101-124

Question 1

Substantive procedures of NCA

Answer 1

1. Physical inspection
2. Trace NCA register to NCA for existence
3. Trace NCA to NCA register to ensure completeness
4. If newly purchased NCA, scrutinise purchase invoice. If material, check board minutes
5. If disposed, check cash receipts. If material check board minutes
6. Scrutinise repairs and maintenance
7. Reconciliation of balance of NCA register and general ledger balance and fs figures
8. Reperform calculations of depreciation
9. Inspect documents for title of ownership
10. Check disposals: NCA register adjusted, depreciation taken out, profit and loss koss recorded

Question 2

Revaluation substantive procedures

Answer 2

1. Where an asset has been revalued, IAS 16 followed
2. Agree revaluation amount
3. Confirm gain has been recorded in OCI and revaluation surplus
4. Recalculate depreciation expense, transfer excess depreciation from revaluation surplus to retained earnings
5. Obtain copy of valuers report and ensure reliability using
   Basis of valuation, experience, qualifications, reputation, independence objectivity
6. Appropriate disclosure according to ifrs
7. Reperform calculations
8. Compare valuation of other similar properties

Question 3

Function of Internal audit

Answer 3

1. Examine, evaluate, report to mngmt and directors about adequacy and effectiveness of IC
2. Helps achieve corporate objectives
3. Test IT controls
4. Value for money audit
5. Liases with external audit
6. Aids risk assessment

Question 4

Using work of internal audit

Answer 4

1. Objective
2. Competent
3. Applies sytematic and disciplined approach

Question 5

Management experts

Answer 5

Helps in preparation of financial statements
Use of mngmt expert
1. Check objectivity
2. Check competence
3. Appropriateness
4. Consistent with other data
5. Whether it is sufficiently reliable

Question 6

Auditors expert

Answer 6

To assist auditors in obtaining sufficient appropriate evidence
1. Assumptions made
2. Use of source data
3. Nature, timing of communication
4. Confidentiality
5. Nature, scope and objective of work
6. Responsibility

Question 7

Purpose of audit documentation

Answer 7

1. To ensure audit was done properly
2. For senior staff to review work of junior staff
3. To help auditor in future
4. To encourage high quality work

Question 8

Typical contents of working paper

Answer 8

1. Title
2. Date
3. Preparers name and sign
4. Reference to other schedules
5. Purpose of audit test
6. Detail of test done
7. Conclusion from work
8. Reviewers name and signature

Question 9

Quality management objective

Answer 9

To achieve reasonable assurance that
1. Audit has been conducted according to professional standards
2. Auditor opinion has been issued in appropriate circumstances

Question 10

Engagement partener is responsible for following components of quality management

Answer 10

1. Leadership
2. Relevant ethical requirement
3. Montioring and remediation
4. Acceptance and continuance
5. Enggemnt resources and engagement performance

Question 11

Areas requiring significant judgement are

Answer 11

1. Determination of materiality
2. Decisions in auditor report
   3, proposed audit opinion
3. Conclusions in significant areas like going concern
4. Response to significant risk

Question 12

Engagement quality review

Answer 12

Compulsory for listed company
1.review fs and proposed auditor opinion
2. Review selected documentation for significant judgements and conclusions
3. Use of appropriate consultation during difference of opinion
4. Firms independance
5. Discussion of significant matters with EP

Question 13

Fraud risk factors

Answer 13

1. Deficiencies in IC
2. Signifucant estimates
3. Easy to steal assets
4. Known history of breached
5. Pressures on management to meet financial targets

Question 14

Contingent liability and contingent assets

Answer 14

1. Contingent liabilities:
   If no outflow of resources but probable, then disclosure
   If outflow of resources
2. Probable: provision
3. Not probable: nothing
   Contingent assets
   If inflow of resources certain: asset
   If not probable, then disclosure

Question 15

4 kinds of opinion

Answer 15

2 diffiiculties
1. Mm
2. Not obtaining sufficient appropriate evidence
4 opinions
1. Unmodified opinion
None of the issues arose. Fs present fairly
2. Qualified opinion ( except for)
One or both issues but not pervasive. Fs present fairly except for
3. Adverse opinion: MM which is pervasive. Fs do not present fairly
4. Disclaimer of opinion: no sufficient appropriate evidence. Cannot form opinion

Question 16

Addition to auditors report

Answer 16

1. Material uncertainty related to going concern
2. Matter paragraph ( disclosure disclosed)
3. Other matter paragraph( disclosure not disclosed)
4. Other information paragraph (director report contradicting fs)