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(a) The following matters should be checked while vouching a sales invoice
- That the date of the invoice fall's within the accounting period.
- That the invoice is made out in the name of the client and that the debtor exists among the
list of debtors.
- That the Debtor's account had been debited with the full amount of the invoice.
- That the goods sold are those that are regularly dealt in by the concern(nature of
transaction)
- That the cost of sales has been credited to an appropriate nominal account or accounts.
- Ensure that the invoice numbers are sequential.
- Reconfirming that the totals were correctly computed.
- Authorisation of transaction
(b) Payment from petty cash should be, verified as follow;-
- Trace the amounts advanced to the petty cashier for meeting petty expenses from the cash
book into the petty cash hook.
- Vouch payments with support vouchers which must be supported, wherever possible by
external evidence.
- Check authorisation of reimbursements.
- Ensure where a columnar petty cash book is maintained that the extension have been
carried forward into appropriate amount columns.
- Check the column totals and cross totals and the dates_
- Verify the cash balance in hand.
- Trace posting of the various columns in which payments are classified to the respective
ledger accounts.
- Verify whether the amount of petty cash imprest is fixed. Whether the fixed amount is
reasonable considering the total amount of petty cash payments made during a month or
so.
(c) Inherent limitations in accounting and, internal control systems as per ISA 400: Risk
assessments and internal control are:
- Management's usual requirement that the cost of internal control does not exceed the
expected benefits to be derived.
- Most internal controls tend to be directed at routine transactions rather than non-routine
transactions.
- The potential for human error due carelessness, distraction, mistakes of judgement and
the misunderstanding of instructions.
- The possibility of circumvention of internal controls brought the collusion of a member
of management or an employee with parties outside or inside the entity.
- The possibility that procedures may become inadequate due to changes in conditions, and
compliance with procedures may deteriorate.
- Overriding of controls by the management.
Kavungya answered the question on May 14, 2019 at 12:55
- (a) Describe five purposes of an internal control system.
(b) Explain five actions that an auditor should take if the internal control system is found to...(Solved)
(a) Describe five purposes of an internal control system.
(b) Explain five actions that an auditor should take if the internal control system is found to be
weak.
Date posted: May 14, 2019. Answers (1)
- 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)