1a) Briefly explain how the auditor can use each of the following methods of sample selection when carrying out his audit assignment;
i) Stratified sampling (2 marks)
ii) Cluster sampling (2 marks)
iii) Haphazard sampling (2 marks)
iv) Block sampling (2 marks)
b) Explain the reasons why an auditor is not required to carry out a complete check of all the transactions and balances of a business. (4 marks)
c) Identify the cases where an auditor is required to conduct a complete check of all the transactions and balances of a business. (4 marks)
d) Explain two reasons why an auditor should consider materiality when selecting a sample size. (4 marks)
(Total: 20 marks)
(a) You have recently been appointed as the external auditor of XYZ Ltd. Explain the stages you would take in the conduct of your audit. (4 marks)
(b) In the context of the Companies Act (Cap. 486), outline the procedure for the removal of an auditor. (6 marks)
(c) The auditor should obtain sufficient and appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion.
2Identify and briefly explain any three procedures for obtaining audit evidence.
(6 marks)
(d) Briefly explain the meaning of the following terms in relation to audit reports:
(i) “Except for” opinion. (2 marks)
(ii) Disclaimer of opinion. (2 marks)
(Total: 20 marks)
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