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The Institute of Chartered Accountants of PakistanModular Foundation Examinations Autumn 2001September 07, 2001AUDITING (MARKS 100)Module ‘D’ & SM ‘9’ (Paper – D 11) (3 hours)
Q.1 (a) You have been approached by a leasing company for appointment as its first auditor.List down five “client screening procedures” which you will perform before making adecision regarding acceptance of the audit.
(05)
 (b) You have been appointed as auditor of a listed company. Draft a letter which you willsend to the retiring auditors seeking their professional clearance.
(05)
 Q.2 Engagement letters are sent by the auditors to their clients describing essentiallythe following matters:(a) scope of audit(b) fraud and irregularities(c) accounting, taxation and other services(d) feesDraft an engagement letter covering all of the above points.
(10)
 Q.3(a) What is the primary objective of an audit?
(04)
 (b) Explain the term “reasonable assurance” in the context of audit opinion.
(04)
 Q.4 You have been assigned to review the payment system of an enterprise. The FinanceDirector suspects that some duplicate payments may have been made. List five controlprocedures which you would expect to find.
(05)
 Q.5 Discuss briefly the considerations that you would take into account in developingthe overall audit plan for an audit engagement.
(05)
 Q.6 You have been asked by your senior to observe the stock count at one of the auditclients:(a) What procedures would you perform prior to the physical count to ensure asmooth stock count?
(04)
 (b) During the stock count, how would you ensure that the physical inventorylisting provided to you is complete?
(04)
 (c) How would you ensure proper cut off for purchases and sales?
(04)
 Q.7(a) Differentiate between tests of controls and substantive procedures.
(04)
(b) What tests of controls would you perform while carrying out a review of the payrollsystem of a company?
(04)
 
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