(a) Limitations of gathering audit evidence are:-
- It is usually expensive to gather evidence especially from third parties where such third
parties are numerous and geographically dispersed.
- There may be lack of co-operation from the staff and to some extent third parties in
availing audit evidence.
- There are possibilities of collusion between management employees and third parties
leading to distortions of audit evidence.
- The business of the entity might be technical and as such difficult to gather evidence and
the auditor has to use experts.
- There might be inadequate record or incomplete records which may limit internal
evidence.
- There may be problems of biased opinion especially in observations if they are made by
unqualified and incompetent audit personnel.
- Evidence from third parties may delay or there may be lack of co-operation in replying to
auditor's circularisation.
(b) Considerations under which the external auditor can rely on the work of the internal
auditor arc:
- The extent to which the internal audit functions organisational status and relevant policies
and procedures support the objectivity of internal auditors.
- The level of competence of the internal audit function i.e. their qualifications.
- Whether the internal audit function applies a systematic and disciplined approach
including quality control.
- Assessing of the management acts upon their reports.
- Availability of resources
- Previous experience
(c) Considerations that should be when forming an opinion made are:
- The financial statements adequately disclose the significant accounting policies selected
and applied.
- The accounting policies selected and applied are consistent with the applicable financial
reporting framework
- Compliance with the international financial reporting standards.
- The accounting estimates made by management are reasonable.
- The information presented in the financial statements is relevant, reliable, comparable
and understandable.
- The terminology used in the financial statements including the title of each financial
statement is appropriate.
- The financial statements provide adequate disclosures to enable the intended users to
understand the effect of material transactions
Kavungya answered the question on May 14, 2019 at 13:26
-
a) Standardisation of working papers refers to a predetermined Format of presenting and
documenting audit findings.
With reference to the above statement, discuss three advantages and three...
(Solved)
a) Standardisation of working papers refers to a predetermined Format of presenting and
documenting audit findings.
With reference to the above statement, discuss three advantages and three disadvantages
of standardized working papers.
b) Explain Four factors that could influence the acceptance of evidence obtained from a
third party.
Date posted:
May 14, 2019
.
Answers (1)
-
An auditor should perform procedures to obtain information that is used to identify the risks of
material misstatement due to fraud".
Highlight the audit procedures you would...
(Solved)
An auditor should perform procedures to obtain information that is used to identify the risks of
material misstatement due to fraud".
Highlight the audit procedures you would carry out to detect the following types of fraud:
i. The motor vehicle of an employee is covered through the insurance scheme of the
company's motor vehicles.
ii. The motor vehicle of an employee is repaired using the company's funds and the amount
appears as an expense in the accounting records.
Date posted:
May 14, 2019
.
Answers (1)
-
Distinguish between errors and frauds.
(Solved)
Distinguish between errors and frauds.
Date posted:
May 14, 2019
.
Answers (1)
-
List two techniques that could be used by a firm to minimize errors.
(Solved)
List two techniques that could be used by a firm to minimize errors.
Date posted:
May 14, 2019
.
Answers (1)
-
Highlight four types of fraud that could occur in an accounting and internal control system over
purchases and payable
(Solved)
Highlight four types of fraud that could occur in an accounting and internal control system over
purchases and payable
Date posted:
May 14, 2019
.
Answers (1)
-
List the circumstances that indicate the presence of errors, irregularities and frauds in an entity
(Solved)
List the circumstances that indicate the presence of errors, irregularities and frauds in an entity
Date posted:
May 14, 2019
.
Answers (1)
-
Propose three ways in which a company might prevent or minimise accounting errors.
(Solved)
Propose three ways in which a company might prevent or minimise accounting errors.
Date posted:
May 14, 2019
.
Answers (1)
-
a) Explain the potential errors that could occur in the processing of sales transactions.
b) Highlight four preventive measures that could be put in place for...
(Solved)
a) Explain the potential errors that could occur in the processing of sales transactions.
b) Highlight four preventive measures that could be put in place for the areas you have
identified in (a) above.
c) Identify three examples of discrepancies in the accounting records that could indicate
the possibility of fraud.
Date posted:
May 14, 2019
.
