Professional Documents
Culture Documents
the
of
the
the
and
discover significant weaknesses in the clients systems but the audit work
should
be
(if
they exist).
1.5 TYPES OF AUDITS
Private Audit and Statutory Audit
A private audit is one undertaken at the instance of an interested party
(e.g. a sole trader) or parties (partners of a partnership), even though
there is no legal obligation that an audit be carried out.
In the case of private audit, the scope of the audit may be determined as
narrowly or as broadly as the client wishes.
A statutory audit arises under the Company law as a result of which it is a
statutory
obligation for the accounts of every limited liability company to be audited
annually
by a professional qualified auditor. Statutory audits have their scope
largely
determined by the governing legislation which the client or the
auditor
has
no
authority to vary in any way. Despite the fact that the appointment of an
auditor
is
is
an
organization
to
review
the
accounts
prepared
by
management.
Internal audit is where an organization appoints a full time staff to monitor
and report on the running of the companys operations.
Complete Audit, Interim Audit and Continuous Audit
Complete audit applies to smaller concerns where the volume of
transactions and complexity of records do not require the auditors
attendance more than once each year. This visit normally takes place as
soon as the businesss financial year ends and continues until it has been
completed and the audit report signed.
Interim Audit: In the case of larger clients, the auditor will often find it
necessary
to
to
be
otherwise
be
necessary,
and
in
exceptional
circumstances,
CHAPTER TWO
III.
IV.
V.
process or law
Carry out the work as an auditor concurrently with carrying out work
VI.
2.6 OBJECTIVITY
By this principle, auditors essential for any professional person exercising
professional judgement. It is as essential for members in business as for
practicing members. Objectivity is the state of mind which has regard to all
considerations relevant to the task in hand but no other .
It is sometimes described as independence mind.
Under the rule of skill and competence a person to carry out audit exercise
is expected to have adequate training, experience and the proficiency to
audit.
Akintola being a history graduate lacks the basic training,
experience and proficiency to carry out audit job and there for violate the
rule of skill and competence.
The analysis and solution above showed that three rules has been
violated.
CHAPTER THREE
The first auditors are usually appointed by the directors, acting as agent of
the company. They are to hold office until the conclusion of the next annual
general meeting, when they may be re-elected or removed. Section 152 of
the company Acts 1968, which covers the appointment of auditors,
provided as follow:
1. Every company shall at each annual meeting appoint an auditor or
auditors to hold office from the conclusion of that, the conclusion of the
next annual general meeting.
2. At any annual general meeting a retiring auditor, appointed however
shall be reappointed without any resolution being passed unless:(A)He is not qualified for appointment or
(B) A resolution has been passed at that meeting appointing some other
person instead of him or providing expressly that he not be appointed or
(C) He has giving the company notice in writing of his unwillingness to be
appointed. Provided that where notice is giving of an intended resolution to
appoint some person or persons in place of a retiring auditor, by reason of
death, incapacity or disqualification of that person or of all those persons,
as the case may be, the resolution cannot b e proceeded with, the retiring
auditor shall not be automatically reappointed by virtue of this subsection.
3. Where at any annual general meeting no auditors are appointed or
reappointed, the commissioners may direct the registrar to appoint a
person to fill the vacancy.
4. the company shall within one week of the power of the registrar under
sub section (3) of this section becoming exercisable, give notice of that fact
to registrar; and if a company fails to give notice as required by this
subsection, the company and every officer of the company who is in default
shall be liable to fine a ten naira for every day during which the default
continues.
5. subject as herein provided, the first auditors of the company may be
appointed by the directors at any time before the first annual general
meeting, and auditors appointed shall hold office until the conclusion of the
meeting provided that:(a) the company may at a general meeting remove any such auditors
and appoint in their place any other persons who have been
nominated as noticed has been given to the members of the company
not less than fourteen days before the date of the meeting; and
(b) If the directors fail to exercise their powers under subsection,
the
Company in general meeting may appoint the first auditors and
thereupon the said powers of the directors cease.
