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Auditing I Question Paper

Auditing I

Course:Bachelor Of Commerce

Institution: Kca University question papers

Exam Year:2010

UNIVERSITY EXAMINATIONS: 2009/2010
SECOND YEAR STAGE 3 EXAMINATION FOR THE DEGREE OF
BACHELOR OF COMMERCE
CAA 203: AUDITING I (DAY)
DATE: APRIL 2010 TIME: 2 HOURS
INSTRUCTIONS: Answer Question ONE and Any other TWO Questions
QUESTION ONE
a) explain the following:
i. letter of engagement (3 Marks)
ii. letter of representation (3 Marks)
iii. letter of weaknesses (3 Marks)
iv. substantive tests (3 Marks)
v. walk through tests (3 Marks)
b) what are the implications of a weak internal control system (6 Marks)
c) highlight matters that signify lack of independence on the part of the auditor (9 Marks)
(Total: 30 Marks)
QUESTION TWO
Mr. kamau onyango, a businessman based in Nairobi, recently ventured into the taxi business. He
started with a fleet 20 saloon cars each with its own driver. Mr kamau has approached your audit firm
for advice on the appropriate internal controls he should put in place for the business.
Required:
Briefly but logically explain the internal control measures that you would advise to be put in place with
respect to:
a) cash collection from customers (8 Marks)
b) fuel consumption (4 Marks)
c)tyre maintenance (4 Marks)
d)car maintenance (4 Marks)
(Total: 20 Marks)
QUESTION THREE
a) briefly explain the objectives of an internal control system over a company’s fixed assets
(6 Marks)
b) as an auditor assistant tasked with the audit of a client’s fixed asset for the year ending 30 june
2009, describe the audit procedures you would carry out to verify:
i) disposal of fixed assets (6 Marks)
ii) depreciation charged (8 Marks)
(Total: 20 Marks)
QUESTION FOUR
a) Computerized information systems have unique features when compared to manual systems,
which require adequate controls to be in built into the systems. Outline two objectives of each
of the following controls:
i) input controls (4 Marks)
ii) processing controls (4 Marks)
iii) output controls (4 Marks)
b) summarise the difficulties encountered by auditors when using computer audit programs in
their audit assignment (8 Marks)
(Total: 20 Marks)
QUESTION FIVE
In the context of international standard on auditing (ISA) 560 (subsequent events):
a) distinguish between adjusting events and non-adjusting events (4 Marks)
b) briefly explain the auditor’s responsibilities with respect to the following subsequent events:
i) events up to the date of the auditor’s report (4 Marks)
ii) events after the date of the auditor’s report but before the financial statements are issued
to shareholders (6 Marks)
iii) events after the financial statements have been issued to shareholders (6 Marks)
(Total: 20 Marks)

Auditing I Question Paper

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