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AUD339 Sample TEST 2 COMMON TEST
Auditing (AUD339)
Universiti Teknologi MARA
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UNIVERSITI TEKNOLOGI MARA
TEST 2
COURSE : AUDITING
COURSE CODE : AUD
EXAMINATION :
TIME : 1 HOUR 30 MINUTES
INSTRUCTIONS TO CANDIDATES
This question paper consists of three (3) questions.
Answer ALL questions in the Answer Booklet. Start each answer on a new page.
Do not bring any material into the examination room unless permission is given by the invigilator.
Please check to make sure that this examination pack consists of :
i) the Question Paper ii) an Answer Booklet – provided by the Faculty
- Answer ALL questions in English.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 5 printed pages
QUESTION 1
The ethical pronouncements of the professional bodies are an attempt to codify principles that provide useful guidance to professional accountants in the conduct of their business. They include certain assumptions about moral principles and standards of conduct, which should be observed by professional accountants.
Required:
a. Explain any TWO (2) fundamental principles of ethics as stated in the MIA by Laws (On Professional Ethics, Conduct and Practice).
(4 marks)
b. Distinguish between the independence in fact and independence in appearance. (3 marks)
c. Discuss briefly any TWO (2) responsibilities an Audit Oversight Board (AOB) in improving the quality of the audited financial statements and increasing the confidence of the public on the quality of the services provided by the auditors.
(3 marks) (TOTAL: 10 marks)
QUESTION 2
A. The Malaysian Institute of Accountants (MIA) pursuant to Section 10(a) of Accountants Act 1967 has set By-Laws (On Professional Conduct and Ethics). The Code of Ethics provides a set of principles and rules that offer guidance to members in performing their professional responsibilities
Required:
a. State the main objective of the MIA By-laws. (2 marks)
b. Explain the statement below: “I am a member of MIA. Am I a bound by the ethical guidelines of the Institute?”
(3 marks)
QUESTION 3
A. Property, plant and equipment (PPE) are assets that have expected lives of more than one year are used in the business and are not acquired for resale. The intent to use the assets as part of the operation of the client’s business and their expected lives of more than one year are the significant characteristics that distinguish these assets from inventory, prepaid expenses and investment.
Required:
a. Briefly explain any TWO (2) analytical procedure of PPE. (5 marks)
b. Identify a documentary evidence that should be obtained by auditors to verify the ownership of the following non-current assets: i. Freehold land and building. ii. Plant and machinery. iii. Motor vehicles. (3 marks) c. State any TWO (2) reasons why auditors verify PPE differently from current asset accounts. (2 marks)
B.
Non-current Liabilities are non-current obligations that are expected to be settled within the next 12 months after the year-end. Examples of non-current liabilities are bonds and capitalized leases.
Required:
a. Suggest any THREE (3) assertion with the relevant control objectives of non-current liabilities. (6 marks)
b. State any FOUR (4) substantive audit procedures for verifying non-current liabilities. (4 marks)
c. The followings are the substantive audit procedures that the auditors use in verifying the property, plant and equipment. For each audit procedures, determine the related assertions.
i. Select a sample of PPE from observation and trace to the PPE register. ii. Select a sample of PPE from the PPE register and perform a physical inspection. iii. Inspect vehicle registration document of motor vehicle. iv. Determine that PPE assets and related expenses, gains and losses are properly identified and classified in the financial statements. v. Vouch PPE additions to minutes of Board of Director’s meeting, vouchers, invoices and contracts.
(5 marks)
(TOTAL: 25 marks)
(TOTAL: 50 MARKS)
END OF QUESTION PAPER
AUD339 Sample TEST 2 COMMON TEST
Course: Auditing (AUD339)
University: Universiti Teknologi MARA
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