AUDITING ASSIGNMENT - 5

Important Note:

Please do not cheat yourself by directly copying the answers from elsewhere, because the
marking is simply NOT simply on just giving the Correct answers, instead the marks will only be
given if there is an Evidence that you have tried to think, research, paraphrase and write the
answers in your own words, along with relevant Examples, wherever possible, Good Luck!

Question-1: Explain the components of audit risk and, for each component, state example of
two factors which can result in increased audit risk.

Question-2: State the purpose of an engagement letter.

Question-3: In agreeing the terms of an audit engagement, the auditor is required to agree the
basis on which the audit is to be carried out. This involves establishing whether the Preconditions
for an audit are present and confirming that there is a common understanding between the
auditor and management of the terms of the engagement. Describe the process the auditor
should undertake to assess whether the PRECONDITIONS for an audit are present.

Question-4: Explain what an 'audit plan' is and give examples of items that would ordinarily be
included in the audit plan.

Question-5: Auditors are required to document their understanding of the client’s internal
controls. There are various options available for recording the internal control system. Of these
options are narrative notes, flowcharts and internal control questionnaires. Describe few
advantages and disadvantages to the auditor of narrative notes, flowcharts and internal control
questionnaires as methods for documenting the system.

Submission due date and procedure:

-The due date for submission is: Tuesday morning i.e. 8TH October, 10:00 AM.
-The assignment must be Hand-written.
-Before submission please Critically Reflect on your work.
-To submit your assignment on the LMS, simply scan / take a picture of your assignment and
upload it on the given LMS tab. Also IA. bring its Hard Copy in the upcoming class.
-Please Note that Late submissions and any submission via e-mail will NOT be entertained and
will be scored as 0.
Good Luck!