a) Monitoring costs. They arise as a result of mechanisms put in place to ensure interests of shareholders are met. They include cost of hiring external auditors, bonding assurance which is insurance taken out where the firm is compensated if manager commits an infringement, internal control system implementation.
b) Opportunity costs which are incurred either because of the benefit foregone from not investing in a riskier but more profitable investment or in the due to the delay in decision making as procedures have to be followed(hence, a timely decision will not be made)
c) Restructuring costs are those costs incurred in changing or altering an organizations structure so as to prevent undesirable management activities.
d) Board of directors- a properly constituted board plays the oversight role on management for the shareholders.
Judiesiz answered the question on May 22, 2018 at 12:29
-
State five the disadvantage of management accounting
(Solved)
State five the disadvantage of management accounting.
Date posted:
April 24, 2018
.
Answers (1)
-
Clearly, give the differences between management accounting and financial accounting
(Solved)
Clearly, give the differences between management accounting and financial accounting.
Date posted:
April 24, 2018
.
Answers (1)
-
Outline four contents of a letter of representation
(Solved)
Outline four contents of a letter of representation.
Date posted:
April 14, 2018
.
Answers (1)
-
a) Explain the following terms as used in auditing: (i) Audit risk. (ii) Inherent risk. (iii) Control risk. (iv) Detection risk.
(Solved)
(a) Explain the following terms as used in auditing:(i) Audit risk. (ii) Inherent risk. (iii) Control risk. iv) Detection risk.
Date posted:
April 14, 2018
.
Answers (1)
-
(a) Define the term recurring audit (b) State the circumstance under which the auditor may send a new engagement letter to the existing ...
(Solved)
(a) Define the term recurring audit (b) State the circumstance under which the auditor may send a new engagement letter to the existing ...
Date posted:
April 14, 2018
.
Answers (1)
-
Explain the procedures an auditor should follow before and after accepting nomination.
(Solved)
Explain the procedures an auditor should follow before and after accepting nomination.
Date posted:
April 10, 2018
.
Answers (1)
-
Why would a company not share all its profits to shareholders?
(Solved)
Why would a company not share all its profits to shareholders?
Date posted:
March 30, 2018
.
Answers (1)
-
(a) Explain why auditors carry out circularisation of debtors. (b) Distinguish between positive and negative debtors circularisation procedures. (c) Describe in...
(Solved)
(a) Explain why auditors carry out circularisation of debtors.
(b) Distinguish between „positive? and „negative? debtors circularisation procedures.
(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
iii. where no reply is received from the debtor
Date posted:
March 28, 2018
.
Answers (1)
-
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...
(Solved)
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?
b) What circumstances must Mr. John Mutiso demonstrate if he has to succeed against the auditors?
c) State the measures XYZ & Co. should undertake to minimize potential liability for professional negligence.
Date posted:
March 28, 2018
.
Answers (1)
-
Distinguish between Accrual concept and Prudence concept
(Solved)
Distinguish between Accrual concept and Prudence concept.
Date posted:
March 23, 2018
.
Answers (1)
-
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...
(Solved)
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.
(b) Outline the contents of a typical:
(i) Current audit file;
(ii) Permanent audit file.
Date posted:
March 22, 2018
.
Answers (1)
-
Give four examples of internal audit work that may be used by the external auditor
(Solved)
Give four examples of internal audit work that may be used by the external auditor
Date posted:
March 22, 2018
.
Answers (1)
-
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...
(Solved)
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
Date posted:
March 22, 2018
.
Answers (1)
-
Distinguish between internal audit and internal check ...
(Solved)
Distinguish between internal audit and internal check
Date posted:
March 22, 2018
.
Answers (1)
-
What are the similarities between internal and external audits?
(Solved)
What are the similarities between internal and external audits?
Date posted:
March 22, 2018
.
Answers (1)
-
In addition to shareholders, many different parties are interested in the audited accounts of a company. Name FOUR such parties and state the significance...
(Solved)
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.
Date posted:
March 22, 2018
.
Answers (1)
-
Discuss the 4 main methods of determining depreciation
(Solved)
Discuss the 4 main methods of determining depreciation.
Date posted:
March 22, 2018
.
Answers (1)
-
(a) Define control accounts (b) State the two main types of control accounts (c) State the purpose of control account
(Solved)
(a) Define control accounts (b) State the two main types of control accounts (c) State the purpose of control account
Date posted:
March 21, 2018
.
Answers (1)
-
“Action must be specifically taken to prevent the occurrence of frauds involving the assets of the company”, Finance Director of Food All Limited addressing accounting...
(Solved)
“Action must be specifically taken to prevent the occurrence of frauds involving the assets of the company”, Finance Director of Food All Limited addressing accounting staff of the company. Of particular interest to the directors are:
1. The safety of unclaimed wages
2. The receipt of cash from customers.
3. The company’s cheque books
4. Issue of credit notes to debtors.
Required:
a. For each of the above, explain how a fraud can occur in the area.
b. What controls should be in place to prevent the occurrence of each of the frauds described in (a) above?
Date posted:
March 16, 2018
.
Answers (1)
-
The Companies Act (Cap.486) sets out the duties of the auditors for a company in respect of his report and other matters.
Required:
a. State four situations under...
(Solved)
The Companies Act (Cap.486) sets out the duties of the auditors for a company in respect of his report and other matters.
Required:
a. State four situations under which the Act requires auditors to qualify their report.
b. State two circumstances in which the auditors may qualify their report owing to inherent uncertainty.
c. State four types of circumstances in which the auditors may qualify their report as a result of disagreement with the directors
Date posted:
March 16, 2018
.
Answers (1)