6. The directors may fill any casual vacancy in the office of auditor, but
while any such vacancy continues, the surviving or continuing auditors, if
any may act.
3.5. Removal
Section 153 of the Companies Act 1968 covers resolution as to the
appointment and removal of auditors. The section lays down the steps,
which a company must follow if a change of auditor is proposed. The steps,
as set out below, are designed to protect the auditor from unwarranted
dismissal:
3.6. Qualification
1. The provision of the institute of chartered accountings act 1965 shall
have effective in relation to any investigation of audit for the purpose of the
companies Act 1968, so however that none of the following person shall be
qualified for appointment as an audit of a company
(a) An officer of servant of the company; or
(b) A person who is a partner of or in the employment of an officer or
servant of the company; or
(c) A body co-operate;
And reference in this subsection to an officer or servant shall be construed
as not including references to an auditor
2. in the application of subsection (1) of this section, the disqualification
shall extend and apply to persons who in respect of any period of audits,
then were in the employ of the company or where in otherwise connected
there with in any manner.
3. a person can also qualified for appointment as auditor of a company if he
is, by virtue of subsection (1) or (2) of this section, disqualified for
appointment as a auditor of any other body corporate which is the
companys subsidiary or holding company, or would be so disqualified if the
body cooperate were a company.
4. Anybody cooperate which act as the auditor, of a company shall be
reliable to a fine not exceeding two hundred naira.
The position of auditor, as entrenched in the statute, is to make them
independent.
3.7. Duties
The duties of auditor are spelt out in this section 155 (1) of the companies
Act 1968, as follow:
The auditor shall make a report of the members on the accounts examine
by them, and every balance sheet every profit and loss account and all
group account laid before the company in general meeting during their
tenure of office, and the report shall contain statement as to the following
matters mentioned in schedule 9 of the Act:
1. Whether they have obtained all the information and the explanation that
to the best of their knowledge and behalf were necessary for the purpose of
their audit.
2. Whether their opinion, proper books of account have been kept by the
company, so far as appear from their examination of those books and
proper returns adequate for the purpose of their audit have been receive
from branches not visited by them.
3. (i) whether the company balance sheet and (unless it is frame as a
consolidated profit and loss account) profit and loss account dealt with by
the report are in agreement with books of books of and returns.
(ii) Whether, in their opinion and best of their information according to the
explanation given them, then account give the information required b y the
companies Acts 1968 in the manner so required and give a true and fair
view:
(a) In case of the balance sheet, of the state of the company affaires as at
the end its financial year;
(b) In the case of the profit and loss account for it financial year;
Or as the case may be, give a true and fair view thereof subject to the nondisclosure of any matters (to be indicated in the report) which by virtue of
part III of schedule 8 of the Act are not required to be disclosed.
4. in the case of a holding company submitting group accounts whether, in
their (auditors) opinion, the group account have been properly prepared in
accordance with the provisions of the Acts so as to give a true and fair view
of the state of affairs and profit or loss of the company and its subsidiaries
dealt with hereby, so far as concerns members of the company, or as the
case may be, so as to give to give a true and fair view thereof subject to the
nondisclosure of any matters (to be indicated in the report) which by virtue
of part III of schedule 8 of the act are not required to be disclosed.
they attend on any part of the business of the meeting which concerns
them as auditors.
Then auditor also has the following rights:
(1) Right associated with the proposal to replace him or remove him
from office;
(2) Right to require subsidiaries and their auditors to provide such
information and explanation as may be needed in course of his duties.
