Name________________________

Id. No_______________________
P.O.Box______________________
City (Town)___________________
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UNITY UNIVERSITY COLLEGE

SCHOOL OF DISTANCE AND CONTINUING EDUCATION

Worksheet for Auditing I (Acct 411)

This is a test paper you are expected to do on your own. It carries 15 points. The test
paper should be completed and mailed to the School of Distance and Continuing
Education for evaluation. Do not try to complete the worksheet until you have covered
all the lessons and exercises in the course material.

Any questions in the course that you have not been able to understand should be stated
on a separate sheet of paper and attached to this worksheet. Your tutor will clarify them
for you.

After completing this test paper, be certain to write your Name, Id.No and Address on
the first page. Your Name and Id.No on the other pages.
Part I: Write "True" if the statement is correct and "False" is the statement is incorrect in
the space provided. (0.5 Marks Each)

_________ 1. If the accounting and internal control system of an organization are strong, the
extent of substantive procedures may be reduced and even eliminated.
_________ 2. An internal control system can provide only reasonable assurance that the
managements objective in establishing the system are achieved.
_________ 3. The establishment and maintenance of internal control is an important
responsibility of the internal auditor.
_________ 4. Operational Auditing can be done by examination of the variance arised from
comparison of actual with budget.
_________ 5. Examination of transactions with reference to laws and regulations, as well as
statutory law of the country can be considered as financial audit.

Part II. Multiple Choices

Choose the best answer by placing the identifying the letter on the space provided. (1 Mark
Each)
______ 1. Which of the following statement describe internal control of purchases.
A. Purchases are properly initated and authorized
B. All shipments are received only for authorized purchases and orders
C. All invoices should be checked
D. Reconciliation should be made between book and physical inventory
E. All of the above
______ 2. Which of the following is the activity of the internal auditor.
A. Verifying the correctness, accuracy and authorization of the transactions
B. Giving an independent opinion on the financial statements of the organization.
C. Facilitate the early detection and prevention of fraud
D. To assist management in achieving the most efficient operation
______ 3. Which of the following is not internal control weakness of cash?
A. Withholding of cash received. C. Lapping
B. Purchase advance D. Window dressing
E. writing off bad debts when actually customers' remittance is received.

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______ 4. The clients system of internal control must be sufficient to provide reasonable
assurance that:
A. transactions are properly valued C. existing transactions are recorded
B. transactions are properly authorized D. recorded transactions are valid
E. all of the above F. B and D only
______ 5. What is the external auditors primary conduct of study and evaluation of the existing
system of internal control?
A. To determine the nature, timing and extent of substantive testing
B. To find out whether the management is effective or not.
C. To detect frauds and errors
D. To give an independent opinion on the financial statements of the client
E. To issue a letter of weakness in internal control to the management
______ 6. One means of achieving internal control is an appropriate sub division of duties.
Which of the following is not consistent with this principle?
A. To the extent practical, employees should be rotated periodically to different job
assignments.
B. Employees with custody of assets should maintain the accounting records relating
to those assets.
C. No one employee should handle all aspects of a transaction.
D. Each employees area of responsibility should be carefully defined.
E. None of the above
______ 7. Which of the following is not financial statement assertion. (Audit objectives).
A. Timeliness C. Completeness E. Occurrence
B. Existence D. Valuation F. None of the above
______ 8. Who are the users of audited financial statements.
A. Academic and financial institutions
B. Management
C. Suppliers, customers, creditors, and investors
D. Employees and labor unions
E. All of the above

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______ 9. If inadequate sales returns and allowances are approved by the manager of sales
department, this control is used to assertion. (Verify)
A. Existence or occurrence
B. Completeness
C. Rights and obligations
D. Valuation
E. None of the above

10. The following eight functions are to be performed by three clerical

employees of a client (organization). You are requested to assign the listed functions to
three employees in a manner to achieve the highest degree of internal control. (3 Mark)

A. Maintain the General Ledger

B. Maintain the Accounts Receivable Ledger
C. Maintain the Accounts Payable Ledger
D. Prepare Checks for Signature
E. Maintain the Cash Disbursement Records
F. Issue credits for returns and allowance
G. Reconcile bank account
H. Handle and deposit cash receipts