1. 

(4 marks) (c) Explain two audit procedures that could be performed when verifying trade creditors. (Total: 20 marks) QUESTION FIVE (a) Describe three audit procedures that an auditor would carry out when the going concern assumption is questionable. (6 marks) Explain three steps that an auditor should take if management fails to provide the written representations requested (6 marks) for (& marks) (c). Discuss four purposes of the management letter prepared by auditors. (Total: 10 marks) QUESTION SIX (a) Explain the meaning of the following types of audit opinion and indicate the circumstances under which each can be issued Qualified opinion (2 marks) Unqualified opinion. (2 marks) (b) Discuss five matters that should be included in an unqualified audit report (10 marks) () Define the term "audit planning memorandum". (1 mark) (ii) Highlight five contents of an audit planning memorandum. (5 marks) (Total: 20 marks) QUESTION SEVEN (a) Explain five important characteristics of an effective computer audit software. (10 marks) (b) Describe five types of controls that are used to enhance reliability in a computerised information system (CIS) which an auditor must evaluate, cinch- (10 marks) (Total: 20 marks)KASNEB CPA PART I SECTION 2 AUDITING AND ASSURANCE TUESDAY: 2 December 2014. Time Allowed: 3 hours Answer any FIVE questions. ALL questions carry equal marks QUESTION ONE Explain the meaning of the term "letter of engagement" 12 (2 marks) (b) Explain Sour objectives of a letter of engagement. (8 marks) Describe five responsibilities of the directors of a company in rela ng function of the company (10 marks) (Total: 20 marks) QUESTION TWO Using the Hedley Byrne case, explain five curential clements required to prove negligence on the part of the auditor (10 marks) Highlight four ways in which an auditor might reduce his liabilities to third parties (4 marks) O Explain three circumstances under which an auditor could disclose confidential information (6 marks) (Total: 20 marks) QUESTION THREE In gathering audit evidence, the auditor might rely on the work of an expert as per International Standard on Auditing (ISA) 620: Using the work of an auditor's expert. With reference to the above statement (1) Distinguish between a "management expert" and an "auditor's expert" (4 marks) Identify six areas in which an auditor's expert might render expertise (6 marks) (b) With specific reference to International Standard on Auditing (ISA) 530: Audit Sampling (1) Define the term - sampling risk". (2 marks) Explain the meaning of non-sampling risk. (2 marks) (9) For each scenario described below. explain whether an auditor should increase or decrease the sample size An increase in the tolerable rate of deviation. (2 marks) An increase in the expected rate of deviation of the population to be tested. (2 marks) An increase in the number of sampling units in the population. (2 marks) (Total: 20 marks) QUESTION FOUR (a) Discuss four problems that might be encountered in the verification of stock. (8 marks) (b) With specific reference to cash at bank: (1) Outline three audit objectives for cash at bank (3 marks) State five procedures that the auditor should perform on the bank reconciliation statement. (5 marks) CA23 Page 1 Out of 2