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Features of audit working papers:
•• All working papers (without exception) should show by whom they were prepared and when, and when they were reviewed and/or updated, and by whom, by means of signatures and dates – these may be electronic in the case of electronic working papers.
•• Audit planning documentation should include the risk assessment which should be cross referenced to the audit program, and the audit program should be cross referenced to the audit working papers and vice versa.
•• Working papers showing the work performed should be cross referenced to the audit program and the lead schedule on that particular section of the audit file, and should describe the nature of the work performed, the evidence obtained, and the conclusions reached.
•• Each section of the audit file should have a lead schedule which should be cross referenced back to the relevant working papers.
•• Trial balances should be cross referenced back to the relevant section of the audit file, and cross referenced forward to the financial statements.
•• The financial statements should be cross referenced to the trial balance.
•• Schedules of unadjusted differences should be cross referenced to the sections of the file to which they relate.
•• Schedules of review points should all be ‘cleared’ to show that all outstanding matters have been dealt with.
Wilfykil answered the question on April 12, 2019 at 08:52
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Explain the following controlling procedures in a well planned audit:
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Date posted: April 12, 2019. Answers (1)
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You are an audit manager in McKay & Co, a firm of Chartered Certified Accountants. You are preparing the engagement letter for the audit of Ancients; a public limited liability company, for the year ending 30 June 2006.Ancients has grown rapidly over the past few years, and is now one of your firm’s most important clients. Ancients has been an audit client for eight years and McKay & Co has provided audit, taxation and management consultancy advice during this time. The client has been satisfied with the services provided, although the taxation fee for the period to 31 December 2005 remains unpaid. Audit personnel available for this year’s audit are most of the staff from last year, including Mr. Grace, an audit partner and Mr. Jones, an audit senior. Mr. Grace has been the audit partner since Ancients became an audit client. You are aware that Allyson Grace, the daughter of Mr. Grace, has recently been appointed the financial director at Ancients. To celebrate her new appointment, Allyson has suggested taking all of the audit staff out to an expensive restaurant prior to the start of the audit work for this year.
Required:
Identify and explain the risks to independence arising in carrying out your audit of Ancients for the
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Date posted: April 12, 2019. Answers (1)
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Date posted: April 12, 2019. Answers (1)
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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)
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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
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Date posted: April 12, 2019. Answers (1)
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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.
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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
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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 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.
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Date posted: April 12, 2019. Answers (1)
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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
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Date posted: April 12, 2019. Answers (1)
- List and describe SIX financial statement assertions, other than completeness, used by auditors
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List and describe SIX financial statement assertions, other than completeness, used by auditors
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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)
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(ii) A review of the structure of internal controls in each major function every four years;
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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
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(b) Describe the information your firm will seek from the internal auditors in order for you to
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(c) Describe the circumstances in which it would not be possible to rely on the work of the
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Date posted: April 12, 2019. Answers (1)
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Required:
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Date posted: April 12, 2019. Answers (1)
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