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Audit Practice And Investigations Question Paper

Audit Practice And Investigations

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2009

KENYATTA UNIVERSITY
UNIVERSITY EXAMINATIONS 2008/2009
INSTITUTE OF OPEN LEARNING PROGRAMME
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
BAC 401: AUDIT PRACTICE AND INVESTIGATIONS

DATE: Tuesday 11th August, 2009 TIME: 11.00 a.m. – 1.00 p.m.

INSTRUCTIONS
1.
Answer ALL Questions.
2.
Marks allocated are shown at the end of each question.

Question One
a)
Identify and explain five audit benefits to be derived from using Computer
Assisted Audit Techniques (CAATs) when carrying out testing of computer
records.

[10 marks]
b)
Briefly explain five problems associated with the use of audit interrogation
programmes.
[10
marks]

[Total 20 marks]
Question Two
Mr. Kimani and Mr. Mathenge are each 50% shareholders and the only directors of K
and M Ltd., a company which operates as a building contractor involved in civil
engineering contracts which frequently take more than one year to complete. The
turnover of the company in the year ended 31 March 2000 was in the region of
sh 1,200,000,000. The company has been suffering cash flow problems in recent times.
Mr. Kimani and Mr. Mathenge have disagreed on the management policies of the
company. As a result of this disagreement, Mr. Mathenge has agreed to sell his shares to
Mr. Kimani and has resigned as a director with effect from 31 March 2000.

Page 1 of 2

The consideration for the shares is to be fixed by a valuation of shares based on the
audited accounts for the year ended 31 March 2000.
You have been appointed the investigating accountant to review the valuation of the
shares. Mr. Kimani and the auditors of K and M Ltd. have agreed to co-operate fully.
Required
As the investigating accountant, detail those matters which you would pay particular
attention to in carrying out your
review.
[20
marks]

Question Three
a)
List and explain five factors that may indicate inapplicability of going concern.

[10 marks]
b)
Explain any five mitigating factors that auditor should search for if he assures
himself that there is inapplicability of going concern.
[5 marks]

[Total 15 marks]
Question Four
a)
Define the term risk-based auditing methodology.
[3 marks]
b)
You are the auditor of a company whose year-end was 31 March 2001. The
directors have decided to obtain a professional valuation of all the freehold and
leasehold properties as at 31 March 2001.

The following points are brought to your attention:
1.
Depreciation has never been provided on freehold and long leasehold
properties.
2.
One of the properties is wholly let out to third parties, and the directors
intend to dispose of this property as soon as possible.
Required
Set out the matter which, as a result of the property valuation, should be taken in
consideration during the preparation of the accounts to 31 March 2001 and the
disclosures, which should be made in the accounts for that year.

[Total 15 marks]
……………………
Page 2 of 2

Audit Practice And Investigations Question Paper

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