International Partners
Faculty
Business
Department
Course Code
ACCO 1152
Course Title
Level
Duration
TWO HOURS
Date
April/May 2015
Course co-ordinator:
J. E. Spencer-Wood
INSTRUCTIONS TO CANDIDATES
SECTION A: Compulsory question (this carries 10 marks).
SECTION B: Answer THREE of the four questions (each question carries 30
marks).
April/May 2015
Course Title Audit and Assurance Exam 1
Course Code ACCO 1152
Page 1 of 4
APPROVED
SECTION A - Compulsory
Question One
Outline and discuss the threats to an auditors independence giving an example
of each.
Total 10 marks
April/May 2015
Course Title Audit and Assurance Exam 1
Course Code ACCO 1152
Page 2 of 4
APPROVED
SECTION B Answer THREE of the following four questions only
Question Two
An auditors opinion is based upon sufficient appropriate audit evidence.
(a) Analytical procedures have been described as evaluations of financial
information through analysis of plausible relationships among both financial and
non-financial data - ISA/HKSA 520(4)
When undertaking an audit analytical procedures are used, inter alia, at the risk
assessment and planning stages.
How does the auditor employ analytical procedures at the two stages
mentioned above?
(10 marks)
(b) Audit evidence is needed in respect of the truth and fairness of financial
statement assertions.
List and explain five financial statement assertions.
(20 marks)
Total 30 marks
Question Three
You are the accountant at GEM plc and must make a presentation to the marketing
executives in order to give them a clear understanding of the basics and importance of
internal control systems within the company. You intend to cover the key aspects on
PowerPoint slides supported with a more detailed handout.
Required:
Prepare the detailed handouts. They should be bullet-pointed and cover the
following.
(1)
(2)
(3)
(4)
(5)
April/May 2015
Course Title Audit and Assurance Exam 1
Course Code ACCO 1152
Page 3 of 4
APPROVED
Question Four
Audit documentation is defined as the record of audit procedures performed, relevant
audit evidence obtained, and conclusions the auditor reached (terms such as working
papers or workpapers are also sometimes used).
ISA (UK and Ireland) 230
Required:
(a) Describe and discuss the objectives of maintaining working papers?
(16 marks)
(b) Give five examples of documents to be found in the Permanent File (of the
working papers). Outline the reasons why each of the documents you
mention is kept by the auditor.
(10 marks)
(c) Give two examples of documents to be found in the Current File (of the
working papers). Outline the reasons why each of the documents you
mention is kept by the auditor.
(4 marks)
Total 30 marks
Question Five
(a) Explain and define materiality in terms of financial statement preparation
(i.e. accounting materiality)
(5 marks)
(b) Define audit performance materiality and compare it to accounting
materiality.
(6 marks)
(c) State the stages during the audit process when audit performance
materiality is reviewed and discuss the reasons for each of these reviews.
(10 marks)
(d) Give three examples of qualitative materiality and discuss why they are
important to the statutory auditor.
(9 marks)
Total 30 marks
April/May 2015
Course Title Audit and Assurance Exam 1
Course Code ACCO 1152
Page 4 of 4