Provision as to liability of officers and auditors: in other to avoid situations
were provision is made in the articles or contract relieving officers from
liability, the company Act 1968, section 196 provides as follows:
Subject as hereinafter provide, any provision, whether contained in the
articles of a company or otherwise, for exempting any officer of the
company or any person (whether an officer of the company or not)
employed by the company as auditor from, or indemnifying him against, an
y liability which by virtue of any rule of law, would otherwise attached to
him in respect of negligence, default, breach of duty or breach of trust of
which he may be guilty in relation to the company shall be void:
(a) nothing in this section shall operate to deprive any person of any
exemption or right to be indemnified in respect of any done or omitted to
be done by him while any such provision was in force; and
(b) notwithstanding anything in this section, a company may, in pursuance
of any such provision as aforesaid indemnified in respect of any such officer
or auditor against any liability incurred by him in defending any
proceedings whether civil or criminal in which judgment is given in his favor
or in which he is acquitted or in connection with any application under
section 388 of the company Act 1968 in which relief is granted to him by
the court.
CHAPTER FOUR
LETTER OF ENGAGEMENT
4.1 INTRODUCTION
Prior to the commencement of any audit work, the auditor should agree
in writing, the precise scope and nature of the audit work to be
undertaken. The letter of engagement serves this purpose.
The letter of engagement is therefore a letter sent by the auditors to
a
client
at
the
beginning of any audit. It sets out the terms of the engagement and
forms
the
basis
of
the contract.
Purpose of a Letter of Engagement
I.
II.
engagement, it helps
to
IV.
confirmation
of
the
auditors
the audit, the form of their report and the scope of any non-audit
service.
4.2.
It should
also identify any report which the auditor must submit in addition to the
statutory audit report.
on
the
financial
of
your
company
and
the
respective
areas
of
our
and when required, all the companys accounting records and all
other records and related information, including minutes of all
management
and
shareholders meetings.
Responsibility of Auditors
As auditors, we have a statutory responsibility to report to the
members
whether
in
our opinion the financial statements give the true and fair view of
the
state
of
the
companys affairs and of the profit or loss for the year and whether
they
have
been
Act
the
in
our
report,
description
of
the
directors
and
will
of
assets
We shall obtain an
of
as
basis
for
accounting
such
evidence,
as
we
consider
sufficient
to
enable
us
draw
reasonable
conclusions therefrom.
The nature and extent of our procedures will vary according to our
assessment
of
the
the
internal
control system and may cover any aspect of the business operations.
Our
audit
is
not
but,
if
such
weakness come to our notice during the course of our audit which we
think
should
be
brought to your attention, we shall report them to you. Any such report
would
not
be
will
Such
be
granted only on the basis that such reports are not prepared in the
interest
of
anyone
statements. We are also entitled to attend all general meetings and receive notices of all
such meetings.
The responsibility for safeguarding the assets of the company and prevention and
detection of fraud, error and non-compliance with laws or regulations rests with
yourselves. However, we shall endeavour to plan our audit so that we have a
reasonable expectation of detecting material misstatements in the financial statements
or accounting records (including those resulting from fraud, error or non-compliance
with law or regulation), but our examination should not be relied upon to disclose all
such material misstatements or fraud, errors, or instances of non-compliance as may
exist.
Once we have issued our report, we have no further responsibility in relation to
the financial statements for the financial year. However, we expect that you will
inform us of any material event occurring between the date of our report and
that of the Annual General Meeting which may affect the financial statements.
Other Services
You have requested that we provide other services in respect of taxation. The
terms
under which we provide these other services are dealt with in a separate letter.
We
will also agree in a separate letter, the provision of any services relating to
investment business advice.
Our fees are computed on the basis of the time spent on your affairs by the
partners
and our staff and on levels of skill and responsibility involved. Unless otherwise
agreed, our fees will be billed at appropriate intervals during the
course of the year and will be due on presentation.
Applicable Law
The
audit
appointment
in
writing
with
your
understanding
of
our
terms
of
engagement.
