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(a) Purpose of an internal control system.
• Enable management to carry out the business in an orderly and efficient manner. Internal
contracts layout the various procedures to be followed in conducting the affairs of the
organisation.
• Ensures adherence to management policies. Management policies vary from broad
objective to detailed policy matters. Internal controls serve as a check to ensure that
management policies are adhered to.
• Safeguard the company's assets - Certain controls are designed to ensure the assets of the
company arc protected from theft and destruction.
• Help in ensuring completeness and accuracy of the accounting records maintained as per
the Companies Act which requires that, a company keeps proper books of accounts.
• Helps in, preventing and detecting errors and frauds. This is management's objectives and
it is achieved through the implementation and continuous operation of an adequate
system of internal controls.
(b) Actions to be taken by the auditor if the IC's is weak
• The auditor should bring such weaknesses to the attention of the management
immediately and request correction measures.
• The auditor should change his audit approach in the area where the ICs is weak 'from
system based audit to vouching audit together with auditing in depth where the
weaknesses are pronounced.
• The auditor should increase substantive tests to avoid any frauds.
• The auditor should gather more audit evidence in those areas where weaknesses are
strongly pronounced.
• The auditor should record these weaknesses in his working papers so that in the future if
engaged again, he may concentrate on such areas with weak controls.
Kavungya answered the question on May 14, 2019 at 12:54
- a) Explain the matters that an auditor should consider during the planning stage °Ian audit
of a continuing client.
b) Define the following audit risks:
i. Inherent risk:
ii....(Solved)
a) Explain the matters that an auditor should consider during the planning stage °Ian audit
of a continuing client.
b) Define the following audit risks:
i. Inherent risk:
ii. Control risk.
c) Briefly describe the procedure an auditor could use to assess the risks in (b above in the
course of his audit of a company.
Date posted: May 14, 2019. Answers (1)
- Outline four challenges that an audit firm might face in planning an audit.(Solved)
Outline four challenges that an audit firm might face in planning an audit.
Date posted: May 14, 2019. Answers (1)
- Explain how the external auditor reduces audit time by relying on the work of the client's internal
audit function.(Solved)
Explain how the external auditor reduces audit time by relying on the work of the client's internal
audit function.
Date posted: May 14, 2019. Answers (1)
- Explain three reasons that could lead to the failure of an audit planning process.(Solved)
Explain three reasons that could lead to the failure of an audit planning process.
Date posted: May 14, 2019. Answers (1)
- Summarize six advantages of the business risk approach in auditing.(Solved)
Summarize six advantages of the business risk approach in auditing.
Date posted: May 14, 2019. Answers (1)
- Explain the importance of audit planning.(Solved)
Explain the importance of audit planning.
Date posted: May 14, 2019. Answers (1)
- Describe eight benefits of audit documentation.(Solved)
Describe eight benefits of audit documentation.
Date posted: May 14, 2019. Answers (1)
- In the context of International Standards on Auditing (ISA) 300 (Planning and Audit of Financial
Statements);
a) Explain when audit planning takes place
b) List four items that...(Solved)
In the context of International Standards on Auditing (ISA) 300 (Planning and Audit of Financial
Statements);
a) Explain when audit planning takes place
b) List four items that should be included in audit planning memorandum
c) i) Suggest four practical problems that could be encountered in implementing audit
plan.
ii) Explain four ways in which you would mitigate the effects of the problems
identified in (c) (i) above
Date posted: May 14, 2019. Answers (1)
- a) Highlight the three components of audit risk.
b) Explain six objectives of planning the audit work.
c) Describe four sources of information that could assist in...(Solved)
a) Highlight the three components of audit risk.
b) Explain six objectives of planning the audit work.
c) Describe four sources of information that could assist in audit planning.
Date posted: May 14, 2019. Answers (1)
- 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...(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
audit plan. With reference to the above statement, discuss five matters that the auditor
should consider when establishing the overall audit strategy.
Date posted: May 14, 2019. Answers (1)
- Explain why an auditor should prepare a letter of engagement(Solved)
Explain why an auditor should prepare a letter of engagement
Date posted: May 14, 2019. Answers (1)
- Differentiate the role of an accountant from that of an auditor.(Solved)
Differentiate the role of an accountant from that of an auditor.
Date posted: May 14, 2019. Answers (1)
- i) Outline two purposes of conducting interim audits.
ii) Evaluate the drawbacks of conducting an interim audit in a business.(Solved)
i) Outline two purposes of conducting interim audits.
ii) Evaluate the drawbacks of conducting an interim audit in a business.
Date posted: May 14, 2019. Answers (1)
- (a) Highlight -five weaknesses of an audit conducted at the end of the financial period.
(b) Explain three fundamental differences between the work of internal auditors...(Solved)
(a) Highlight -five weaknesses of an audit conducted at the end of the financial period.
(b) Explain three fundamental differences between the work of internal auditors and external
auditors.
Date posted: May 14, 2019. Answers (1)
- (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...(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)
- Discuss the case for and against outsourcing the internal and it function of an entity.(Solved)
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)
- (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.(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)
- 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...(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
their first meeting.
Date posted: May 14, 2019. Answers (1)