Download International Standards on Auditing: Principles and Procedures and more Exams Business Taxation and Tax Management in PDF only on Docsity! AUDITING (MARKS 100) Module D (3 hours) Q.1 While carrying out the audit of a client you had found that direct confirmation from a major customer of the company had not been received. The management of the company has explained that due to a dispute which arose in the recent past, it is not advisable to pursue the customer as this would further aggravate the relationship. However, the management is willing to provide you copies of the statements received from the customer alongwith the reconciliation to verify the year end balance, which you may retain in your working papers as audit evidence. In the given scenario, explain the guiding principles provided by the International Standards on Auditing. (06) Q.2 The purpose of audit sampling is to draw conclusions about the entire population. The auditor adopts different methods to select a representative sample i.e. which has characteristics typical of the population. Briefly describe the principal methods of selecting the samples. (09) Q.3 Describe the criteria given in the International Standards on Auditing, to evaluate the reliability of audit evidence. (06) Q.4 List the audit procedures for the verification of fixed assets as appearing in the financial statements. Also give the related ‘audit assertion’ against each step. (12) Q.5 (a) An auditor is required to establish overall audit strategy as part of developing the audit plan. The overall audit strategy sets the scope, timing and direction of the audit, and guides the development of more detailed audit plan. Identify the matters, which should generally be considered in establishing the scope of audit engagement. (07) (b) The auditor performs risk assessment procedures to obtain an understanding of the entity and its environment, including its internal controls. Briefly discuss all such procedures. (09) Q.6 You are in-charge of a team engaged in the audit of a listed company. The engagement team is about to hold a meeting to discuss the susceptibility of the company’s financial statements to material misstatement due to fraud. One of your team members is perplexed about the auditor’s responsibility towards fraud. You are required to explain the following: (a) Auditor’s responsibilities for detecting material misstatements due to fraud; and (04) (b) The matters that would be considered in the above mentioned meeting. (08) docsity.com
