A. There are NINE (9) types of balance related audit objectives that must be met before the auditor can conclude that any given account balance is fairly stated. Briefly explain any FIVE (5). (10 marks) B. The following audit procedures were planned by Fazira, a Senior Auditor in the audit of acquisition and disbursement cycle at Nadhirah Sdn. Bhd: i. Foot the purchases journal and trace the totals to the related general ledger accounts. ii. Re-compute the cash discounts taken by the client. iii. Compare monthly sales amount to identify any unusual transaction. iv. Examine details of purchases for five days before and five days after year-end to determine whether purchases have been recorded in the proper period. v. Examine supporting documentation for a sample of transactions for authorized payee and amount and to determine services or goods were received. Required: For each procedure (i) to (v) above, identify the audit objective for each procedure.(5 Marks) C. The following audit procedures were planned by Hawa, a Senior Auditor in the audit of sales and collection cycle at Ikmal Manufacturing Sdn. Bhd: vi. Examine customer order for evidence of customer approval. vii. Re-compute prices and extension on sales invoices. viii. Compare gross margin percentage with previous years. ix. Trace 20 accounts from the trial balance to accounts on master files. x. Examine for sequence of shipping documents. Required: For each procedure (i) to (v) above, identify the audit objective for each audit procedure. (5 marks) Question 2 A. ISA 500 Audit Evidence defines audit evidence as the information used by the auditor in arriving at the conclusion on which the auditors opinion is based. Required: i. Explain why external evidence is more reliable than internal evidence. (4 marks) ii. Explain the terms relevant and reliable that determine the persuasiveness of evidence. (6 marks) B. For each of the following audit procedure, identify which type of audit evidence is applicable. No. Audit procedures Audit evidence 1 Observe clients warehouse personnel carried out stock taking at the end of financial year. 2 Trace the total amount of the sales journal to the amount stated in general ledger. 3 Obtain letter from clients legal counsel which states there were no lawsuits against the client. 4 Examine the title of the land for ownership from the contract or agreement. 5 Discuss the adequacy of provision for doubtful debts with the credit manager 6 Sending a written request to the clients insurance company requesting the amount of the fire insurance coverage. 7 Recalculate depreciation expenses 8 Evaluate the reasonableness of receivables by calculating and comparing ratios. 9 Examine newly acquired machine to make sure that acquisition was actually received and is in operation. 10 Examine corporate minutes of meeting to determine the authorization of issuance of bonds. Question 3 A.The following situations involve the provision of non-audit services. Indicate whether providing the services is a violation of MIA by- Laws. a) Providing internal audit services to a public company that is not an audit client. b) Implementing a financial information system designed by management for a private company. c) Recommending a tax shelter to a client that is publicly held. The services were pre- approved by the audit committee. d) Providing bookkeeping services to an audit client that is a private company. (4 marks) B.For each specific audit objectives given below, suggest appropriate management assertions and general audit objectives i. Recorded cash disbursement transactions are for the amount of goods or services received and correctly recorded. ii. Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarised. iii. Recorded cash disbursement are for goods and services actually received. iv. Cash disbursement transactions are properly classified. v. Existing cash disbursement transactions are recorded. vi. Cash disbursement transactions are recorded on the correct dates.