Yours faithfully,
JUDE & Co Chartered Accountant
CHAPTER FIVE
Documentation of the
risk
assessment
procedures
for
some
classes
of
matters,
which
require
the
exercise
of
judgement,
The
The
The
The
control system
e) The needs in
the
particular
circumstances
from
direction,
specimen
letters,
standard
organization
of
working
concerning
the
legal
and
process
organizational
legal
documents,
including
audit
management
available,
views,
the
amounts
to
determine
Capital/Share
capital,
Capital
Surplus/General
with
respect
to
Stocks,
work-in-Progress,
service contracts.
A list of the Companys properties and investments with
notes on verifications.
q. A list of the Companys bankers, stockbrokers, solicitors,
valuers, insurance brokers etc.
It
is
essential
that
the
permanent
file
be
updated
prior
to
of
important
statistics
including output,
sales
Sometimes the auditor will obtain evidence from several sources, which
together will provide them with the necessary assurance.
The relevance of the audit evidence should be considered in relation
to the overall audit objective of forming an opinion and reporting on the
financial statements. To achieve this objective, the auditor needs to obtain
evidence to enable him to draw reasonable conclusions in answer to the
following:
Balance Sheet items:
a) Whether all the assets and liabilities were received.
b) Whether the amounts attributed to the assets and liabilities
were arrived at in accordance with the stated accounting
policies.
c) Whether the assets, liabilities, capital, reserves have been
properly disclosed.
Profit and Loss account items:
a) Whether all income and expenses have been recorded.
b) Whether the recorded income and expenditure transactions did occur.
c) Whether income and expenses have been properly disclosed and
appropriately.
Compliance Tests
Compliance tests are those tests that seek to provide audit evidence
that internal control procedures are being applied and strictly adhered to
as prescribed.
Auditors Opinion:
The auditor may rely to a great extent on appropriate evidence
obtained by substantive testing to form his opinion. Alternatively, the
auditor may be able to obtain assurance from the presence from the
presence of reliable internal control mechanism and therefore reduce the
Document like cash receipts are trace to the debit or left hand side of the
cash book. Payment vouchers trace to the credit or right hand side of the
cash book. While sales invoice is trace to the sales day book. This kind of
tracing under vouching is seen as the first in the list of actions or
processes an auditor intend to take or undertake when embarking on an
audit exercise in a client office.
Assets verification
Vouching
Vouching means the examination of business together with documents
and other evidence of sufficient validity to satisfy the auditor that such
transaction are in other have been properly authorize and are correctly
calculated and recorded.
For example, vouching, the auditor should ensure that
1. Invoice is address to the company.
2. Invoice appears at least to be authentic.
3. The goods relate to the ordinary course of the companys business
4. The invoice should be signed and dated
5. Invoice date should relate to the current accounting period.
Verification
Verification on the other hand means establishment of ownership,
existence and valuation of assets as at the balance sheet dates.
The auditor has a duty to verify all the assets appearing on the balance
sheet as at the date to ensured completeness of those assets. The
following aspects of each asset must be verified:
(a) Cost i.e. establishment of the cost of purchase
(b) Authorization by the relevant authority
(c) Value- this has to do with market value that may have to be
compared with cost.
(d) Existence- this has to do with determination of physical existence of
some assets.
(e) Beneficial ownership such assets must be by the company and must
be serving a useful purpose for the company.
(f) Presentation in the account- this deals with companies with various
statute and accounting standard as to adequacy of disclosure.
This will
enable the auditor to obtain and evaluate audit evidence about some
characteristic of the items selected in order to form or assist in
forming a conclusion concerning the population from which the
sample is drawn. Audit sampling can use either a statistical or a nonstatistical approach.
Error means either control deviations, when performing tests of
controls, or misstatements, when performing tests of details. Similarly,
and
is
other
therefore
than
on
specifically
identifiable
population.
Population means the entire set of data from which a sample is
selected and about which the auditor wishes to draw conclusions. For
example, all of the items in a class of transactions or account balance
constitute a population. A population may be divided into strata, or
sub-populations, with each stratum being examined separately. The
term population is used to include the term stratum.
