Question 1: (25 marks)

Al Arab is the medical insurance company established on 1^st January 2000. The company is well known and generating positive cash flows for the 15 years. From the year 2016, the company suffering losses. To make different corrective actions, the CEO of a company decided to change the CPA firm. The company hired Axis firm as a new CPA firm. Now suppose you are the senior auditor of this firm and your CEO assigned you to perform audit procedures for the client Al Arab and obtain sufficient audit evidence.

Required:

a.What are the different types of audit procedures that you as an auditor is planning to perform/adopt during audit process? (15 marks)

b.Support each type of audit procedure with relevant example. (10 marks)

Question 2: (25 marks)

Assume that the auditors find a weak Internal Control system at Sunrising Company, a manufacturer and distributor of sanitary fittings. Would the weak internal control causes the auditors to rely more or less on each of the following types of evidence during their audit of Sunrising Company?

a.Documents created and used only within the organization (5 marks)

b.Physical evidence (5 marks)

c.Evidence provided by specialists. (5 marks)

d.Analytical procedures. (5 marks)

e.Accounting records (5 marks)

Required: For each of the above five items, state your assumption and explain fully the underlying reasoning.

Question 3: (25 marks)

"Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the nancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinion.

'Opinion', In our opinion the nancial statements present fairly, in all material respects, the nancial position of the Company as at 31 December 2015 and its nancial performance and its cash ows for the year then ended in accordance with International Financial Reporting Standards".

a.What are the basic elements of auditor's report? Explain briefly.(10 marks)

b.What do you understand from the above one section of auditor's report? (10 marks)

c.What conclusion or result you can extract from the above paragraph about the company financial statement representations? (5 marks)

Question 4: (25 marks)

A.There are different types of auditor opinions, one of which they must express in their audit report once they will complete their audit process. List and briefly discuss the different types of auditor opinions.

(15 marks)

B.Identify that under following cases what types of opinions can be expressed by the auditor? Support your answer with discussion.

(10 marks)

Case A

The auditor noticed that inventory of Beta Company faces a write-down due to obsolescence. However, the company refuses to write down the inventory. Thus, only the inventory and cost of goods sold accounts are wrong

Case B

The auditor is looking to review the company's minutes book, which contains important information regarding the board of directors meeting and the audit committee. ABC Company does not permit the auditor to review the minutes book. As a result, the auditor is unable to access the minutes book, a majority of the company's accounts cannot be verified