Principles Of Auditing Question Paper

Principles Of Auditing

Course:Bachelor Of Commerce

Institution: Kenyatta University question papers

Exam Year:2008

KENYATTA UNIVERSITY
INSTITUTE OF OPEN LEARNING (IOL)
UNIVERSITY EXAMINATIONS 2007/2008
SPECIAL EXAMINATION FOR THE DEGREE OF BACHELOR OF
COMMERCE

BAC 303:
PRINCIPLES OF AUDITING

DATE: Wednesday, 8th October, 2008
TIME: 8.00 a.m. – 10.00 a.m.
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INSTRUCTIONS:
Answer ALL questions.

Question 1
a)
Mohammed & Co. Club is an unincorporated club with a set of rules and committee of management. They have 2500 members and own their ground and Club – House. The free – hold is registered in the names of trustees who are also members of the committee.
Required:
a)
Draft an unqualified auditors report by the auditors called Wasonga and partners who are paid. (15 marks)
b)
When can an auditor’s report be dated?(5 marks)

Question 2

In the accounts department of your client Kibera Software Ltd., there is a section devoted
to the collection of and authorization of discounts and allowances returned to customers.
a)
What internal control would you recommend for this section?
(12 marks)
b)
How far is the external auditor concerned with this section?
(8 marks)
Question 3
a)
Explain what you understand by “Evidential Matter”, specifically addressing the
nature, competence and sufficiency of audit evidence. (10 marks)
b)
i)
Which are the objectives of a stock control system?
(5 marks)
ii)
How are the objectives achieved?
(5 marks)

Question 4
a)
“Audit files and working papers if carefully and skillfully maintained would
enhance audit efficiency”. Discuss. (13 marks)
b)
What is whistle blowing? When may an auditor inform the proper authorities of
a breach of law? (7 marks)

Question 5
Explain how different section of the company’s Act Chapter 486 relate to:
a)
Auditors Appointment
b)
Auditors Independence
c)
Auditors Duties
d)
Auditors Rights
e)
Auditors Dismissal
(4 marks each = 20 marks)

Question 5
a)
Audits can be of many types:
Explain the meaning of Continuous audits and complete audits and make a clear comparison of the two (12 marks)
b)
Suggest the work an internal auditor could carry out to check procedures in a purchasing system whenever he wants to minimize the risk of fraud or error. (8 marks)

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