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Auditing And Assurance Question Paper

Auditing And Assurance

Course:Cpa Part I

Institution: Orbit School Of Management Studies question papers

Exam Year:2009

KASNEB
CPA PART 1
AUDITING AND ASSURANCE
PILOT PAPER

August 2009

Answer any FIVE questions.
ALL questions carry equal marks.

QUESTION ONE
a.
i. Define the term "assurance engagements" (2mks)

ii. Highlight the elements of an assurance engagement (8mks)

b.
i. Distinguish between a risk based audit approach and a balance sheet audit. (4mks)

ii. State three advantages of a risk based audit approach and three advantages of a balance sheet audit (6mks)

QUESTION TWO
"Professional independence is a concept fundamental to the accountancy profession"

Required:
a. Describe why the independence of an auditor is important (6mks)

b. List and explain the five main categories of threats to an auditor''s independence. (10mks)

c. Explain how an audit committee can help in safeguarding the independence of the company''s auditor. (4mks)

QUESTION THREE
Kiatu Ltd. is a shoe manufacturing company based in industrial area. As an audit assistant in Kiplagat and Associates (Certified Public Accountants), you have been assigned the task of auditing the company''s inventory for the financial year ending 31 March 2010.

Required:
a. Identify and explain four inherent risks associated with a company''s inventory and work-in-progress. (8mks)

b. List four audit objectives of an auditor attending a client''s physical inventory count. (4mks)

c. Outline the audit procedures you would carry out during the company''s physical inventory count. (8mks)

QUESTION FOUR
a. In the context of International Standard on Auditing (ISA) 620 (using the work of an expert):

i. Identify five situations where an auditor may rely on the work of an expert (5mks)

ii. List and explain five factors that an auditor should consider when evaluating the work of an expert. (10mks)

b. State five factors that influence the sample size used by an auditor (5mks)

QUESTION FIVE
a.
i. Define the term "letter of representation" (2mks)

ii. Outline the reasons why an auditor seeks to obtain a letter of representation. (6mks)

b. Highlight the audit objectives of reviewing subsequent events (4mks)

c. Describe the audit procedures an auditor should perform to identify the existence of relevant subsequent events (8mks)

QUESTION SIX
a. Outline the contents of a letter of engagement. (6mks)

b. With respect to an auditor''s report, distinguish between the following sets of terms:
i. Disclaimer of opinion and adverse opinion. (4mks)

ii. Unqualified opinion and qualified opinion. (4mks)

c. Briefly describe three circumstances in which an auditor would be required to include an emphasis of a paragraph in his audit report (6mks)

QUESTION SEVEN
With respect to the audit of computer based accounting systems:

a.
i. Define the term "test data" (2mks)

ii. Describe the difficulties encountered in the use of test data (10mks)

b. Write explanatory notes on the following:

i. Generalised package programs (2mks)

ii. Purpose-written programs (2mks)

iii. Utility programs (2mks)

iv. Integrated test facility (2mks)

Auditing And Assurance Question Paper

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