KABARAK
UNIVERSITY
UNIVERSITY EXAMINATIONS
MAIN CAMPUS/NTC
SECOND SEMESTER, 2017/2018 ACADEMIC YEAR
EXAMINATION FOR THE DEGREE OF BACHELOR OF COMMERCE
ACCT 310: PRINCIPLES OF AUDITING
STREAM: Y3S1
TIME: 11.00-1.00 PM
EXAMINATION SESSION: APRIL
DATE: 10/04/2018
INSTRUCTIONS
1. Answer question ONE and any other TWO questions
2. Marks allocated for each question is indicated at the end of the question
3. Each question must start on a fresh page
Question One
a) State and explain any three primary objectives of an Audit
(6marks)
b) List the principal matters, which the auditors considers in forming an opinion on the
financial statements.
(4marks)
c) Describe any three professional etiquette or code of ethics required of an auditor
(6marks)
d) What are the main objectives of an internal control system?
(5 marks)
e) Explain the meaning of an audit programme.
(2 marks)
f) Outline the purpose of a letter of representation from management to the auditor.
(4marks)
g) State three important factors that must be considered when assessing the reliability of
audit evidence
(3marks)
(Total 30 marks)
As members of Kabarak University family, we purpose at all times and in all places, to set apart in
one’s heart, Jesus as Lord. (1 Peter 3:15)
Page 1 of 2
Question two
a)
Briefly explain the meaning of the term “audit”
(2 marks)
b) List four advantages to a company of having its accounts audited
(4 marks)
c) Distinguish between statutory audit and Private Audit
(3marks)
d) Identify and list the responsibilities of company directors in relation to the company’s
accounting system.
(6 marks)
e) List five limitations of an audit
(5 marks)
(Total 20 marks)
Question three
a)
Explain the factors that external auditors should consider in determining whether the
financial statements of a limited company show a true and fair view. (6 marks)
b)
Identify six basic elements of the auditor’s report containing an unqualified opinion
on the financial statements.
(6 marks)
Briefly explain the types of audit opinion that would normally arise from a limitation
in the scope of audit.
(8marks)
(Total 20 marks)
c)
Question four
a) Outline the professional guidelines that would assist the external auditor in avoiding being
unduly dependent on a single client.
(5 marks)
b) Identify and briefly explain the statutory and ethical matters you would consider before
accepting appointment as an auditor of a company.
(10 marks)
c) In the context of the Companies Act (Cap. 486), state the rights of an auditor. (5 marks)
(Total: 20 marks)
Question five
a) “The auditor must not only be independent, but must be seen to be independent.” Briefly
comment on this statement.
(4 marks)
b) Suggest how the independence of an auditor may be strengthened
(4 marks)
c) Explain the challenges that auditors face in the process of being independent. (4 marks)
d) Outline the ways in which an auditor may be held criminally liable in the course of his
audit duties
(6 marks)
e) Briefly explain what is meant by “the auditor’s duty of due professional care (2 marks)
(Total: 20 marks)
As members of Kabarak University family, we purpose at all times and in all places, to set apart in
one’s heart, Jesus as Lord. (1 Peter 3:15)
Page 2 of 2