Sampling
risk
arises
from
the
possibility
that
the
auditors
Tolerable Error i.e. the maximum error in a population that the auditor
is willing to accept.
CHAPTER SEVEN
7.1 FRUAD
Accounting fraud may be briefly defined as an act of deceit by an
individual, group of person or even a body corporate. Here the person or
group of persons deceitfully converts through an illegitimates, or
unwholesome means, what belongs to another person (the victim) into
his own (fraudster) use or possession.
Fraud can be perpetrated in the following three major ways:
i. Cash receipt defalcations.
ii. Sales invoice defalcations.
iii. Store vouchers manipulations
The international auditing guidelines set out the responsibilities of the
auditor with regard to detection and prevention of the fraud and other
irregularities. It also gives guidance on the extent to which the auditors
finding should be reported to management, shareholders and other
stakeholders.
Whereas,
to
international
auditing
guideline
on
internal
control
Section 393 of the company Act 1965 declares guilty of offence a person
who recklessly makes a statement which is misleading false or
deceptive in a material. An auditor is therefore entitled to accept
representations as truthful in the absence of any indication to the
contrary and provided these are consistence with other audit evidence
obtained through substantive and compliance tests.
to
consider
the
legal
consequences.
This
involves
believe that the report may not be acted upon or are unsure as to
the person to whom to report, they may wish to have legal advice.
statements
of
the
instance
or
of
its
consequences, or
b) They are unable to determine whether fraud or error
has occurred.
They should not refrain from qualifying their opinion on the
grounds that the position has been corrected since the balance
sheet
date
or
because
of
the
possible consequences of
qualification.
Reporting Fraud and Error to Third Parties
When the auditors become aware of a suspected instance of fraud
(or in particular cases, error) which is supported by strong
evidence, and considering the fact that the matter may be one
that ought to be reported to a proper authority in the public
interest, they should ensure that the matter is drawn to the
attention of the directors, including any audit committee.
If,
b.
In certain
professional
judgement
to
determine
whether
their
II.
permitted
or
required
by
legislation
to
disclose
information.
Matters to be taken into account when considering whether
disclosure is justified in the public interest may include:
a. the extent to which the suspected fraud is likely to affect
members of the public;
b. whether the directors have rectified the matter or are taking,
or are likely to take, effective corrective action;
c. the extent to which non-disclosure is likely to enable the
suspected fraud to recur with impunity;
d. the gravity of the matter; and
e. the weight of evidence and the degree of the auditors
suspicion that there has been an instance of fraud.
When reporting to proper authorities in the public interest, it is
important that, in order to retain the protection of qualified
privilege, auditors only report to one who has a proper interest to
receive the information.
b.
c.
d.
CHAPTER EIGHT
AUDIT REPORT
8.1 INTRODUCTION
International Auditing Guideline 13 [paragraph 13] states
The reports should be dated. This informs the reader that the auditor
consider the effect on the financial statement and of his reports of event or
transactions about which he became aware that occurred up to that date
International accounting standard [IAS] 10 on contingencies and event
occurring after the balance sheet date issue by the accounting committee
deals with the treatment in financial statements of event occurring after the
balance sheet date.
The auditor should date and sign his report as of the date he completes his
examination. Which include performing procedures relating to events
occurring to the date of his reports? However, since his responsibility is to
report on financial statements as prepared and presented by the
management the auditor should not date his report earlier than the date on
which the financial statement are approved by the management.
The auditor obtains assurance that management approved the financial
statements for example by obtaining a signed copy of the financial
statements or an authorized or an authorized representation to that effect.
IV.
