TUESDAY: 2 August 2022. Afternoon paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.
QUESTION ONE
1. Explain three factors that have contributed to the growth of internal audit function in modern organisations. (6 marks)
2. Mazao Enterprises Ltd. manufactures and sells horticultural pesticides. The management has requested your firm to carry out an assessment of its internal control systems.
Required:
Describe five factors you would consider when determining the adequacy of the internal control system of the company. (10 marks)
3. During an audit planning exercise, you have been assigned a role of an engagement partner.
Required:
In reviewing of the audit work performed by the audit team, propose four matters you would focus on. (4 marks)
(Total: 20 marks)
QUESTION TWO
1. Describe the five matters that need to be disclosed in the auditor’s report as per the requirements of the Company’s Act. (5 marks)
2. Highlight six factors to consider when assessing the reliability of internal control system in a computerised information system. (6 marks)
3. Sweetpools Ltd. is in the process of automating its internal audit function. The company intends to install a Generalised Audit Software (GAS) from a local software firm.
Required:
Identify four functionalities that would be supported by the Generalised Audit Software (GAS) in the internal audit function of the company. (4 marks)
4. During a directors meeting of ABC Ltd., it was resolved that the Internal Audit department adopts the Risk Audit Model in subsequent audit assignments.
Required:
Explain the term “Risk Audit Model” as used in internal auditing. (1 mark)
Highlight four advantages of adopting a Risk Audit Model in internal auditing. (4 marks)
(Total: 20 marks)
QUESTION THREE
1. In relation to auditor’s report, describe three contents of each of the following components of the auditor’s report:
Auditor’s opinion. (3 marks)
Basis for opinion. (3 marks)
2. Explain the following terms in relation to Computer Assisted Audit Techniques (CAATs):
Embedded Audit Module. (2 marks)
Integrated Test Facility. (2 marks)
Program Code Analysis. (2 marks)
3. Propose two circumstances that may result to fraudulent financial reporting. (4 marks)
4. List four benefits that accrue to an organisation as a result of being audited. (4 marks)
(Total: 20 marks)
QUESTION FOUR
1. You have been appointed by your audit team leader to undertake a verification of property, plant and equipment as indicated in the clients statement of financial position.
Required:
Suggest four methods of assets valuation you would deploy to ascertain the accuracy of the value of the property, plant and equipment indicated in the statement of financial position. (8 marks)
2. With reference to gathering audit evidence, distinguish between “positive confirmation” and “negative confirmation”. (4 marks)
Your firm has recently recruited a team of new auditors directly from tertiary institutions under Graduate Trainee program.
As part of induction, you are required to train them on reliability of audit evidence and audit procedures of gathering audit evidence.
Required:
Describe to the new team four audit procedures that can be deployed in gathering audit evidence. (8 marks)
(Total: 20 marks)
QUESTION FIVE
1. Explain three provisions of the Companies Act in relation to appointment of auditors. (6 marks)
2. Summarise three similarities between “internal audit” and “external audit”. (6 marks)
3. In the course of an audit assignment, an auditor might come across certain errors and frauds.
With reference to the above statement:
Highlight four such types of errors. (4 marks)
Enumerate four types of frauds. (4 marks)
(Total: 20 marks)
