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i) Economic
The cost in terms of expensive audit resources would be prohibitive which will inflate audit fees
ii) Time
The complete check would take so long that the client may receive audit reports on matters which are outdated
iii) Practical reasons
Users of accounts do not expect 100% accuracy. The auditor will only focus on material areas.
iv) Psychological
A complete check would be tiresome to audit staff who may then not carry out an effective and efficient audit
v) Fruitless/End results
A complete check would not add much to worth of figures if as would be normal a few amounts were discovered. This emphasis in auditing should be on the completeness of record and true and fair view.
vi) Large volume of transactions
For large business with voluminous transactions, it is necessary for auditor to sample since not all transactions can be audited. Full testing would not achieve the specified audit objectives for an area e.g. full testing on sales invoices would not verify all sales are recorded (it may not demonstrate completeness) nor would it deal with human error on the part of the auditor
Wilfykil answered the question on February 23, 2019 at 06:45
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Briefly explain how the auditor can use each of the following methods of sample selection when carrying out his audit assignment
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ii) Cluster sampling
iii) Haphazard sampling
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Date posted: February 23, 2019. Answers (1)
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Date posted: February 23, 2019. Answers (1)
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Date posted: February 23, 2019. Answers (1)
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Date posted: February 23, 2019. Answers (1)
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Explain the procedures that the auditor should adopt for the final review(Solved)
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Explain the procedures that the auditor should adopt for the final review
Date posted: February 23, 2019. Answers (1)
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Date posted: February 23, 2019. Answers (1)
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Date posted: February 23, 2019. Answers (1)
- Your are currently engaged in planning the audit of the payroll system of Ujenzi Ltd a manufacturing company, for the year ending 30 June 2005,...(Solved)
Your are currently engaged in planning the audit of the payroll system of Ujenzi Ltd a manufacturing company, for the year ending 30 June 2005, Ujenzi Ltd‘s payroll system is fully computerized
Required:
(a) Explain four ways in, which the use of a computerized payroll system by Ujenzi Ltd, would affect your work as the auditor.
(b) Explain three controls which should be instituted by Ujenzi Ltd to ensure that only authorized persons are allowed access to information on personal files and to input updates for the calculation of wages.
(c) Outline how audit tests could be performed ―around the computer in relation to Ujenzi Ltd‘s payroll
(d) List any two fraudulent activities likely to be perpetrated in relation to Ujenzi Ltd‘s payroll
Date posted: February 22, 2019. Answers (1)
- Outline the procedures an external auditor should follow if he suspects that fraud; or error have been perpetrated(Solved)
Outline the procedures an external auditor should follow if he suspects that fraud; or error have been perpetrated
Date posted: February 22, 2019. Answers (1)
- Outline the respective responsibilities of an entity‘s management and the external auditor with respect to the prevention and detection of fraud and error(Solved)
Outline the respective responsibilities of an entity‘s management and the external auditor with respect to the prevention and detection of fraud and error
Date posted: February 22, 2019. Answers (1)
- List the procedures you would follow to verify the following items:
(i) Petty cash balance.
(ii) Revaluation reserve.
(iii) Copyrights(Solved)
List the procedures you would follow to verify the following items:
(i) Petty cash balance.
(ii) Revaluation reserve.
(iii) Copyrights
Date posted: February 22, 2019. Answers (1)
- Cash in hand and cash at bank are commonly referred to as liquid assets. Because of this liquidity, these assets represent the most vulnerable of...(Solved)
Cash in hand and cash at bank are commonly referred to as liquid assets. Because of this liquidity, these assets represent the most vulnerable of all the assets of an entity. You have recently been employed by Korir and Associates (Certified Public
– Accountants) as an audit assistant. During your first audit assignment at Viwanda Ltd you have been allocated the audit of cash in hand and cash at bank.
Required
(i) State and explain any the audit procedures you would undertake in order to determine whether or not there has been any misappropriation of cash.
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Date posted: February 22, 2019. Answers (1)
- The auditor should prepare working papers which are sufficiently complete and detailed to provide an overall understanding of the audit.(Solved)
The auditor should prepare working papers which are sufficiently complete and detailed to provide an overall understanding of the audit.
Required:
(a) State four benefits that an auditor would obtain from working papers that satisfy the above requirement.
(b) List five items of information you would expect to be contained in a permanent audit file and explain why each of these items of information should be readily available.
(c) In the audit or purchases, list four examples of the type of information that would be contained in the detailed audit working papers.
(d) Give any two reasons why a director should examine the directors‘ minute book
Date posted: February 22, 2019. Answers (1)
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Date posted: February 22, 2019. Answers (1)
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Date posted: February 22, 2019. Answers (1)
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Date posted: February 22, 2019. Answers (1)
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Outline and briefly explain the procedures that the internal auditor can conduct on behalf of the external auditor.
Date posted: February 22, 2019. Answers (1)
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Date posted: February 22, 2019. Answers (1)
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Date posted: February 22, 2019. Answers (1)
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Date posted: February 22, 2019. Answers (1)