a) In order to test the vouchers for errors, I would;
i. Cast the figures in the vouchers in order to determine their arithmetical accuracy.
ii. Compare the current year‘s payments against the previous year‘s and investigate any unfavourable variance or difference.
iii. I would trace the payment vouchers to the ledger accounts to ensure no payment was left out in the vouching.
iv. I would inspect the payment voucher for authorization by the responsible official. I would expect authorization to be evidenced by a signature or stamp.
v. I would inspect the documents underlying the payment voucher such as the goods received note.
vi. I would carry out a sequence check on the payment voucher to establish the completeness of the vouchers. Any cancelled or spoilt vouchers should be accounted for.
b) It is not satisfactory to pick vouchers from a limited period as these vouchers may not be representative of all the vouchers that were raised in that period. This is because these vouchers may relate to payments that are subjected to special conditions or conditions that were not prevalent in the company throughout the period, e.g. there could have been a different accountant recording the payments made via those vouchers different people giving authority etc.
c) Statistical sampling is ideal in the following conditions:-
i) The population to be tested must be homogenous i.e. it must consist of items of the same kind, subject to the same level of audit risk.
ii) The population must be fairly large, otherwise the benefits of the technique will not be achieved. Statistical techniques need to be adjusted to work on small populations.
iii) Expectation of error must be low – i.e. control risk must have already been assessed as less than high (i.e. ICS is strong). High control risk requires impractically large sample sizes.
iv) The items in the population must be easily identifiable once selected so that checking of the items is easily carried out e.g. Items such as invoices must be pre-numbered and filed in sequence.
Wilfykil answered the question on February 21, 2019 at 10:41
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Outline the statutory provisions with regard to duties of external auditors
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Date posted:
February 21, 2019
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February 21, 2019
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(Solved)
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February 21, 2019
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February 21, 2019
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February 21, 2019
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February 21, 2019
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February 21, 2019
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(Solved)
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February 21, 2019
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The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with:
i. Dating the auditor‘s report
ii. Audit...
(Solved)
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i. Dating the auditor‘s report
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Required:
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Date posted:
February 21, 2019
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Answers (1)
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Specialists or experts are occasionally required by external auditors mainly in connection with the valuation assets and the determination of liabilities.
(Solved)
Specialists or experts are occasionally required by external auditors mainly in connection with the valuation assets and the determination of liabilities.
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Date posted:
February 21, 2019
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Most errors in computer based accounting systems can be traced to faulty input. Controls over the completeness and validity of all inputs are vital. Control...
(Solved)
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Required:
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Date posted:
February 21, 2019
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Answers (1)
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Your firm audits Clean Paints Ltd. and you are planning the audit of stock and work in progress for the year ended 31 December 2000....
(Solved)
Your firm audits Clean Paints Ltd. and you are planning the audit of stock and work in progress for the year ended 31 December 2000. Clean Paints Ltd. determines the value of stock in its financial statements by the year -end stocktake. There is no perpetual Stock Inventory System though stock is counted quarterly for the purposes of management accounting
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Required:
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Date posted:
February 21, 2019
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Answers (1)
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During the course of an audit, the auditor attempts to obtain sufficient relevant and reliable evidence to provide the satisfaction that the financial records are...
(Solved)
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Required:
a) Describe the main factors which influence the auditor in determining the size of the sample he will use for his detailed testing.
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Date posted:
February 21, 2019
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Answers (1)
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Write in point form an audit programme to cover salary and wages of a small size firm.
(Solved)
Write in point form an audit programme to cover salary and wages of a small size firm.
Date posted:
February 21, 2019
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Answers (1)
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Define the term audit programme.
(Solved)
Define the term audit programme.
Date posted:
February 21, 2019
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Answers (1)
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(Solved)
The matter listed below are always included in the internal control of a firm. You are required to explain the purpose of each of the items listed as (a), (b) and (c) below. Indicate the compliance tests you would carry out in order to ensure that the
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a) A requirement that mail is opened by two responsible employees who must promptly make listings of all receipts.
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Date posted:
February 21, 2019
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Answers (1)
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Working papers provide the audit evidence. They can be categorized into:
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Working papers are...
(Solved)
Working papers provide the audit evidence. They can be categorized into:
i. Auditors‘ prepared working papers.
ii. Client‘s schedules used as working papers.
iii. Audit programmes.
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Required:
a) What details should each working paper which is prepared by an auditor indicate?
b) What details should each client schedule used as a working paper indicate?
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Date posted:
February 21, 2019
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Answers (1)
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Printa Limited is a large printing company, which has an on-line computer accounting system. The system is based around a central main frame computer, with...
(Solved)
Printa Limited is a large printing company, which has an on-line computer accounting system. The system is based around a central main frame computer, with terminals serving individual departments. As part of the interim audit work, you have been asked to carry out a preliminary evaluation of ;
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Date posted:
February 21, 2019
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Answers (1)
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It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important...
(Solved)
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Required:
a) Under statutory provision, what are the main contents of the auditors‘ report?
b) Explain how the international standards on auditing attempt to ensure that the report of the auditors is clearly understood.
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Date posted:
February 21, 2019
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Answers (1)
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The cashier of a firm who also acts a bookkeeper has been suspected of dishonesty. The books have not been audited for the last nine...
(Solved)
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Required:
Outline how you would proceed with the investigation
Date posted:
February 21, 2019
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Answers (1)