KASNEB Audit & Assurance - Question 2b

Describe five motives for fraudulent financial reporting by the management of an entity.... [Click to view full question and step-by-step solution]

KASNEB Audit & Assurance - Question 2d

Evaluate three approaches used in performance auditing in the Public Sector.... [Click to view full question and step-by-step solution]

KASNEB Audit & Assurance - Question 3a

Distinguish between 'tests of control' and 'substantive tests',... [Click to view full question and step-by-step solution]

November 2020

1a

Audit evidence

International Standard on Auditing (ISA) 505 - External confirmations, considers a number of different types of external confirmations including accounts receivable confirmations.

Required:

(i). Distinguish between a "positive confirmation" and a "negative confirmation".

(ii). Evaluate four circumstances, other than the confirmation of accounts receivable, where external confirmations might be used by the auditor to obtain audit evidence.

1b

Audit planning

International Standard on Auditing (ISA) 315 - Identifying and assessing the risks of material misstatement through understanding the entity and its environment, sets out matters that should be documented during the planning stage of an audit.

Required:

Highlight six matters that should be documented when developing an audit plan.

1c

Audit evidence

International Standard on Auditing (ISA) 230 - Audit Documentation, provides guidance to auditors in respect of audit working papers.

Required:

Summaries six factors which could affect the form and content of audit working papers.

2a

Planning and Risk Assessment

An overall audit strategy guides the auditor in developing an audit plan.

Required:

Examine four matters that might be taken into consideration by an auditor when developing the overall audit strategy.

2b

Errors, Frauds and Irregularities

Describe five motives for fraudulent financial reporting by the management of an entity.

2c

Contemporary and emerging issues in audit

Other than in fraud detection, suggest four other areas where forensic accounting and auditing might be applied.

2d

Auditing in the public sector

Evaluate three approaches used in performance auditing in the Public Sector.

3a

Audit evidence

Distinguish between 'tests of control" and "substantive tests",

3b

Audit evidence

Any work delegated to audit assistants should be directed, supervised and reviewed in a manner which provides reasonable assurance that such work is performed competently.

Required:

Examine four matters that might be taken into consideration when reviewing the work performed by audit assistants in an audit engagement.

3c

Auditing in a computerised system

Your audit firm is currently engaged in the audit of Zed Ltd. for the financial year ending 30 November 2020. You are considering whether to perform certain tests manually or with the assistance of computer assisted audit techniques (CAATS).

Required:

Discuss three factors that could influence your decision on whether to perform the tests manually or with CAATs.

4a

Nature and purpose of an audit

Your friend James Nyakemincha has recently purchased some shares from ABC Ltd., a listed company at the Securities Exchange. You questioned him on whether he had investigated the company before purchasing the shares. He replied: "Not really, I chose ABC Ltd.'s shares because I read in the newspaper that ABC is externally audited, of which not all companies are, and that their auditors are an international auditing firm hence it must be a good investment".

Required:

Citing five reasons, justify why you would agree or disagree with James' view with regard to his purchase of shares.

4b

Legal and professional framework

Discuss five mechanisms that the management of an audit firm could use to ensure compliance with the professional code of ethics by members of staff.

5a

Auditors Reports

In terms of International Standard on Auditing (ISA) 700 - Forming an opinion and reporting on financial statements; in evaluating whether the financial statements are presented fairly in the context of the financial reporting framework, the auditor should evaluate important aspects of the financial statements.

Required:

Identify five aspects of the financial statements which the auditor should evaluate.

5b

Audit evidence

Describe five audit assertions you would test in the conduct of an audit of office furniture and equipment.

5c

Errors, Frauds and Irregularities

Explain five reasons why directors might decide not to correct a material misstatement in the financial statements.

November 2020

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