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
i. Size and complexity of client‘s entity: The amount of audit work may overwhelm audit staff later on despite proper planning, as a result of increasing audit and verification procedures, need to visit all branches etc. ii. Auditor‘s other assignments: the auditor could have two client firms with same calendar/accounting year ends hence he faces
Given the fact that a bank statement is an audit evidence from an external source, it‘s more reliable than if it were generated from within the entity. This is because an internal source of evidence is more likely to be distorted, intentionally or otherwise, than an external source of audit evidence. A bank statement is
i) In an organization, an internal control system enhances the efficient and orderly running of activities and operations to satisfy the needs of stakeholders. ii) It ensures adherence to management policies. These policies provide a good framework within which the internal control system operates. iii) Helps in the safeguarding of company‘s assets. Using physical controls
With reference to guidelines issued by ICPAK, the following are the areas of risk that may compromise the work of an external auditor. The auditor needs to use the guidelines as references to avoid being unduly dependent on a single client; i) Fees Recurring fees paid by a client to an audit firm should not
i) Sampling Risk and Non-Sampling Risk Sampling risk is the risk that the auditor‘s conclusion, based on a given sample may be different from the conclusion reached if the entire population were subjected to the same audit procedure i.e. either the auditor wrongly concludes that control risk is higher than it actually is or that
i) Opening Paragraph This identifies the financial statements of the entity that have been audited. ii) Scope Paragraph Indicating that all information and explanations necessary for the opinion were provided. iii) Opinion Paragraph That the financial statements presents a true and fair view of the operating results and financial position of the organization. iv) Books
i. Knowledge of the Business. This entails getting information on general economic factors and industry conditions affecting client‘s business. Also ascertaining, important characteristics of the business is necessary. ii. Understanding the Accounting and I.C.S: The auditor should find out to what extent he can rely on the client‘s internal control system. iii. Risk and Materiality:
Management/directors will first discharge their duties by setting up systems of internal controls (assuming non existed before). This should be consistent with policies laid down. Directors should be the first to adhere to the Internal control system since the employees will do what the directors do with respect to the controls. Director: should thus ensure
i) Auditor‘s Intended reliance on systems of control If the auditor has more assurance or intends to obtain more assurance from accounting and internal control systems, it means his assessment of control risk is low and for this reason a larger sample size will be needed. This is because the auditor needs to gather more
The purpose of an audit report is to reflect a clear written expression of the auditor‘s opinion on the financial statements taken as a whole. This entails indicating explicitly whether the financial statements give a true and fair view of the state of affairs of the company. The auditors have a statutory duty to make