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Study Notes Audit

The document discusses various audit procedures and controls related to external auditors' use of internal auditors, IT controls, and statutory requirements regarding auditor appointment and reappointment under the Companies Act of 2017. Specifically, it addresses: 1) The procedure for a company's board to recommend reappointing an existing auditor and the process a shareholder should follow if wanting to appoint a different auditor. 2) Situations where the Commission may appoint an auditor to fill a vacancy. 3) Comments on whether an auditor's outstanding credit card balance with an audit client creates an independence issue. 4) Types of internal audit assistance an external auditor can utilize and documentation requirements. 5) IT general and

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37 views

Study Notes Audit

The document discusses various audit procedures and controls related to external auditors' use of internal auditors, IT controls, and statutory requirements regarding auditor appointment and reappointment under the Companies Act of 2017. Specifically, it addresses: 1) The procedure for a company's board to recommend reappointing an existing auditor and the process a shareholder should follow if wanting to appoint a different auditor. 2) Situations where the Commission may appoint an auditor to fill a vacancy. 3) Comments on whether an auditor's outstanding credit card balance with an audit client creates an independence issue. 4) Types of internal audit assistance an external auditor can utilize and documentation requirements. 5) IT general and

Uploaded by

Kidz ki Duniya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Statutory Portion

Spring 2019 Q.4

(a) Under the Companies Act, 2017, state the procedure to be followed if the board of
directors decides to recommend the reappointment of existing auditor for the next
year. (02)
(b) The board of directors of Alpha Limited intends to re-appoint the existing auditor for
the next year. However, Javed, a shareholder of the company, wants to appoint a
different auditor.
Required:
Briefly explain the procedure that Javed should follow. Also state the responsibilities
of the board in this regard.
Autumn 2018 Q8 (b)
Under the Companies Act, 2017 identify the situations in which the Commission may appoint a
person to fill the vacancy of an auditor. (03)

Spring 2018 Q.1 (a)


On 5 March 2018, HSB & Company, Chartered Accountants (HSB) has been offered
appointment as external auditor of Tahir Limited (TL) for the year ending
31 December 2018. TL is the subsidiary of Crypto Bank Limited (CBL), which is
audited by another firm of chartered accountants.
Hatim, a partner of HSB is using credit card of CBL and the balance outstanding
against it on 28 February 2018 was Rs. 1.1 million. Hatim plans to clear the dues by
30 July 2018, which is well before the commencement of audit. It is expected that the
audit planning activities will commence from 1 November 2018.
Required:
Comment on the above situation in the light of Companies Act, 2017. (04)

Use of work of Internal Audit


Spring 2019 Q7 b
State the matters to be documented by the external auditor if he uses the internal
auditor for providing direct assistance on the audit. (04)

Spring 2018 Q.3

Faheem is the audit manager on audit of Blue Bell Limited (BBL) for the year ending
31 March 2018, which is in the planning stage. BBL has a well-established internal audit
function which reports directly to the audit committee. The staff of the internal audit
department have adequate level of competence and are members of professional accounting
bodies.
Considering the above, Faheem intends to engage internal auditors to perform audit
procedures for certain audit areas.
Required:
On behalf of the engagement partner, provide appropriate guidance to Faheem to assist him
in selecting the areas where direct assistance of internal auditors can be utilized. (06)

IT Controls
Autumn 2019 Q2 b

Mention any four general controls over development of new computer information
systems and applications. (04)

Autumn 2019 Q9

Plover Limited has recently developed an integrated system for maintaining its financial
records. During testing, following input and processing errors were identified in the system:
Input errors
(i) A non-existent product number was mentioned on the online order form.
(ii) Inward movement of inventory was recorded in some other inventory account.
Processing errors
(i) In the payroll system, all employees of a department were processed at the rate of
Rs. 100 per hour instead of approved rate of Rs. 80 per hour.
(ii) Salaries of few employees were processed twice.
Required:
Identify and briefly describe one application control in respect of each of the above type of
errors, that would have been effective in either preventing or detecting the error. (08)

Spring 2019

Q.9 (a) Chand Travels (CT) is a tour operator, which provides airline ticket bookings, hotels
reservations and customized tour packages. CT has recently implemented a software
for maintaining its financial records.
Required:
What do you understand by logical access controls? Briefly describe four logical access
controls that CT should employ. (07)
(b) Describe four controls which CT may employ to reduce the possibility of disruption of
operations. (04)
Autumn 2018
Q.7 (a) Briefly describe what is a system log file and give any four types of information that
may be generated by a system log. (03)
(b) Differentiate between General IT controls and Application controls. (04)
(c) Advanced Limited (AL) uses an in-house developed integrated system for all its
accounting and operational needs. AL has been facing following issues in transaction
processing:
(i) While processing a batch of 50 purchase invoices, it was noticed that 3 invoices
of suppliers were posted twice in the accounts.
(ii) Some instances have been identified in which AL’s accountant had posted the
amount received from the customers in some other customer’s account due to a
typing error of the customer code.
(iii) While processing the payments, the accountant often fails to mention the cheque

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