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Auditing And Assurance-Mock Question Paper

Auditing And Assurance-Mock

Course:Cpa Part Ii

Institution: Strathmore Business School question papers

Exam Year:2006

QUESTION ONE- (JUNE 1993 QUESTION ONE)
(a) What is an audit? (2 marks)
(b) Explain the importance of audit to a limited liability company. (10 marks)
(c) In addition to shareholders, many different parties are interested in the audited accounts of a company. Name FOUR such parties and state the significance of audited accounts to each one of them. (8 marks) (Total: 20 marks)

QUESTION TWO - (PILOT PAPER NOVEMBER 1991)
(a) Describe the following types of Audits:
i. Statutory Audits;
ii. Internal Audits;
iii. Private Audits;
iv. Management Audits;

(b) What are the similarities and differences between internal and external audits?

QUESTION THREE – (DECEMBER 1994 QUESTION SEVEN)
a) Distinguish between internal audit and internal check (4 marks)
b) Explain the matters you would consider and the work you would perform to enable you assess the extent to which you would rely on the work of the internal audit department of your client (12 marks)
c) Give four examples of internal audit work that may e used by the external auditor
(4 marks)
(Total: 20 marks)

QUESTION FOUR - (JUNE 1993 QUESTION TWO)
You are the audit manager in charge of Car Alarms Ltd. Whose financial year ended on 31 March 1993. Due to the tight schedule of your programmes you are unable to devote anytime at the client’s premises. Therefore you have delegated the responsibility to the audit senior.

(a) State the procedures you would follow to control the audit up to completion stage. (16 marks)

(b) Explain the matters you would pay attention to in order to achieve you firm’s quality control targets. (4 marks)
(Total: 20 marks)

QUESTION FIVE – (DECEMBER 1995 QUESTION ONE)
The auditing guideline on ‘recording’ requires audit working papers to be sufficient complete and detailed so that an experienced auditor who has no previous connection with the audit is able to subsequently ascertain from working papers the work performed and to further support the conclusions reached thereon.

Required:
(a) State four benefits that the auditor will obtain from the working papers that meet the above requirements. (4 marks)
(b) Outline the contents of a typical:
(i) Current audit file; (10 marks)
(ii) Permanent audit file. (6 marks)
(Total: 20 marks)

QUESTION SIX - (JUNE 1996 QUESTION TWO)
John Mutiso bought shares of Sh.2 million six months ago in Kenya Company Limited which has since gone into liquidation. He intends to sue XYZ & Co. Certified Public Accountants for the imminent loss of Sh. 2 million which he is likely to suffer. XYZ & Co. had audited the Kenya Company Ltd. The previous year and issued an unqualified report. John Mutiso claims that he solely relied on the audit report when he took that investment decision.

Required:
a) Do the auditors, XYZ & Co. have any liability to Mr. John Mutiso? (4 marks)
b) What circumstances must Mr. John Mutiso demonstrate if he has to succeed against the auditors? (6 marks)
c) State the measures XYZ & Co. should undertake to minimize potential liability for professional negligence. (10 marks)
(Total: 20 marks)

QUESTION SEVEN (JUNE 1992 QUESTION FIVE)
You have been asked by the partners of your firm to prepare a draft memorandum on materiality which will provide guidance to members of staff in conducting the audit of the accounts of limited companies.

Required:
a) Define materiality. (4 marks)
b) Explain the importance of this concept to the auditor. (6 marks)
c) Suggest some criteria for determining cut-off point in order to assess the materiality of an error. (10 marks)
(Total: 20 marks)

QUESTION EIGHT (JUNE 1997 QUESTION FIVE)
(a) Explain why auditors carry out circularisation of debtors. (6 marks)
(b) Distinguish between ‘positive’ and ‘negative’ debtors circularisation procedures.
(6 marks)
(c) Describe in detail the work you would carry out in scrutinizing the replies to the debtors circularisation and in confirming whether the debtors balances are collectable in the following situations:
i. where the debtor does not agree with the balance and states a difference; (6 marks)
ii. where the debtor reports that he cannot confirm the balance (2 marks)
iii. where no reply is received from the debtor (4 marks)
(Total: 20 marks)

Auditing And Assurance-Mock Question Paper

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