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AcFn 4062 Auditing Principles and Practices II

This document outlines an assignment for distance students at Bahir Dar University, focusing on Auditing Principles and Practices II. It includes general instructions on academic integrity, a list of questions requiring short and precise answers related to auditing concepts, and emphasizes the importance of understanding various accounting cycles and audit procedures. The assignment is structured to assess students' knowledge and application of auditing principles in practical scenarios.

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140 views2 pages

AcFn 4062 Auditing Principles and Practices II

This document outlines an assignment for distance students at Bahir Dar University, focusing on Auditing Principles and Practices II. It includes general instructions on academic integrity, a list of questions requiring short and precise answers related to auditing concepts, and emphasizes the importance of understanding various accounting cycles and audit procedures. The assignment is structured to assess students' knowledge and application of auditing principles in practical scenarios.

Uploaded by

addis abebaw
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS


DEPARTMENT OF ACCOUNTING AND FINANCE
Assignment for Distance Students (40%)
Academic Year: 2017 (2024/25) Semester: I
Course Title–Auditing Principles and Practices II (AcFn 4062)
GENERAL INSTRUCTION:
 Read in advance the provided course material thoroughly and give short and precise
answer on separate sheet of paper.
 All questions are required to be attempted and completed by your own words.
 If a student is found guilty of plagiarism, the achieved result will be disregarded and the
student will be failed.
 Plagiarism and copying of assignments will result in the default mark 0% being awarded.
This is also punishable offence, which will lead to a disciplinary action.
 Ensure that your answers are neat and presented in the correct format.

Write short and precise answer for the following questions (4 Points Each)
1. Identify five different accounts commonly involved in the acquisition and payment cycle. For
each account, provide two examples of the types of transactions that would typically affect
that account. Explain why understanding the flow of transactions in this cycle is important
for auditors.
2. Briefly explain what tests of controls and substantive tests of transactions are. Describe a
four-step methodology that auditors can use to design both tests of controls and substantive
tests of transactions, using the acquisition and payment cycle as a running example. In your
explanation, include examples of tests that auditors can use. Explain the relationship between
testing of controls and substantive testing.
3. Describe four major business functions that occur within the inventory cycle. For each
function, provide two specific examples of documents or records that are typically used.
Explain why auditors need a thorough understanding of these business functions, documents,
and records.
4. Briefly explain the following stages of an inventory audit:

 Planning  Substantive Tests of Transactions


 Testing of Controls  Substantive Tests of Balances
 Give a concrete example of what an auditor might do at each stage, referring
specifically to inventory.
5. What is the difference between a "substantive test of balances" and a "test of controls" when
auditing cash?
6. What is the primary purpose of performing bank reconciliation?
7. You are auditing a company that uses an imprest system for its payroll bank account. During
the year, you noticed several instances where employees were paid significantly more than
their stated hourly rate. What specific audit procedures should you perform when testing the
payroll account in this scenario? Explain which controls you should check to find out how
this error may have occurred.
8. Define what a contingent liability is, and provide three examples of common contingent
liabilities that auditors should be aware of. Describe the audit procedures that auditors
typically use to identify and evaluate contingent liabilities. Explain how each procedure
assists in the evaluation. What criteria does an auditor use to determine if a contingent
liability should be disclosed in the financial statements?
9. Differentiate between Type I (adjusting) and Type II (non-adjusting) subsequent events,
using specific examples of each. Explain the auditor's responsibility regarding subsequent
events that occur between the balance sheet date and the date of the audit report. What type
of documentation is important for the auditor to review in order to find subsequent events?
10. Describe five key procedures that auditors perform during the final evidence accumulation
phase of an audit. Explain the purpose of each procedure, and provide a specific example of
how the procedure helps auditors complete their audit.

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