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Group 1

The document outlines an assignment for an auditing course, focusing on the audit planning for a charity named 'Maji!' and the internal audit department of a company called Zerox. It details the charity's income sources, risks for the upcoming audit, and required audit procedures and controls over cash. Additionally, it addresses the role of the internal audit department in corporate governance and the implications of having an audit committee for Zerox.

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19 views3 pages

Group 1

The document outlines an assignment for an auditing course, focusing on the audit planning for a charity named 'Maji!' and the internal audit department of a company called Zerox. It details the charity's income sources, risks for the upcoming audit, and required audit procedures and controls over cash. Additionally, it addresses the role of the internal audit department in corporate governance and the implications of having an audit committee for Zerox.

Uploaded by

omondiv394
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 PDF, TXT or read online on Scribd
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GROUP ONE (1) ASSIGNMENT

CAC 321- INTRODUCTION TO AUDITING


28TH FEBRUARY 2024

GROUP 1 – QUESTION ONE

You are an audit assistant in the firm Harry and Sally. You have been asked to
plan the audit of 'Maji!' for the year ended 30 June 20X4. It is the first time your
audit firm has audited the charity, which has not been audited previously. The
trustees have expressed interest in receiving a 'value added' audit and are
particularly interested in business advice, especially in the area of systems
controls.

' Maji!' is a registered charity that raises money for projects building wells in
Africa through musical entertainment. The group consists of volunteers who travel
around the country, putting on variety shows of music and dance, the proceeds of
which are put towards building the wells. The main show is a tap dance
production, acting out the difficulties many people face when they are not near a
clean water supply.

The administrative offices of ' Maji!' are located in a large provincial town. It
owns a house, donated by legacy in the past, where the administration is carried
out and where the volunteers stay during off periods.

A large proportion of ' Maji!'s income comes from box office receipts which are
taken by the theatre at which they are performing. The theatres usually waive their
standard terms for use of the premises and merely take a 10% commission on
ticket receipts to cover light and heat and other such expenses. Income usually
comes in after every booking in the form of a lump sum cheque from the theatre,
together with a break down of takings and commission.

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' Maji!' also receives donations towards the work. These come from a variety of
sources:

Cash donations from buckets passed around at the interval of each performance

Cash donations on the (rare) occasion that the team does street performances

Cash donations made over the phone or by post by interested donors

The troupe consists largely of volunteers so they are only paid expenses
for their work. The cost of housing the group while they are on the road
is borne by the charity. The charity employs an administrator who
organises bookings, handles publicity and co-ordinates all the finances.

Required
(a)Discuss the risks arising for the audit of the year ending 30 June 20X4.
(8 marks)
b) State the audit procedures you would undertake in respect of cash income in the
financial statements. (6 marks)
c) List some controls over cash which the charity should implement. ( 6 Marks)

GROUP 1- QUESTION TWO


a) You are a recently qualified Chartered Certified Accountant in charge of the internal audit
department of Zerox , a rapidly expanding company. Turnover has increased by about 20% p.a.
for the last five years, to the current level of Kshs50 million. Net profits are also high, with an
acceptable return being provided for the four shareholders. The internal audit department was
established last year to assist the board of directors in their control of the company and to
prepare for a possible listing on the stock exchange. The Managing Director is keen to follow the
principles of good corporate governance with respect to internal audit. However, he is also aware

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that the other board members do not have complete knowledge of corporate governance or detailed
knowledge of International Auditing Standards.

Required:
a) Explains how the internal audit department can assist the board of directors
in fulfilling their obligations under the principles of good corporate
governance. (5 Marks)

b) Explains the advantages and disadvantages to Zerox of an audit committee.

( 5 Marks)

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