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(a) Components of audit risk.
Inherent risk: - This is the susceptibility of an assertion to a misstatement that could be
material, either individually or when aggregated with other misstatements.
Control risk;-This is the risk that a misstatement could occur in an assertion and that could be
material, either, individually or when aggregated with other misstatements, will not be prevented,
or detected and corrected by the enterprise internal controls
Detection risk: - This is the risk that the auditor will not detect a misstatement that exists in an
assertion that could be material, either individually or when aggregated with other misstatements
by the substantive analytical review procedures (ARP) performed.
(b) Objectives of audit planning:-
- To comply with Accounting Standards and Audit and Assurance Standards.
- To cover all types of-allied responsibilities during the audit such as tax audit reports
and secretarial audit
- To achieve effectiveness in reporting and more so to ensure that the audit will be
performed in an effective manner.
- To determine the nature, timing and extent of planned risk assessment procedures.
- To determine the nature, timing and extent of planned further audit procedures at the
assertion level.
- To plan for proper completion of the audit in time
- For budgeting purposes
- To pay attention to the risk areas of operation
(c) Sources of information that could assist the auditor in planning:-
- Inquiries of management and others within the entity: - Discussions with the client's key
management officials about the entity’s objectives and expectations, and its plans for
achieving these goals.
- Analytical procedures: - These involve comparing the company's results to those of the
industry ratios and trends that may be helpful to the auditor while carrying out analytical
procedures.
- Observation and inspection:- These involve a variety of procedures that include., Visiting
the client's premises to develop a better understanding of the company's businesses and
operations.
- Reading minutes of meetings and correspondence with the client.
- Reading previous year's audit files and permanent audit files.
- The auditor may also consider obtaining information from the entity's external legal
counsel, or externally available data sources, including analyst reports, industry journals,
government statistics, surveys, texts, financial newspaper and so on.
- Previous audits
- Clients records
- Confirmation from third parties
Kavungya answered the question on May 14, 2019 at 12:41
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when preparing an audit plan for a new client.
b) An auditor shall establish...(Solved)
a) Identify five additional matters that an external auditor should take into consideration
when preparing an audit plan for a new client.
b) An auditor shall establish an overall audit strategy that guides the development of the
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should consider when establishing the overall audit strategy.
Date posted: May 14, 2019. Answers (1)
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ii) Evaluate the drawbacks of conducting an interim audit in a business.(Solved)
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ii) Evaluate the drawbacks of conducting an interim audit in a business.
Date posted: May 14, 2019. Answers (1)
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(b) Explain three fundamental differences between the work of internal auditors...(Solved)
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(b) Explain three fundamental differences between the work of internal auditors and external
auditors.
Date posted: May 14, 2019. Answers (1)
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business and organisation.
With reference to the above statement, list the...(Solved)
(a) It is essential that all members of an audit team fully understand the client's industry,
business and organisation.
With reference to the above statement, list the different ways that the knowledge implied
above could be obtained.
(b) Explain the meaning of the following terms with reference to auditing:
(i) Due diligence.
(ii) Forensic auditing.
Date posted: May 14, 2019. Answers (1)
- Explain the importance of the following in the context of an audit:
i. Audit programme
ii. Time budget.(Solved)
Explain the importance of the following in the context of an audit:
i. Audit programme
ii. Time budget.
Date posted: May 14, 2019. Answers (1)
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Discuss the case for and against outsourcing the internal and it function of an entity.
Date posted: May 14, 2019. Answers (1)
- (a) Section 162 of the Companies Act and related 7th Schedule to the Act deal with the auditor's
duties and rights.
Required;
List four duties of the auditor...(Solved)
(a) Section 162 of the Companies Act and related 7th Schedule to the Act deal with the auditor's
duties and rights.
Required;
List four duties of the auditor of a limited liability company that can be inferred From
Section 162 and 7th Schedule of the Companies Act.
(b) Differentiate between a continuous audit and an interim audit.
Date posted: May 14, 2019. Answers (1)
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(b) Discuss the potential benefits that could accrue to an organisation that sets up and
maintains an audit committee.(Solved)
(a) Define the term "audit committee."
(b) Discuss the potential benefits that could accrue to an organisation that sets up and
maintains an audit committee.
Date posted: May 14, 2019. Answers (1)
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b) Identify the matters that a new auditor would discuss with the management of a...(Solved)
a) State the reasons why an auditor might not be appointed.
b) Identify the matters that a new auditor would discuss with the management of a client on
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Date posted: May 14, 2019. Answers (1)
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auditor in an audit assignment.(Solved)
Identify any four areas in which the external auditor must seek co-operation from an internal
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Date posted: May 14, 2019. Answers (1)
- Explain the guidelines that have been issued by the Institute of Accountants in your country,
to prevent the following matters from posing a threat to an...(Solved)
Explain the guidelines that have been issued by the Institute of Accountants in your country,
to prevent the following matters from posing a threat to an auditor's independence:
(i) Fees.
(ii) Personal and family relationships.
(iii) Loans_
(iv) Beneficial shareholdings.
Date posted: May 14, 2019. Answers (1)