Title;
Addressee;
Opening or introductory paragraph
Identification of the financial statements audited;
A statement of the responsibility of the entitys management
and the responsibility of the auditor;
Scope paragraph (describing the nature of an audit)
These financial
conducted
our
audit
in
accordance
with
International
the
obtain
the
reasonable
assurance
about
whether
audit
to
financial
An audit includes
SIGNATURE
TYPES OF AUDIT REPORT
in an auditors report
follows:
In our opinion, the financial statements give a true and fair view of (or
present fairly, in all material respects) the financial position of the
Company as of 31December, 20X1, and of the results of its operations
and it cash flows for the year then ended
International
Accounting
Standards/
in accordance
International
with
Financial
Reporting Standards
qualified
concludes
opinion
should
be
expressed
that
when
the
auditor
an
II.
Adverse opinion
This is issued when the financial statement provided by the organization
has shown gross material misstatement and the financial statement to not
conform with generally accepted accounting principle (GAAP)
DISCLAIMER OPINION
This opinion is issued when the auditor is unable to conclude his audit . it
states that the auditor could not arrive at a concluding opinion due to
limiting factors disclose therein.
8.6 CONCEPT OF TRUE AND FAIR VIEW
True and Fair
from
with
no
required
standards and law. The accounts have been correctly extracted from
the
books
and
records.
Fair means that the information is free from discrimination and
bias and in compliance with expected standards and rules.
The
CHAPTER NINE
clear
that
corporate
The
or
internal
controls as:
a) To carry on the business of the company in an orderly and efficient
manner;
b) To ensure adherence to management policies;
c) To safeguard the asset of the organization; and
d) To secure completeness and accuracy of the records.
9.3 THE ESSENTIAL FEATURES OF INTERNAL CONTROL
The detailed nature of the controls operative within any commercial
organization will depend upon:
a.
b.
c.
d.
e.
The
The
The
The
The
of
transactions.
d. They ensure that all recorded transactions are real, properly
valued, related to the correct period, properly classified,
correctly authorized and posted.
e. They
help
to
ensure
reliable
financial
reporting
and
II.
III.
in the system had taken place (e.g. a change over from manual).
The ICQ should be completed by a senior member of the audit
staff after putting the questions to the responsible officers of
IV.
V.
preliminary
evaluation.
He
should
conduct
further
officer to authorize
expenditure.
YES
NO
Cheque Payments
Is the signing of blank cheques prohibited?
Is the signing of cheques restricted to
directors/Secretaries/other senior officials?
Is the duly authorized invoice produced in
respect of each payment before cheques are signed?
Are all cheques (other than those for cash) suitably crossed?
Are paid cheques returned by the bank
monthly?
Are these cheques filed in the order in which they appear in the
cash book?
Cash Payments
Apart from salaries and wages, are all payments made from
an imprest?
Are supporting vouchers examined and authorized by a party
other than the cashier or accountant?
Are expenditures appropriately analysed?
Are checks made on the balance of cash in hand at random
intervals by an independent official?
CHAPTER TEN
resorted
to
taking
professional
indemnity
insurance
to
through
the failure of the auditor to carry out their duties imposed by the
contract with the client. Furthermore, an auditor may be held liable
under the law of tort for duty of care, especially, where a third party is
involved.
Criminal Liability
An auditor who makes a misleading statement and/or falsifies records
with the intent of deceiving, may face criminal liability.
Liability under Contract Law
When auditors accept appointment, they enter into a contract which
imposes certain obligations on them. These obligations arise from the
terms of the contract.
10.3
AUDITORS
LIABILITY
FOR
NEGLIGENCE
UNDER
COMMON LAW
An auditor will incur liability under common law if he is found
negligent
in
the
performance of his duty and the client suffers a loss as a result of such
negligence.
At
the same time, where loss has resulted but no negligence can be
attributed
to
the
to
as
the
it
is
What is Negligence?
Negligence means some act or omission which occurs because the
person concerned (e.g. an auditor) failed to exercise that degree of
reasonable skill and care which is reasonable to be expected in the
circumstances of the case.
careful and expert auditor would do but what an ordinary skill man (or
woman) would do in the circumstances.
CHAPTER ELEVEN
II.
