UNIVERSITY OF BOTSWANA, FACULTY OF BUSINESS

DEPARTMENT OF ACCOUNTING AND FINANCE

SECOND TEST
Course Code: ACC 309 Duration: 1 HOURS Date: 23 November,
2021
Title of paper: Principles of Auditing
Subject: Accounting Title of Examination: BACC, BASS, BFIN, B.Sc
(Computing and Finance)

SUGGESTED SOLUTIONS

Solution to Question One

No A B C D No A B C D
1 X 13 X
2 X 14 X
3 X 15 X
4 X 16 X
5 X 17 X
6 X 18 X
7 X 19 X
8 X 20 X
9 X 21 X
10 X 22 X
11 X 23 X
12 X 24 X

Solution to Question Two

(a) Specific purpose of audit documentation:

(i) A basis for planning the audit: to plan the audit adequately
the auditor refers to information in the files of previous audit.
(ii) A record of the evidence accumulated and the results of
the tests: working papers may provide evidence that the audit
was well planned and adequately supervised; the evidence
accumulated was appropriate and sufficient; and the audit
report was proper, considering the results of the audit.
(iii) Data for providing the proper type of audit report: audit
documentation provides an important source of information to
assist the auditor in deciding whether appropriate sufficient
evidence was accumulated to justify the audit report in each
set of circumstances.
 (iv) A basis for review by supervisors and partners: the audit
files are the primary frame of reference used by supervisory
personnel to review the work of assistants. [4x 2 = 8]

(b) The key consideration in preparing audit documentation is that the

documentation should be prepared in sufficient details to provide an
experienced auditor with no connection to the audit a clear
understanding of the work performed, the evidence obtained and its
source, and the conclusion reached. [3]
(c) Audit documentation is broadly organised in two major files namely
permanent files and current files. Permanent Files contain data of a
historical or continuing nature pertinent to the current audit. For example,
copies of the articles of incorporation, bylaws, bond indentures, contracts,
Analyses previous years of accounts such as long-term debt, shareholders’
equity accounts, goodwill, and fixed assets. Current Files include all audit
documentation applicable to the year under audit. For example, audit
programs, Audit planning memos, abstract or copies of minutes of the
board. [5]