KNEC| KASNEB| KISM| Study notes and Revision materials for schools in Kenya. KNEC certificate courses, Diplomas, Higher Diplomas, KISM courses cpsp-k and aps-k, KASNEB cpa, atd, cs, cifa, ccp, dcm, cict and cict, Ksce and Kcpe
Valuation of Stock • Check that the stock sheets used during the count are the ones used as the basis of valuation. • Compare valuation sheets with copies of stock count sheets to ensure that no alterations were made or if so, this is reflected in valuation. • Ensure costs allocated do not exceed net
• An auditor can only be removed by shareholders regardless of the party that appointed him. • If any shareholder wishes to nominate another person in place of the existing auditor, he should give a special notice of 14 days to the company. • The company would in turn send a notice to the retiring
– Ownership: The auditor needs to verify that there was authority issued for the purchaseof an asset by the company. – Cost: The auditor should verify the cost as given by comparing it with manufacturer ordealers. – Valuation: This assurance will be acquired by ensuring appropriate depreciation has beencharged, so that valuation at year end
Identification of stock items • Comparing stock items in the stock sheets with the items of stock in the shelves/store. • Verifying that stock items‘ description in the stock sheet match the actual stock item (as per given code) in the store. • Ensure there is a clear distinction between finished units and steel components
(i) “Except for Opinion” The opinion is qualified by stating that the financial statements give a true and fair view except for the effects of any adjustments that might have been found necessary had the limitation not affected the evidence available to the auditors. (ii) Disclaimer of Opinion Occurs when the auditors conclude that they
i) Peer Review This is a review of an audit firm‘s systems, procedures, and audit standards generally, conducted by another firm of comparable site and reputation. It‘s a review of a firm‘s complete set up by another firm and should be considered occasionally. ii) • Quality Control: peer review ensures a certain standard is achieved
By not providing for depreciation the management have gone against IAS 16 which require every non-current assets to be systematically depreciated over its useful life. If the directors think there is a change in the value of the plant and machinery, IAS 16 dictates that revaluation should be done by a competent and reputable person
Condition of Stock Item • Verify that stock whose value is given is in good condition i.e. there are no defects of any sort. • Ensure that items identified as damaged or obsolete during the count have been treated as such. • Obtain details of damaged/obsolete stock and the extent of damage as taken during
Cut-off Procedures • Verify that the value of stock as given is not inclusive of previous year‘s closing stock. This would entail ascertaining the value of opening stock (if any) and subtracting from this, the value of units produced in the current year. • Check that no sales figure for finished goods (awaiting collection) is
Vouching This is the process by which the auditor examines vouchers to see:-o Whether these are for the business. o Whether they have been authorized o Whether they are for the current financial period. o Whether they are properly recorded This means that the auditor will try to substantiate the validity of information contained in