This
-
Programme/software package:
The auditor should ensure that access to computerized salary (payroll)
software package operating in an organization is restricted to only authorize
persons within the organization. This will be done by the use of PASSWORD
inbuilt into the computer program. The use of PASSWORD serves as a
means of preventing potential fraudster from gaining access to the payroll
system.
In organizations where computer networking is maintained there is usually
a computer configuration system that makes it possible for internal audit.
Unit department to view from their offices the entries into the salary system
by the finance department as the entries are being made.
of
processing on paper.
Audit
the
traditional
approach
does
reality
computerized
manipulate
not
reflect
the
modern
of
accounting,
where
computers
and
are
used
to
satisfy
record-keeping
and
reporting
complexity
requirements.
As
the
of
audit
trail.
b. Through the computer
The round the computer approach is now frowned upon.
Typical
audit
problems that arise as audit trails move further away from the hard
copy
trail
include:
a. Testing computer generated totals when no detailed
analysis is available;
b. Testing the completeness of output in the absence of control
totals. Its recognized that one of the principal problems
facing the auditors is that of acquiring an understanding of
the workings of electric data processing and of the computer
itself.
Auditors now customarily audit through the computer. This involves an
examination of the detailed processing routines of the computer to
determine whether the controls in the system are adequate to ensure
complete and correct processing of all data. In these situations it will often
be necessary to employ computer assisted audit techniques.
CHAPTER TWELVE
fair view of the financial statements as at the balance sheet date, the
auditor has a duty to verify all the assets and liabilities appearing on the
balance sheet as well as to ensure that there are no other assets and
liabilities which ought to appear on the balance sheet.
between third parties and the companys staff with a view to deceiving the
auditor.
suppliers
are
circularized,
the
independence
confirmations
received will support not only the creditors ledger balances, but also the
monthly statements which most suppliers send to their customers anyway.
Verification of Stock And Work In Progress
It is the responsibility of the management of an entity to ensure that the
amount of which stocks are shown in the financial statements
represents stocks physically in existence and includes all stocks owned
by the entity, while the auditor has a duty to obtain necessary evidence
to satisfy himself as to the ownership, existence and condition of
stocks valued at the year end.
The reasons why auditors pay particular attention to audit of stocks and
W.I.P are stock usually constitute one of the largest items in the balance
sheet, hence a relative small error in stock will have a material effect on
the financial statements. The following are other reasons:
a. Closing stock affects cost of sales and therefore profit and loss directly
to
the
particular
set
of
to
They also form an important part of the system of internal control. The
register must be agreed with the financial records and enquiries as to
the extent and frequency of checks by company officials on the
reconciliation of financial records, assets register and physical assets.
An asset register will normally contain the following information for each
asset:
a.
Suppliers name;
b.
date of purchase;
c.
original cost;
d.
e.
f.
g.
estimated replacement cost entered at annual
intervals; and
h.
The following
Practical questions:
1. . Name and discuss the qualities of an auditor.
2. Johnson Nig Ltd has propose to engage Paul & co chartered
accountants for the auditing of its statement of accounts. It has
been discovered that the principal partner of Paul & co is the
husband of madam Ngozi okere the financial controller of Johnson
Nig Ltd. There is also a discovery that the audit manager of Paul
& co. Mr. Denis had served 3 years jail term for fraudulently
swindling his former employer. PATO micro finance bank. Financial
consultant of Johnson Nig Ltd has approach you for advice; clearly
state what your advice would be and the professional basis of such
advice.
3. What are the differences between internal and external auditors
4. What is internal control and what are the qualities of a good
internal control system
5. Distinguish between fraudulent misapplication of asset and
fraudulent manipulation of account.
6. What step would you take in auditing balance sheet items
REFERENCES
Adeniyi A. Adeniyi (2004) Auditing and investigations wyse associates
limited mary land lagos
Ajayi .C. A. (1989) Financial control in public sector. 1989 annual
conference.
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