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Explain the nature and purpose of a post-audit review
Date posted:
February 22, 2019
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Distinguish between a procedural audit and a balance sheet audit
Date posted:
February 22, 2019
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Identify and list the responsibilities of company directors in relation to the company‘s
accounting system
Date posted:
February 22, 2019
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Explain how auditors distinguish their responsibility from those of the directors in respect of financial statements
Date posted:
February 22, 2019
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State the basic element of the scope paragraph of an audit report
Date posted:
February 22, 2019
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Explain five factors which would indicate to the auditor that the going concern assumption of the business entity he is auditing is threatened
Date posted:
February 21, 2019
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Many auditors now use laptops computers to perform various audit tasks. However, if audit firms use laptop computers they risk data being corrupted and appropriate controls must therefore be put in place to prevent the corruption of data.
a) Explain six ways which auditors can use laptop computers in their audit work (other than computer-assisted audit techniques).
b) Explain the computer assisted audit techniques listed below:
i. Embedded audit facilities.
ii. Integrated test facilities.
c) Briefly describe two types of software that might be used by auditors in their work other than Computer Assisted Audit techniques.
d) Describe the controls that auditors should implement when using laptop computers on audits.
Date posted:
February 21, 2019
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One of the responsibilities of the directors of a company is to establish strong internal controls to safeguard the assets of the firm.
Required:
a) State the audit objectives of internal controls on fixed assets.
b) Set out the audit procedures you would follow to verify directors‘ fees.
c) What procedures would you apply to verify the extension of a building that has been constructed by the client during the year?
Date posted:
February 21, 2019
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Your client, ABC Ltd. has a system for inputting purchase and expense invoice where the operator inputs the following from each item.
-Order number (a code 2221 is used for items like electricity)
-Supplier name
-Supplier code number
-First four letters of nominal account name (entered on invoice by purchase department manager)
-Nominal account code (entered by purchase department manager) Date
-Goods inward note
-number Net amount
-VAT amount
-Gross amount
Required:
a) Suggest manual operation and controls which might previously have applied to these invoices.
b) Suggest input controls that might be applied by the program to these items.
c) List some audit tests that could be applied to these items indicating the purpose of each test and the relevant audit evidence obtained.
Date posted:
February 21, 2019
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List three disadvantages of using standardized audit programmes and how these disadvantages can be avoided.
Date posted:
February 21, 2019
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In the course of the audit of ABC Stationers Ltd. for the year ended 30 June 2001, you have noted and recorded in the audit working papers, the following evidential matters:
1. Flowcharts of the company‘s payroll prepared by your audit assistant backed up by tests of controls.
2. An oral statement by the production director that the expected working life of plant acquired during the year is ten years.
3. A letter to the managing director from the company‘s bank manager indicating that the bank intends to extend overdraft facilities for a period of one year.
4. A list of items of inventory counted by a member of your audit team during observation of the company‘s annual stock count.
5. A letter from a customer to your firm in reply to a confirmation request indicating agreement with the balance recorded in the books of ABC Stationers Ltd.
Required:
a) With respect to each matter listed above, explain its relevance to the overall audit objective of forming an opinion and reporting on the financial statements.
b) Explain your judgment on the reliability of the audit evidence obtained in five ways listed above.
Date posted:
February 21, 2019
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Under what circumstances is one ineligible for appointment as an auditor of a company?
Date posted:
February 21, 2019
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You have received a request form XYZ Ltd. to accept an appointment as their auditor for the financial year ending 31 December 2001
Required:
a) Explain the preliminary procedures you would carry out upon your appointment.
b) What is the importance of a preliminary review?
c) Why is it important for the auditor to hold discussions with the client‘s senior staff?
d) State why it is important for an incoming auditor to hold consultations with the outgoing auditor.
Date posted:
February 21, 2019
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You have been appointed the auditor of United Millers Company Limited, a medium manufacturing company which is quoted on the stock exchange.
