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Advanced Auditing

Mathematics Technology

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9 views3 pages

Advanced Auditing

Mathematics Technology

Uploaded by

y mugambi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MERU UNIVERSITY OF SCIENCE AND TECHNOLOGY

P.O. Box 972-60200 – Meru-Kenya.


Tel: +254 (0)799529958, +254 (0)799529959, +254 (0)712524293
Website: www.must.ac.ke Email: [email protected]

University Examinations 2017/2018

FOURTH YEAR,FIRST SEMESTER EXAMINATION FOR THE DEGREE OF BACHELOR OF


COMMERCE

BFC 3427 : ADVANCED AUDITING

DATE: SEPTEMBER 2018 TIME: 2 HOURS

INSTRUCTIONS: Answer question one and any other three questions

QUESTION ONE (30 MARKS)

a) Highlight the challenges of linking IT Audit to financial Audit process. (5 Marks)


b) There is a perception by the public that a clean audit opinion guarantees good financial
health. This perception creates an expectation gap, i.e the difference between the purpose of
an audit under the International Standards on Auditing (ISAs) and what the public
understands as the auditor’s role. Discuss the role of the auditor and the public expectation.
(7 Marks)

c) (i) Explain the objectives of “The Risk Mangement Process” (3 Marks)


(ii) Describe the stages involved in a risk management process. (5 Marks)
d) Explain the main objectives of brainstorming by the auditors, before, during and after audit.
(3 Marks)
e) Employee fraud is a significant problem faced by government and organizations of all types,
sizes, locations and industries. In the context of this statement discuss the ways in which
organizations can detect and control fraud. (7 Marks)

Meru University of Science & Technology is ISO 9001:2015 Certified


Foundation of Innovations Page 1
QUESTION TWO (20 MARKS)

a) Distinguish between audit risk and sampling risk. ( 6Marks)


b) What should the auditor consider before relying on the work of an expert? (6 Marks)
c) Describe three areas where judgement will be exercised by the auditor when using statistical
sampling. (8 Marks)

QUESTION THREE (20 MARKS)

Briefly explain the following schemes through which procurement or contracting frauds have been
perpetrated, showing how each of them can be prevented and detected.

(i) Pre- Award fraud (5 Marks)


(ii) Unbalanced bidding (5 Marks)
(iii) Co-mingling of contracts (5 Marks)
(iv) Contract – Slippage (5 Marks)

QUESTION FOUR (20 MARKS)

a) Explain what is the distinction between accounting and auditing. (5 Marks)


b) Explain the importance of the concept of professional independence to the auditor.(5 Marks)
c) List and briefly explain five control objectives that an internal control system over sales aims
to achieve. (5 Marks)
d) The auditor’s operational standards states “The auditor should obtain relevant and reliable
audit evidence sufficient to enable him draw reasonable conclusions thereon” what factors
would influence the auditor to accept third party certificates as audit evidence? (5 Marks)

QUESTION FIVE (20 MARKS)

a) Gitoro Company has a number of long and short –term payables, accruals and provisions in
its balance sheet.

Required:
Describe the audit procedures you would apply to a 10 year bank loan with a variable interest
rate and a bank overdraft, both from the same bank, including those procedures related to
disclosure. (5 Marks)

Meru University of Science & Technology is ISO 9001:2015 Certified


Foundation of Innovations Page 2
b) Outline the basic elements of an unqualified audit report. (5 Marks)
c) The auditor for Meru Company wants to form an opinion on the going concern status of the
company. Describe the audit procedures necessary in order to obtain sufficient audit evidence
for that purpose. (5 Marks)
d) Cyprian Company Ltd has been the auditor for Nchiru Company Ltd for many years. It has
been discovered that for the past few years the managing director has overvalued stock
consistently . What are the possible defenses for the auditor, should a liability claim arise?
(5 Marks)

Meru University of Science & Technology is ISO 9001:2015 Certified


Foundation of Innovations Page 3

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