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Auditing And Assurance Section 2 Year 2000 Question Paper

Auditing And Assurance Section 2 Year 2000

Course:Cpa

Exam Year:2000

Answer any FIVE questions. All questions carry equal marks.
QUESTION ONE
Audit planning process allows the audit senior to acquire adequate knowledge about the entity. This process ensures an effective control of audit work.
Required:
a) Explain the auditor’s planning process when planning for an audit of a new client.(8 marks)
b) How does audit planning assist in the conduct of an audit?(5 marks)
c) Explain the following controlling procedures in a well planned audit:
i. Direction and supervision of work. (2 marks)
ii. Review and coordinating of work. (2 marks)
iii. Quality controls. (3 marks)
(Total: 20 marks)
QUESTION TWO
Explain how you would verify the following:
a) Investment income. (5 marks)
b) Bank balances. (5 marks)
c) Contingent liabilities. (5 marks)
d) Petty cash balances. (5 marks) (Total: 20 marks)
QUESTION THREE
a) Do you believe that the auditors should be responsible to users other than the shareholders? Give reasons to support your answer.(5 marks)
b) Does the auditor require a codified definition of “reasonable care and skill” or should this be left to professional judgment? Explain.(5 marks)
c) Why should the auditor be unwilling to take full responsibility for the detection of fraud during the annual audit? Explain.(5 marks)
d) Discuss the proposition that the ‘expectations gap’ has arisen because of the public’s ignorance and should therefore be resolved by the public themselves. (5 marks)
(Total: 20 marks)
QUESTION FOUR
Explain the following terms:
a) Materiality;(4 marks)
b) The duty of confidentiality;(5 marks)
c) Professional indemnity insurance;(3 marks)
d) Peer review;(3 marks)
e) Quality Control.(5 marks)
(Total: 20 marks)
QUESTION FIVE
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.(10 marks)
b) Explain to Mr. Charo the qualification and disqualification of an accounting firm under the provisions of the Companies Act to become auditors. (10 marks)
(Total: 20 marks)
QUESTION SIX
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. (Total: 20 marks)
QUESTION SEVEN
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?(6 marks)
b) Explain how the international standards on auditing attempt to ensure that the report of the auditors is clearly understood.(8 marks)
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 not required). (6 marks)
(Total: 20 marks)
QUESTION EIGHT
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 integrity of the data base as far as it is relevant to your audit and,
• The effectiveness of the computer controls over sales and debtors.
Required:
a) Describe the controls, which you would expect to be in operation in order to maintain integrity of the database.(10 marks)
b) Set out the points, which you would raise, in your preliminary evaluation of controls over sales and debtors.(10 marks)
(Total: 20 marks)

Auditing And Assurance Section 2 Year 2000 Question Paper

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