John Mutiso bought shares of Sh.2 million six months ago in Kenya Company Limited which has since gone into liquidation. He intends to sue XYZ & Co. Certified Public Accountants for the imminent loss of Sh. 2 million which he is likely to suffer. XYZ & Co. had audited the Kenya Company Ltd. The previous year and issued an unqualified report. John Mutiso claims that he solely relied on the audit report when he took that investment decision.Required:What circumstances must Mr. John Mutiso demonstrate if he has to succeed against the auditors?

Mr. Mutiso must prove that: –
i That XYZ company indeed carried out the audit work negligently
ii That as a direct consequence of XYZ‘s negligence he suffered financial loss
iii That XYZ knew or ought to have known that the accounts will be relied upon for investment decisions by John Mutiso i.e prove that XYZ Co. owed him a duty of care.
iv That Mr. Mutiso actually relied on the report. No other external auditors whatsoever influenced his decision making but just that of the audit report.

Share through

Share to Download

John Mutiso bought shares of Sh.2 million six months ago in Kenya Company Limited which has since gone into liquidation. He intends to sue XYZ & Co. Certified Public Accountants for the imminent loss of Sh. 2 million which he is likely to suffer. XYZ & Co. had audited the Kenya Company Ltd. The previous year and issued an unqualified report. John Mutiso claims that he solely relied on the audit report when he took that investment decision. Required: Do the auditors, XYZ & Co. have any liability to Mr. John Mutiso?
Explain the advantages of a private company over a public company
Distinguish between a company limited by shares and a company limited by guarantee
Explain three characteristics of a public company
List six contents of an unqualified audit report
Explain three characteristics of a private limited company
What is the purpose of an audit report ?
Co-operative Accounting November 2019 Past Paper - KNEC Diploma
Explain the importance of audit to a limited liability company
List four advantages to a company of having its accounts audited
Outline the basic elements of an unqualified audit report
Co-operative Banking - November 2019 Past Paper KNEC Diploma
State the basic elements of the scope paragraph of an audit report
State the basic element of the scope paragraph of an audit report
Highlight the qualities required of the final accounts prepared by a client company
Describe the various ways in which co-ownership of property may be terminated
Explain the procedure a company has to follow when changing its auditors. In your discussion explain ‗dismissal‘ and ‗appointment‘ of auditors by a company?
Explain the advantages of a partnership as opposed to a limited liability company
Explain the principle in the rule in Dunlop Pneumatic Tyre Co. Vs. Selfridge & Co. Ltd, (1915)and the exceptions thereof
Identify and list the responsibilities of company directors in relation to the company‘s accounting system
Under what circumstances is one ineligible for appointment as an auditor of a company?
You have been appointed the auditor of United Millers Company Limited, a medium manufacturing company which is quoted on the stock exchange.Required: Explain the purpose of such a letter
Advantages a company has over a partnership as a form of business organisation
What are ―errors and irregularities‖ in the contest of an external audit of a limited company?
Identify six basic elements of the auditor‘s report containing an unqualified opinion on the financial statements
The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with: Dating the auditor‘s report, Audit procedures., Events after the date of the audit report..Required: In the context of subsequent events, what is the significance of the data of the auditor‘s report
The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with: i. Dating the auditor‘s report ii. Audit procedures iii. Events after the date of the audit report. Required: Summarise the appropriate actions of the auditor regarding events after the date of the audit report
Draft an online audit programme for the fixed assets of a large manufacturing company
What are the responsibilities of the directors of a company in relation to a company‘s financial statements?
Describe the advantages of carrying on business as a partnership as opposed to a limited liability company
The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with: i. Dating the auditor‘s report ii. Audit procedures iii. Events after the date of the audit report. Required: Outline the audit procedures considered necessary between the balance sheet date and the date of the auditor‘s report
Explain the meaning of the term “Co-ownership” and state the ways in which co- ownership may be terminated
It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements. Under statutory provision, what are the main contents of the auditors‘ report?
Identify and briefly explain the statutory and ethical matters you would consider before accepting appointment as an auditor of a company
Distinguish between the following legal persons; Incorporated and unincorporated associations, Partnership and a limited company
It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements; b) Explain how the international standards on auditing attempt to ensure that the report of the auditors is clearly understood
Your firm of accountants has been the auditors of Leather Merchants Limited, a company that exports both raw and semi-finished leather products to European and Asian markets. The company has decided to introduce a comprehensive computer system to manage its accounting and administrative functions. Required: Identify and explain the benefits that the company would derive as a result of putting in place a comprehensive computerized accounting system
You have been appointed the auditor of United Millers Company Limited, a medium manufacturing company which is quoted on the stock exchange. Required: List the important matters which must be included in the letter of engagement.
Differentiate between a Memorandum of Association and Articles of Association of a registered company and detail the contents of the Articles of Association
Explain the factors that external auditors should consider in determining whether the financial statements of a limited company show a true and fair view

KNEC| KASNEB| KISM| Ebooks Kenya

Leave a Reply Cancel reply

Related Posts

Leave a Reply Cancel reply