i. It is the directors‘ duty to prepare financial statements which show a true and fair view of the financial affairs of the company.
ii. They should ensure that these financial statements are prepared in accordance with recognized International Accounting Standards and guidelines.
iii. Ensure that the financial statements comply with the Companies Act as far as possible.
iv. The directors have a responsibility to maintain proper books of account required by the Companies Act. These include journals, registers schedules etc necessary to record all the transactions of a company.
v. They should ensure that the financial statements are in agreement with the underlying books of account.
vi. Ensure that the financial statements are timely availed to all users. This demands that they co-ordinate the accounting staff properly.
- An auditor is required to state whether, in his opinion proper books of account have been kept and whether the financial statements give a true and fair view of the state of the financial affairs of the company being audited. What are the consequences, to the auditor, for giving an unqualified opinion, when he knows that there are material inaccuracies in financial statements
- What is the form of audit opinion you would give if you concluded that the client company was experiencing going concern problems and:you have established that the financial statements give sufficient disclosure of the going concern problems? And you have established that there is no disclosure of the going concern problems in the financial statements?
- The National Metal Works Limited manufactures and retails door and window frames. The company recently dismissed their external auditors. The directors have approached your firm of accountants to act as their auditors and the directors have proposed a fee of KShs. 1, 000, 000 plus a bonus of 1% of profits after tax. Required: State with reason whether professional auditors should accept the method of remuneration as proposed by the directors of the client company
- In carrying out an audit, the auditor appraises the tests and the system of internal control in order to ascertain that it is capable of processing transactions or determining the quantities and values completely and accurately. The auditorfurther carries out substantive tests in an attempt to ensure that the transactions, assets and liabilities recorded in the accounting records upon which the figures in the financial statements are based, are completely and accurately recorded.Required;List and briefly explain the substantive tests the auditor would carry out to verify the values attributed to: Trade and debtors in a company‘s financial statements and trade creditors in a company‘s financial statements
- 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?
- 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
- You have been the auditor of Crossborder Trading Company Ltd. for a number of years. The company‘s head office is in Nairobi, Kenya and if has considerable overseas operations. At each accounting year end, there are large debts due from overseas agents of the company (Sh. 270 million out of total debts of Sh. 680 million as at 31 December 2000). In the past, these debts have always been settled after year end but you have insisted that the debts be the subject of a specific representation made by the company‘s director. Required:Outline the audit work which should be performed when seeking evidence to substantiate the management‘s representations as drafted and indicated the value of the directors‘representations in these circumstances. You should present your answer under the following headings: Existence and title., Valuation and disclosure