430 —— (18 marks 22 minutes) The auditor has a number of different “tools” opinion. These “tools” are actually procedures YOU ARE REQUIRED TO: to obtain the evidence required to express an which are carried out by the audit team. (a) explain the term “risk assessment procedures” in the context of auditing. (2) (b) explain the term “further audit procedures”. (2) (c) briefly describe the seven types of audit procedure for obtaining audit evidence. (7) (d) explain the difference between tests of controls and substantive procedures. (3) ibed in (c) above will be suitable for use ether the procedures describe : ° hon the on is assessing the risk of material misstatement. (2) when mm: the following: “the most effective test of controls is observation, because ent on 4 tive : ° the auditor himself is making the observation”. (2)4.6 (30 marks 36 minutes) To gather erties which is required pertaining to the assertions, the auditor conducts procedures which have been developed and refined to meet the audit objective. The various procedures which will be conducted by the auditor will be mixed but balanced - no single procedure will supply all the evidence needed. The procedures can be categorised as follows: 1, Inspection 5. Analytical Procedures 2. Observation 6. Reperformance 3. Inquiry 7. External confirmation 4. Recalculation YOU ARE REQUIRED TO: a) explain each of the above procedures. ”) b) indicate whether each procedure can be applied as a substantive test, or a test of controls or both. (4) c) give one example for each category of test (1 to 7 above). Your example can be a substantive test or a test of controls. qd d) state whether the above procedures can be used by the auditor when identifying and assessing the risk of material misstatement. Explain. (3) e) identify six parties, other than the client’s directors and employees, from whom the auditor may obtain audit evidence and give an example of what that evidence may be. (9)1 _ (20 marks 24 minutes) auitor obtain evidence sufficient to be able to draw conclusions which in tum support oe uit opinion. Audit evidence is obtained by applying auditing Procedures, and these may re pled to an entire set of data, usually referred to as the population, of to part of me peulation by selecting a sample from that population. YOU ARE REQUIRED TO answer the following questions tegarding audit sampling. 1, What is audit sampling? Q) 2, Where an auditor applies procedures to less than 100% of a population, what are the items to which the auditing procedures are applied collectively known as? oy 3. Whyis it important that the sample be representative of the population? (2) 4, What is sampling risk? (2) 5. Reduce all steps in an audit sampling exercise to 4 broad stages, Q) 6. What are the 5 factors to consider when planning an audit sample? (2) 7. Atthe outset of a sampling exercise, what should the auditor determine regarding the Population? (2) § What are sampling units? Give 3 examples of sampling units in relation to accounts Teceivable. Q) %. List four parameters which must be determined when setting the sample size for a Statistical sample? (2) 10, What is stratification? Give 2 examples of how accounts payable may be stratified. (3)