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Acct 412: Audit Practice And Investigations Question Paper
Acct 412: Audit Practice And Investigations
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2010
INSTRUCTIONS:
1. This paper comprise of four questions.
2. You are required to answer all questions.
3. Marks for each question are shown at the end of the question.
4. Candidates are advised to be articulate and precise.
QUESTION ONE
In the provision of the expectation for accountants, the institute does not expect any member to
do any thing that would bring disrepute to the profession. To ensure that this does not happen,
the institute made pronouncements which are expected to guide accountants in their day to day
assignments. Sometimes these pronouncements are referred to as professional ethics for
accountants.
Required:
Explain the fourteen pronouncements giving examples wherever possible. (20 marks)
QUESTION TWO
Your auditing firm has been appointed to audit a local bank which has branches in all the
provinces. The partners are meeting to review the work involved and have assigned you the duty
of explaining to the partners the unique nature of auditing a bank.
Required:
Prepare, in point form, notes for presentation to the partners detailing;
(i) What makes a bank audit unique? (6 marks)
(ii) The major areas of concern in a bank audit (6 marks)
(iii) The objectives of a bank audit. (8 marks)
QUESTION THREE
Your brother, an enterprising Kenyan heard auditors discussing about auditing and
investigations. He could not make out exactly what they meant and has asked you to expound on
the difference between the two
Required;
(i) Explain to him what auditing is all about. (4 marks)
(ii) Explain the main difference between auditing and investigations. (4 marks)
(ii) When would investigations be required as opposed to an auditing? (4 marks)
(iv) When would an auditing be required as opposed to an investigation? (4 marks)
(v) Mr. Akili Kombo believes that he is a smart accountant. He is the chief executive
Officer of Going under limited. A company that is involved in prospecting for precious
stones in the republic of plenty.He has always done extensive window dressing towards the
end of the year and has year in year out managed to convince the share holders to continue
investing in the company. The auditors have always given him a clean bill of health. The
firm that has been auditing the company has in the recent past been experiencing finamcial
problems and the institute of certified public accountants of plenty,has directed that they
should remain suspended until they show course why the partners should not surrender their
practicing certificates. The institute has very scanty information and has approached you to
advice them on what should be done concerning the company.
Required
Advice the institute. (4 marks)
QUESTION FOUR
For the auditor to form an opnion as to whether the financial statements present a true and fair
view of the state of affairs he needs to follow events happening immediately after the balance
sheet (post balance sheet events). What is the significance of these events and how do they
affect an auditor’s report. (5 marks)
(a) Sampling is an important part of the audit exercise. It has been variously argued that
Sampling makes auditing a guessing game. Present the case for and against sampling in
auditing. What steps should an auditor take to ensure that sampling risks are minimized?
(b) Company Act Cap 486 sec 162 (1) specifies the matter that should be included in an
auditor’s report. Enumerate the provisions and comment on the extent to which these
provisions meet the user’s needs. (5 marks)
(c) What are the ethical issues in receiverships and liquidations as far as auditing is concerned.
(5 marks)
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