AUI 3702 EXAM PACK
Prepared and compiled by MR.BLESSING K
Mobile number : 0742 523 282
Email :
MR. BLESSING K 0742 523 282 0742 523 282
,MAY/JUNE 2016
The Internal Audit Process: Test of Controls
Answers
(1.1) C -Unrecorded sales
(1.2) B-Completeness
(1.3) B- The auditor may misinterpret evidence
Inherent risk plus control risk = Risk of material misstatement
Risk of material misstatement plus detection risk = audit risk
(1.4) A-In response to a subpoena ,an auditor appeared in court of law and disclosed
confidential ,a audit related information that could potentially damage the auditor’s
organization. CIAP1 (qstn 87).
(1.5) C-Original invoices supporting entries into accounting CIAP2 (qstn 19).
(1.6) A-Deposits might not be corrected correctly
(1.7) A-A decrease in inventory turnover rate
(1.8) A-Pay cheques are distributed by the employees’ immediate supervisor CIAP1 (qstn
371).
(1.9) C –the organization’s overall risk assessment
(1.10) C-Reviewing systems of control before implementation
MR. BLESSING K 0742 523 282 0742 523 282
,QUESTION 2
2.1)
Combined assurance is a manner in which the company sets itself up to adequately addresses the
significant risk which the company faces. It can be provided by
Internal assurance providers‟ e.g. internal audit, finance function. The focus will be on
enabling an effective internal control environment and supporting the integrity of
information used for internal decision making by management, the board and its
committees.
External assurance provider‟s e.g. external audit, industrial regulators. The focus will be
on supporting the integrity of external reports, the internal audit and the finance function.
2.2)
a) Try to enter an employee in the master file with a valid income tax number and without
identity number and confirm if the entry is not going to be successful.
In the master file using chats do a walk through the whole population to indentify if they is no
entry with an empty income tax number and identify number held, if so follow up with
management.
b) Select a sample of program change form and inspect the signature of CAE for evidence of
approval
c) Select a sample of employees and ask them to gain access to the company local area network
using correct user ID and wrong password and confirm if they are restricted access.
Try to gain access to the company LAN using fictions user ID and password and confirm if
access is denied.
d) On a surprise bases, visit the company to observe if the factory manager is doing on screen
report and files it is evidence of review
Select a sample of employees from the company and some should be late and some should be
absent.
MR. BLESSING K 0742 523 282 0742 523 282
, Follow through to the on screen print out and confirm if all the employees in your sample who
were absent and late from work were included in the report with their names and sections which
they are designated.
On month end select a sample of employees,
- Try to load their wages and salaries on a different terminal and approved by two
authorized personnel and confirm if it is unsuccessful.
- Try to load their wages and salaries on correct one terminal and approved by one
authorized personnel and confirm if it unsuccessful.
- Try to load their wages and salaries on a correct terminal and approved by two
authorized personnel and confirm if it is successful.
Test the computer literacy and computer skills of existing employees on the payroll section by
giving them a short exam. Check if supporting evidence (copy of certificates) is available for
current employees if they fail the exam set by the auditor.
g) Inspect if :
Changes to pay rates, promotions to higher employment grades and any other changes in
service conditions were decided upon by the personnel department/wage committee and
were made after due consultation with interested parties, for example the union
representatives and consideration of relevant laws and regulations, e.g. overtime, pay
rates, minimum wage regulations.
All changes are documented and authorized by the authorizing body such as wage
committee.
All amendments to employees details are sequenced in the payroll amendment forms
which should be cross-referenced to the supporting documentation and authorized by a
the personnel manager.
h) Obtain a sample of monthly director‟s minutes and inspect the details discussed to confirm
details.
MR. BLESSING K 0742 523 282 0742 523 282
Prepared and compiled by MR.BLESSING K
Mobile number : 0742 523 282
Email :
MR. BLESSING K 0742 523 282 0742 523 282
,MAY/JUNE 2016
The Internal Audit Process: Test of Controls
Answers
(1.1) C -Unrecorded sales
(1.2) B-Completeness
(1.3) B- The auditor may misinterpret evidence
Inherent risk plus control risk = Risk of material misstatement
Risk of material misstatement plus detection risk = audit risk
(1.4) A-In response to a subpoena ,an auditor appeared in court of law and disclosed
confidential ,a audit related information that could potentially damage the auditor’s
organization. CIAP1 (qstn 87).
(1.5) C-Original invoices supporting entries into accounting CIAP2 (qstn 19).
(1.6) A-Deposits might not be corrected correctly
(1.7) A-A decrease in inventory turnover rate
(1.8) A-Pay cheques are distributed by the employees’ immediate supervisor CIAP1 (qstn
371).
(1.9) C –the organization’s overall risk assessment
(1.10) C-Reviewing systems of control before implementation
MR. BLESSING K 0742 523 282 0742 523 282
,QUESTION 2
2.1)
Combined assurance is a manner in which the company sets itself up to adequately addresses the
significant risk which the company faces. It can be provided by
Internal assurance providers‟ e.g. internal audit, finance function. The focus will be on
enabling an effective internal control environment and supporting the integrity of
information used for internal decision making by management, the board and its
committees.
External assurance provider‟s e.g. external audit, industrial regulators. The focus will be
on supporting the integrity of external reports, the internal audit and the finance function.
2.2)
a) Try to enter an employee in the master file with a valid income tax number and without
identity number and confirm if the entry is not going to be successful.
In the master file using chats do a walk through the whole population to indentify if they is no
entry with an empty income tax number and identify number held, if so follow up with
management.
b) Select a sample of program change form and inspect the signature of CAE for evidence of
approval
c) Select a sample of employees and ask them to gain access to the company local area network
using correct user ID and wrong password and confirm if they are restricted access.
Try to gain access to the company LAN using fictions user ID and password and confirm if
access is denied.
d) On a surprise bases, visit the company to observe if the factory manager is doing on screen
report and files it is evidence of review
Select a sample of employees from the company and some should be late and some should be
absent.
MR. BLESSING K 0742 523 282 0742 523 282
, Follow through to the on screen print out and confirm if all the employees in your sample who
were absent and late from work were included in the report with their names and sections which
they are designated.
On month end select a sample of employees,
- Try to load their wages and salaries on a different terminal and approved by two
authorized personnel and confirm if it is unsuccessful.
- Try to load their wages and salaries on correct one terminal and approved by one
authorized personnel and confirm if it unsuccessful.
- Try to load their wages and salaries on a correct terminal and approved by two
authorized personnel and confirm if it is successful.
Test the computer literacy and computer skills of existing employees on the payroll section by
giving them a short exam. Check if supporting evidence (copy of certificates) is available for
current employees if they fail the exam set by the auditor.
g) Inspect if :
Changes to pay rates, promotions to higher employment grades and any other changes in
service conditions were decided upon by the personnel department/wage committee and
were made after due consultation with interested parties, for example the union
representatives and consideration of relevant laws and regulations, e.g. overtime, pay
rates, minimum wage regulations.
All changes are documented and authorized by the authorizing body such as wage
committee.
All amendments to employees details are sequenced in the payroll amendment forms
which should be cross-referenced to the supporting documentation and authorized by a
the personnel manager.
h) Obtain a sample of monthly director‟s minutes and inspect the details discussed to confirm
details.
MR. BLESSING K 0742 523 282 0742 523 282
