted: April 12, 2019. Answers (1)
- The purpose of an external audit and its role are not well understood. You have been asked to
write some material for inclusion in your firm’s...(Solved)
The purpose of an external audit and its role are not well understood. You have been asked to
write some material for inclusion in your firm’s training materials dealing with these issues in the
audit of large companies.
Draft explanation dealing with the purpose of an external audit and its role in the audit of large
companies, for inclusion in your firm’s training materials.
Date posted: April 12, 2019. Answers (1)
- List and describe SIX financial statement assertions, other than completeness, used by auditors
in the audit of financial statements.(Solved)
List and describe SIX financial statement assertions, other than completeness, used by auditors
in the audit of financial statements.
Date posted: April 12, 2019. Answers (1)
- Your firm is the newly appointed external auditor to a large company that sells, maintains and
leases office equipment and furniture to its customers and you...(Solved)
Your firm is the newly appointed external auditor to a large company that sells, maintains and
leases office equipment and furniture to its customers and you have been asked to co-operate
with internal audit to keep total audit costs down. The company wants the external auditors to rely
on some of the work already performed by internal audit.
The internal auditors provide the following services to the company:
(i) A cyclical audit of the operation of internal controls in the company’s major functions
(operations, finance, customer support and information services)
(ii) A review of the structure of internal controls in each major function every four years;
(iii) A n annual review of the effectiveness of measures put in place by management to
minimise the major risks facing the company.
During the current year, the company has gone through a major internal restructuring in its
information services function and the internal auditors have been closely involved in the
preparation of plans for restructuring, and in the related post-implementation review.
Required:
(a) Explain the extent to which your firm will seek to rely on the work of the internal auditors
in each of the areas noted above.
(b) Describe the information your firm will seek from the internal auditors in order for you to
determine the extent of your reliance.
(c) Describe the circumstances in which it would not be possible to rely on the work of the
internal auditors.
(d) Explain why it will be necessary for your firm to perform its own work in certain audit
areas in addition to relying on the work performed by internal audit.
Date posted: April 12, 2019. Answers (1)
- Restmount Kenya Ltd. was formed on 1 October 2006 in order to export tea and coffee to
European markets. The Directors are unsure as to their...(Solved)
Restmount Kenya Ltd. was formed on 1 October 2006 in order to export tea and coffee to
European markets. The Directors are unsure as to their responsibilities and the nature of their
relationship with the external auditors. The audit partner has asked you to visit the client and
explain to the directors, the fundamental aspects of the accountability of the directors and their
relationship with the auditor.
Required:
Explain to the directors of Restmount Kenya Ltd.
a. The need for an audit
b. Procedures for the appointment of an auditor of a public company under the Companies Act.
c. Directors responsibilities in relation to the accounting function of the Company.
d. Auditors’ statutory responsibilities in relation to the audit of the company’s financial statements.
Date posted: April 12, 2019. Answers (1)
- List the factors that lead to the disqualification of an audit Report(Solved)
List the factors that lead to the disqualification of an audit Report
Date posted: April 12, 2019. Answers (1)
- List the different types of Audit opinions(Solved)
List the different types of Audit opinions
Date posted: April 12, 2019. Answers (1)
- What are the effects of limitation in scope on the auditor’s opinion?(Solved)
What are the effects of limitation in scope on the auditor’s opinion?
Date posted: April 12, 2019. Answers (1)
- Give uses of computer audit programs(Solved)
Give uses of computer audit programs
Date posted: April 12, 2019. Answers (1)
- Necessary precautions have to be made to ensure that terminals in a computer information system are used in a controlled way by authorized personnel only....(Solved)
Necessary precautions have to be made to ensure that terminals in a computer information system are used in a controlled way by authorized personnel only. Which are the security techniques used?
Date posted: April 12, 2019. Answers (1)
- What is the audit approach in computerized information systems?(Solved)
What is the audit approach in computerized information systems?
Date posted: April 12, 2019. Answers (1)
- Which are the auditors interest in post balance sheet events?(Solved)
Which are the auditors interest in post balance sheet events?
Date posted: April 12, 2019. Answers (1)
- Discuss on verification of Share Capital(Solved)
Discuss on verification of Share Capital
Date posted: April 12, 2019. Answers (1)
- Discuss on Verification of contingencies e.g. Pending Litigation(Solved)
Discuss on Verification of contingencies e.g. Pending Litigation
Date posted: April 12, 2019. Answers (1)
- Discuss on verification of Long-term liabilities during auditing(Solved)
Discuss on verification of Long-term liabilities during auditing
Date posted: April 12, 2019. Answers (1)
- Define Provisions and Reserves(Solved)
Define Provisions and Reserves
Date posted: April 12, 2019. Answers (1)
- What is the general verification procedures for liabilities?(Solved)
What is the general verification procedures for liabilities?
Date posted: April 12, 2019. Answers (1)