Required:
a) List the important matters which must be included in the letter of engagement.
b) Explain the purpose of such a letter
Date posted:
February 21, 2019
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A company wishes to change from an old computerised system to a new computer based accounting system. Explain how and why both systems should run parallel prior to the change over the new system
Date posted:
February 21, 2019
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State six examples of controls to prevent unauthorised changes to data files that you would expect to find in a new computer based accounting system
Date posted:
February 21, 2019
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In the context of a computer based accounting system, explain the meaning of the following terms:
i) Application controls
ii) General controls
Date posted:
February 21, 2019
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You have been asked by your firm to examine the payment vouchers of a company to establish the level of errors and then decide whether better results can be obtained through statistical techniques.
Required:
a) State the steps you would take in order to test the vouchers for the errors.
b) Why is it not satisfactory to pick vouchers from a limited period?
c) State under what circumstances statistical sampling is a good technique
Date posted:
February 21, 2019
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Outline the statutory provisions with regard to duties of external auditors
Date posted:
February 21, 2019
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Explain the value derived from the work of external auditors.
Date posted:
February 21, 2019
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The director of one of your growing clients have decided to create an internal audit function in their organizational structure
Required:
a) List and briefly describe the duties you would expect the internal audit staff to perform.
b) List and explain the criteria which you would consider before deciding to rely on the work of the internal audit function.
c) State the extent to which you, as an external auditor, can rely on the work of the internal audit function.
Date posted:
February 21, 2019
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Describe the various procedures of obtaining audit evidence giving an example of each by way of illustration.
Date posted:
February 21, 2019
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Explain the meaning of the "audit evidence"
Date posted:
February 21, 2019
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List six examples of key control questions that would be suitable for inclusion in an ICEQ for a wages accounting system.
Date posted:
February 21, 2019
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Explain how an Internal Control Evaluation Questionnaire (ICEQ) differs from an Internal Control Questionnaire (ICQ).
Date posted:
February 21, 2019
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Give four merits of using a flowchart to record an accounting system.
Date posted:
February 21, 2019
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The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with:
i. Dating the auditor‘s report
ii. Audit procedures
iii. Events after the date of the audit report.
Required:
a) In the context of subsequent events, what is the significance of the data of the auditor‘s report?
b) Outline the audit procedures considered necessary between the balance sheet date and the date of the auditor‘s report.
c) Summarise the appropriate actions of the auditor regarding events after the date of the audit report.
Date posted:
February 21, 2019
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Specialists or experts are occasionally required by external auditors mainly in connection with the valuation assets and the determination of liabilities.
Required:
a) The necessity for reliance on specialist.
b) The extent to which the specialist should be independent?
c) Competence of the specialist.
Date posted:
February 21, 2019
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Most errors in computer based accounting systems can be traced to faulty input. Controls over the completeness and validity of all inputs are vital. Control over data conversions, controls over rejections and their correction and reprocessing, batch controls and computer edit controls affect both completeness and validity
Required:
a) Explain the controls that can be established over completeness of input.
b) What controls can be established over validity?
c) Programmed edit checks are probably the most familiar input controls and certainly the most effective. Give examples of these controls bringing out clearly:
i. The name of the edit control.
ii. Description of the control.
iii. The objective of the control.
Date posted:
February 21, 2019
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Your firm audits Clean Paints Ltd. and you are planning the audit of stock and work in progress for the year ended 31 December 2000. Clean Paints Ltd. determines the value of stock in its financial statements by the year -end stocktake. There is no perpetual Stock Inventory System though stock is counted quarterly for the purposes of management accounting
Stock and work in progress is held at the warehouse which is next to the company‘s factory.
Required:
a) State the areas that you will expect the client‘s stocktaking instructions to cover.
b) Describe the work you will perform and the matters you will record at the stock-take attendance.
Date posted:
February 21, 2019