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- If for any reason the auditor is unable to receive all the information and explanation he deems necessary for the purposes of his audit then there has been a limitation in the scope of his work. It means that the auditor is unable to conclude objectively because he is unable to obtain sufficient appropriate audit evidence
Effect of a limitation in scope on the auditor‘s opinion
- If the possible effect of a limitation on scope of an audit is material but not fundamental to the financial statements the auditor issues a qualified opinion (except for opinion) If the possible effect of a limitation on scope of an audit is of fundamental importance that the auditor is unable to express an opinion on the financial statements, the auditor issues a disclaimer of opinion as mentioned above.
- When there is a limitation on the scope of the auditor‘s work that requires the expression of a qualified opinion or disclaimer of opinion, the auditor should describe the nature of the limitation in his report and indicate the possible adjustments to the financial statements that might have been determined to be necessary, had the limitation not existed.
Wilfykil answered the question on February 22, 2019 at 07:43
- Explain the factors that external auditors should consider in determining whether the financial statements of a limited company show a true and fair view(Solved)
Explain the factors that external auditors should consider in determining whether the financial statements of a limited company show a true and fair view
Date posted: February 22, 2019. Answers (1)
- Auditors may be liable to shareholders and other parties who may have relied on the financial statements upon which the auditors have expressed an opinion....(Solved)
Auditors may be liable to shareholders and other parties who may have relied on the financial statements upon which the auditors have expressed an opinion. This is because the auditors are generally taken as owing a ―duty of care those parties and they
could be liable in the tort of negligence if they failed that duty.
Required:
(a) With reference to the external audit assignment, explain the meaning if the term ―duty of care
(b) Briefly explain the auditors‘ general responsibility. With regard to the prevention and detection of fraud and errors.
(c) State and briefly explain five possible measures that auditing firms should take in order to avoid legal actions for negligence against them.
Date posted: February 22, 2019. Answers (1)
- Identify four factors that should be taken into consideration by an audit firm when allocating staff to audit assignments(Solved)
Identify four factors that should be taken into consideration by an audit firm when allocating staff to audit assignments
Date posted: February 22, 2019. Answers (1)
- List two advantages and two disadvantages of using standardised audit programmes during audit assignments(Solved)
List two advantages and two disadvantages of using standardised audit programmes during audit assignments
Date posted: February 22, 2019. Answers (1)
- Briefly explain how an audit firm may use third party confirmations to provide evidence in relation to six difference balance sheet items(Solved)
Briefly explain how an audit firm may use third party confirmations to provide evidence in relation to six difference balance sheet items
Date posted: February 22, 2019. Answers (1)
- For each of the following assets, suggest ten practical control procedures that the owner of
the retail hardware shop should implement to minimise possible losses through...(Solved)
For each of the following assets, suggest ten practical control procedures that the owner of the retail hardware shop should implement to minimise possible losses through theft and fraud:
(a) Cash
(b) Stocks
Date posted: February 22, 2019. Answers (1)
- List four advantages and four disadvantages of using the risk-based audit approach when auditing the financial statements of limited companies(Solved)
List four advantages and four disadvantages of using the risk-based audit approach when auditing the financial statements of limited companies
Date posted: February 22, 2019. Answers (1)
- Identify the circumstances when it is appropriate to use only a substantive approach in an audit and when a combination of compliance and substantive tests...(Solved)
Identify the circumstances when it is appropriate to use only a substantive approach in an audit and when a combination of compliance and substantive tests should be used
Date posted: February 22, 2019. Answers (1)
- State the specific representations you, as an auditor, would wish to obtains from the management in respect of :
(i) Assets.
(ii) Liabilities.(Solved)
State the specific representations you, as an auditor, would wish to obtains from the management in respect of :
(i) Assets.
(ii) Liabilities.
Date posted: February 22, 2019. Answers (1)
- State and briefly explain the action auditors should take if the management refuses to provide a letter of representation.(Solved)
State and briefly explain the action auditors should take if the management refuses to provide a letter of representation.
Date posted: February 22, 2019. Answers (1)
- You have completed your audit of Tinga Tinga Ltd. You have issued a management letter to
the Chief Accountant which identifies weaknesses in the controls over...(Solved)
You have completed your audit of Tinga Tinga Ltd. You have issued a management letter to the Chief Accountant which identifies weaknesses in the controls over sales. Cash is received over the counter, from salesmen and also through the post. Tinga Tinga Ltd‘s Chief Accountant has asked you for recommendations as to the type of controls you would wish to see in operation in a sales system.
Required:
Outline the controls you would expect to find in Tinga Tinga Ltd‘s sales system with regard to:
a) Cash receipts by post
b) Cash collected by salesman
c) Cash sales within Tinga Tinga Ltd‘s premises
d) Banking of cash received
Date posted: February 22, 2019. Answers (1)
- Identify the audit procedures which would need to be carried out in order to identify material post – balance sheet events.(Solved)
Identify the audit procedures which would need to be carried out in order to identify material post – balance sheet events.
Date posted: February 22, 2019. Answers (1)
- Explain the nature and purpose of a post-audit review(Solved)
Explain the nature and purpose of a post-audit review
Date posted: February 22, 2019. Answers (1)
- Distinguish between a procedural audit and a balance sheet audit(Solved)
Distinguish between a procedural audit and a balance sheet audit
Date posted: February 22, 2019. Answers (1)
- The internal control system encompasses all the policies and procedures adopted by the
management of an entity to assist it in achieving management objectives.(Solved)
The internal control system encompasses all the policies and procedures adopted by the management of an entity to assist it in achieving management objectives.
Required:
a) Identify and explain five management objectives that an internal control system over sales aims to achieve
b) List and briefly explain five control objectives that an internal control system over sales aims to achieve
c) Explain the inherent limitations of an internal control system
Date posted: February 22, 2019. Answers (1)
- Identify and list the responsibilities of company directors in relation to the company‘s
accounting system(Solved)
Identify and list the responsibilities of company directors in relation to the company‘s
accounting system
Date posted: February 22, 2019. Answers (1)
- Explain how auditors distinguish their responsibility from those of the directors in respect of financial statements(Solved)
Explain how auditors distinguish their responsibility from those of the directors in respect of financial statements
Date posted: February 22, 2019. Answers (1)
- State the basic element of the scope paragraph of an audit report(Solved)
State the basic element of the scope paragraph of an audit report
Date posted: February 22, 2019. Answers (1)
- State the evidence, which you, as the auditor, would like to find in place and pay attention
to when vouching the following payments made by RR...(Solved)
State the evidence, which you, as the auditor, would like to find in place and pay attention to when vouching the following payments made by RR Paper Mills Ltd., during the financial year ended 31 October 2002.
a) Loans to three employees totaling Sh. 6 million.
b) The last call on 5, 000 ordinary shares at Sh, 15 per share.
c) Fire insurance premiums amounting to Sh. 10, 000 paid for the office block.
d) A loan amounting to Sh. 30 million obtained from a local bank and secured by the factory building.
e) Salesmen‘s commissions amounting to Sh. 3, 000, 000.
Date posted: February 22, 2019. Answers (1)
- What is the form of audit opinion you would give if you concluded that the
client company was experiencing going concern problems and:
i. you have established...(Solved)
What is the form of audit opinion you would give if you concluded that the client company was experiencing going concern problems and:
i. you have established that the financial statements give sufficient disclosure of the going concern problems?
ii. you have established that there is no disclosure of the going concern problems in the financial statements?
Date posted: February 21, 2019. Answers (1)