Answers (1)
-
The opening statement of ISA 315 paragraph 64 notes that "internal control no matter how well
designed and operated, can provide an entity with only reasonable...
(Solved)
The opening statement of ISA 315 paragraph 64 notes that "internal control no matter how well
designed and operated, can provide an entity with only reasonable assurance about achieving the
entity's financial reporting objectives. The likelihood of achievement is affected by limitations
inherent to internal control".
With reference to above-statement, briefly explain the limitations inherent in an internal control
system.
Date posted:
May 14, 2019
.
Answers (1)
-
The risk of fraud in the sales systems of XYZ Ltd. has been assessed as higher than normal.
Briefly describe how the assessment would influence your...
(Solved)
The risk of fraud in the sales systems of XYZ Ltd. has been assessed as higher than normal.
Briefly describe how the assessment would influence your work as an external auditor of XYZ
Ltd.
Date posted:
May 14, 2019
.
Answers (1)
-
Describe the audit procedures you would carry out when auditing a charity organisations:
i) Cash donations
ii) Non-cash donations
(Solved)
Describe the audit procedures you would carry out when auditing a charity organisations:
i) Cash donations
ii) Non-cash donations
Date posted:
May 14, 2019
.
Answers (1)
-
The auditor has a duty to certify the amount of stock in the financial statement.
Outline the auditor's duties before stocktaking in a manufacturing enterprise.
(Solved)
The auditor has a duty to certify the amount of stock in the financial statement.
Outline the auditor's duties before stocktaking in a manufacturing enterprise.
Date posted:
May 14, 2019
.
Answers (1)
-
Highlight seven limitations of an internal control system in an organisation.
(Solved)
Highlight seven limitations of an internal control system in an organisation.
Date posted:
May 14, 2019
.
Answers (1)
-
a) Explain the effectiveness of the following controls in preventing fraud in an organisation
i. Segregation of duties.
ii. Physical controls.
b) Outline a suitable internal control system...
(Solved)
a) Explain the effectiveness of the following controls in preventing fraud in an organisation
i. Segregation of duties.
ii. Physical controls.
b) Outline a suitable internal control system for wage payments
Date posted:
May 14, 2019
.
Answers (1)
-
Summarise four measures that a company could put in place for safeguarding its cash
balances
(Solved)
Summarise four measures that a company could put in place for safeguarding its cash
balances
Date posted:
May 14, 2019
.
Answers (1)
-
State five controls of fixed assets in an organisation.
(Solved)
State five controls of fixed assets in an organisation.
Date posted:
May 14, 2019
.
Answers (1)
-
Describe three cut-off procedures the auditor would perform on inventory at the period end.
Assume that inventory is a material amount in the financial statements.
(Solved)
Describe three cut-off procedures the auditor would perform on inventory at the period end.
Assume that inventory is a material amount in the financial statements.
Date posted:
May 14, 2019
.
Answers (1)
-
For each of the following assets, suggest seven internal control procedures that the owner of a
retail hardware shop should implement to minimize possible losses through...
(Solved)
For each of the following assets, suggest seven internal control procedures that the owner of a
retail hardware shop should implement to minimize possible losses through errors and fraud;
i. Cash
ii. inventory
Date posted:
May 14, 2019
.
Answers (1)
-
Explain four characteristics of a small entity that make it difficult for the auditor to rely on the
entity's system of internal control
(Solved)
Explain four characteristics of a small entity that make it difficult for the auditor to rely on the
entity's system of internal control
Date posted:
May 14, 2019
.
Answers (1)
-
a) Outline six matters that should be checked while vouching a sales invoice.
b) As the audit assistant in XYZ Ltd., identify six procedures that you...
(Solved)
a) Outline six matters that should be checked while vouching a sales invoice.
b) As the audit assistant in XYZ Ltd., identify six procedures that you would carry out to
verify payments from petty cash.
c) Accounting and internal control systems cannot provide management with conclusive
evidence that objectives are reached because of their inherent limitations.
With reference to the above statement, discuss four inherent limitations of accounting and
internal control systems.
Date posted:
May 14, 2019
.
Answers (1)