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
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE

BAC 303:
PRINCIPLES OF AUDITING

DATE: WEDNESDAY, 9TH JANUARY 2008
TIME: 1.00 P.M. – 3.00 P.M.
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INSTRUCTIONS:
? Answer ALL questions
? Marks allocated to each question are appropriately indicated.

Question 1
a)
“Internal control is very important in an audit examination. All audits should be based on proper study and evaluation of the system of Internal Control.” Explain what this means and how the conclusions reached on the effectiveness of the system of Internal Control affect the conduct of an audit. (10 marks)
b)
What are the main Internal Control features you would expect to find in the following functions of a company.
i)
Buying (3 marks)
ii)
Receipt of goods (3 marks)
iii)
Purchases (4 marks)

Question 2
a)
“Nothing enhances the efficiency with which an audit may be conducted more than the careful maintenance and compilation of audit working papers and files.” Discuss. (15 marks)

Question 3
Explain what you understand by “Evidential Matter”, in relation to its nature, competence, and sufficiency of audit evidence. (15 marks)

Question 4
a)
Auditors are forced to engage in personal judgment when determining the extent of audit tests to employ. Write how the following test would help the auditor describing their purposes and uses.
i)
Walk – through tests (5 marks)
ii)
Substantive tests (5 marks)
iii)
Compliance tests (5 marks)
b)
“Auditing is an “Independent” examination --------------“. What does auditor’s
independence mean. (5 marks)

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