SECTION A NTEBOHISENG NKHECHE

1. D
2. A
3. C
4. C
5. C
7C
8. D
9A
10. A

SECTION B
1EXTERNAL AUDITORS
External auditors are bound to be independent from the client they are auditing
They are accountable to the shareholders of the company
Their audit work is done annually
They are not incurrent on the day to day running of the business
INTERNAL AUDITORS
They are accountable to the to the audit board
They are hired as the employees of the company
They are not independent to the company
Responsible for the implementations of internal control
b. It is the responsibility of the external auditor after auditing the final accounts to express an
opinion of whether they represent the true and fair value.
True state that the financial statements are prepared in accordance with the standards and law
Fair state the financial statements are free from error and are faithfully prepared
2 a)Deuce Car Hire Co has a large fleet of cars for hire and operates from twelve separate
depots
During the preparation of financial statements other branches may not bring their financial
statements for recording which may result in other information omitted
Final accounts will be materially misstated
ii) It offers hire services to corporate customers on payment by cash
Since cash is portable, it can be stolen by the employees or third parties
The final accounts will be materially misstated
iii) The company categorises income from sale of damage waiver insurance premiums and the g
hire of child seats and satellites navigation systems as car hire income
Since the company does not operate in selling but hiring its revenues is going to be overstated
resulting in overstated profit and overstated eguity
The financial statements will be materially misstated
B) When the audit team that prepared the financial statements are the ones to audit them
ii) When the work of preparing the accounts is the responsibility of one person and they are not
audited
When the person preparing financial statements is the one to audit them
3a) they should know the reason why the previous auditors moved/did not continue auditing
the client company
They should seek information about the client to the outgoing auditors
They should make the clearance procedures about the client
b) The information should be written as the document
It should be up to date
It should be relevant
AUDIT EVIDENCE
All information collected by the auditor to form a basis of audit conclusion on matters
significant to audit. It should be relevant and reliable as is the information that will help an
auditor to express an opinion on the financial statements
b) Written documents more than communicated
Information should be up to date rather than historical as it helps the auditor to express an
opinion on financial statements
c) i)it acts as the contract between the auditor and the client
it avoid any misunderstanding that may occur between the auditor and the client as the
information will be stated at the engagement letter
It can be used as an update because if there is something forgotten they can only refer to the
angagement letter
ii) the responsibility of the managers
The responsibility of the auditor
Audit fee
Any expert that will be needed
The standards followed in the preparation of financial statements
d)Standards or principles set by ACCA that all its members(students, accountants) are bound to
follow eg they should be integrity, objectivity, confidenciality,professional competence and due
care and professional behaviour.
e)Is the failure of procedures used by an auditor to detect the material misstatement in the
financial statements.