CONFIDENTIAL OCTOBER2019/ASSIGNMENT/AUD402

INDIVIDUAL ASSIGNMENT

COURSE : AUDIT AND ASSURANCE SERVICES

COURSE CODE : AUD402

DURATION : 1 WEEK

INSTRUCTIONS TO CANDIDATES :

1. This question paper consists of THREE (3) questions

2. Answer ALL questions.

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CONFIDENTIAL OCTOBER2019/ASSIGNMENT/AUD402

QUESTION 1

ISA 230 Audit Documentation requires the auditor to meet requirements of specific
documentation and provides evidence as a basis for a conclusion about the achievement of
the overall audit objectives.

Required:

A. Discuss FOUR (4) purposes of audit working papers.

(4 marks)

B. Describe the reason for re-performance and observation when it is considered as the
least expensive types of evidence.
(6 marks)

(Total: 10 marks)

QUESTION 2

Selasih Berhad has appointed your company, S&A Associates as their auditor. You are the
senior in-charge of the accounts receivable and sales receipts accounts.

Required:

A. Briefly explain TWO (2) advantages of using an internal control questionnaire in

documenting the auditor’s understanding of the internal control system

(2 marks)

B. Identify FOUR (4) tests of control procedures that will be carried out on the accounts
receivable and receipts to determine whether the internal controls are weak and not
effective.
(8 marks)

C. Identify FOUR (4) internal controls policies that the auditor expects the management
of Selasih Berhad would implement to reduce error and fraud. For each internal
control policies, discuss the consequences if each of the internal controls identified
are not present.

Note: Use the following format to present your answer to part (C)

No Expected internal controls Consequences if internal controls is not present

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(10 marks)

(Total: 20 marks)

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QUESTION 3

ISA 500 Audit Evidence requires the auditor to obtain sufficient appropriate audit evidence to
be able to draw reasonable conclusions that will be shown in the auditor’s report.

Required:

A. Identify the type of audit evidence on the given audit procedures.

Audit procedures Type of audit evidence

i. Compare the net profit margin for the prior
year with the current year
ii. Perform test count of the inventory / stocks
during stock take.
iii. Observe client’s warehouse personnel
carried out the stock taking procedures.
iv. Obtain letter from the client’s creditor
indicates the amount stated in the client’s
financial statement is the same with their
records.

(4 marks)

B. Briefly explain TWO (2) characteristics that determine the reliability of audit evidence.

(4 marks)

C. i. Cik Rosnah is a new auditor that joints your audit firm recently. As one of the
partner in the firm, you are required to advise Cik Rosnah by providing TWO
(2) examples of audit procedures on each of the following situation given
below:

a. Ownership of land
b. Valuation of Account receivables
c. Physical existence of inventory
d. Recorded value of entries in the purchase journal
(8 marks)

ii. Discuss the types of confirmation letters that are frequently issued by auditors
to the third parties.
(4 marks)

(Total: 20 marks)