Auditing

STION 5 a) The responsibility for adopting sound accounting policies, maintaining adequate internal control and making a fair presentation in financial statements rests with the management. On the other hand, auditor's responsibility is to check the financial statement using the relevant auditing standard by identifying the material misstatements. Required: (1) Discuss the reasons why financial statement auditors are responsible for reasonable but not absolute level of assurance. (6 marks) (ii) Identify the two (2) types of fraud and provide two (2) examples for each. (5 marks) b) Balance-related audit objectives are similar to transaction-related audit objectives as they follow management assertions. However, balance-related have more audit objectives than transaction-related. Required: Describe the general and specific balance-related audit objectives on the inventory cycle based on the following management assertions: (iii) (iv) (v) (vi) Existence Completeness Accuracy Cut-off Realizable value Rights and obligation Please use the format shown below: Management assertions General balance-related Specific balance-related audit objectives audit objectives (0) Existence (9 marks)