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Auditing 1 Question Paper

Auditing 1

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2009

UNIVERSITY EXAMINATIONS: 2008/2009
SECOND YEAR STAGE 3 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 203-A: AUDITING I
DATE: APRIL 2009
TIME: 2 HOURS

INSTRUCTIONS: Answer question ONE and any other TWO questions

QUESTION ONE
a) i). What are the objectives of Internal Audit? Clearly explain these objectives.
(10 Marks)
ii). Discuss the relationship between internal audit and statutory audit.
(5 Marks)
iii). What do you mean by the term `surprise checks'? For what purposes surprise visit is
necessary? (3 Marks)
b) Discuss whether it is practicable and desirable, within the limits of procedures and costs, for
the auditor to accept a general responsibility to detect fraud and other irregularities.
(5 Marks)
c) ‘Auditing Planning’ contemplates knowledge of the business on the part of the auditor. In this
context, you are required to answer the following:
i). What are general matters to be considered by an auditor while taking up a new engagement?
(3 Marks)
(ii) What are the major sources of obtaining information about the client’s business?
(4 Marks)
QUESTION TWO
a) Outline the benefits that can be derived by an audit from the successful employment of
statistical sampling techniques as opposed to non-statistical sampling.
(10 Marks)
b) Describe the various procedures of obtaining audit evidence giving an example of each by way
of illustration.
(10 Marks)
QUESTION THREE
Write short notes on the following:
a) Auditors qualifications
b) Auditors remuneration
c) Statutory duties of auditor
d) Statutory rights of auditor
(20 marks)
QUESTION FOUR
The External auditor of a Company uses the system of internal control to determine the nature, extent
and timing of his audit tests.
a) Whose responsibility is it to ensure the existence of a strong system of internal controls.
(4 Marks)
b) What value does a client obtain from the external auditor with respect of internal control?
Explain how the auditor provides that value.
(6 Marks)
c) What is the main role of the internal auditor with respect to internal control (4 Marks)

d) How does the external auditor assure himself that internal audit is effective (6 Marks)

QUESTION FIVE
a) Outline the purpose of a letter of representation from the management to the auditor
(5 Marks)
b) State why actions an auditor would take if the director refused to provide him with a letter of
representation
(4 Marks)
c) State why its importance for an incoming auditor to hold conversation with an outgoing
auditor
(5 Marks)
d) Differentiate between compliance testing and substantive testing
(6 Marks)

Auditing 1 Question Paper

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