Posted: September 30th, 2023
Q1. Imagine you are the auditor of an organization and you find that the Trial
Part 1 :
Q1. Imagine you are the auditor of an organization and you find that the Trial balance of the financial year does not tally (Dr and Cr are not equal)
a. What are the types of audit test you would cover, explain with examples.
b. Explain the assertions you would apply on transactions and events, on Account balances, and on Presentation &Disclosure. (4 Points)
Q2. Chapter 4
When an Auditor finds misstatements in entities financial statements which may be the result of fraudulent act, what should be the role of an auditor under that situation? (2 Points)
Q3 Chapter 5
‘Audit evidence is all that information, from whatever source, used by the auditor in arriving at the conclusions on which the audit opinion is based.’
Briefly explain the three main concepts of audit evidences. ( 3 Points)
Q4. Chapter 7
Explain auditor’s documentation Process and procedures of internal control over financial reporting (ICFR) and its types of audit reports. (3 Points)
Q5 Chapter 8
Explain the Concept of Audit Sampling and types of Sampling Risk. (3 Point)
Reference Part 1 :
Q1 What Makes Information Useful? Explain each point. (2.5 marks)
Q2 What are the Components of an AIS? (2.5 marks)
Q3 What does documentation mean? Describe the two Techniques of Systems Documentation . (2.5 marks)
Q4 Explain Three Advantages of Database Systems. (2.5 marks)
Q5 Explain The three elements of the Fraud Triangle, then provide an example to each one. (2.5 marks)
Q6 What does Social Engineering mean? Then give three examples of its Techniques from the real life. (2.5 marks)
Reference Part 2 :
Part 3 :
Assignment Question(s): (Marks 15)
Q1. Visit the link below to access an academic article that discusses the “Antecedents and Consequences of Participative Budgeting” one of the most common researched topics in Management Accounting. After reading the article, in your own words, try to summaries it covering the following items:
1- The article issues and objectives.
2- Research method(s) and methodology used.
3- Findings and impact on the field.
Write no less than 300 words.
Q2. What is Grounded theory? Discuss its application in Accounting research.
Q3. Differentiate between the three types of Validity (Internal, External and Construct)
Reference Part 3:
Q1. a) The types of audit tests I would cover if the trial balance does not tally include:
Recomputation – Recomputing additions, subtractions in the trial balance to find errors.
Clerical check – Checking postings and balances are correctly recorded from source documents.
Analytical procedures – Comparing account balances and relationships with prior periods and budgets to identify anomalies (Ramachandran & Rastogi, 2018).1
b) The assertions I would apply include:
For transactions and events – Occurrence, completeness, accuracy, cutoff. For example, checking that all sales are recorded in the correct period.
For account balances – Existence, rights and obligations, valuation and allocation. For example, checking fixed assets physically exist and are recorded at cost.
For presentation and disclosure – Occurrence, rights and obligations, completeness, classification and understandability. For example, checking notes to accounts meet disclosure requirements (Arens et al., 2016).2
Q2. When misstatements are potentially fraudulent, the auditor’s role is to obtain sufficient evidence to determine if material misstatement is due to error or fraud. They should discuss with management and audit committee, consider implications on audit report, and communicate to regulatory bodies if required (Arens et al., 2016).2
Q3. The three concepts of audit evidence are: sufficiency, appropriateness and reliability. Sufficiency is the quantity of evidence, appropriateness is relevance and validity, and reliability depends on source and nature of evidence (Arens et al., 2016).2
Q4. Auditor’s documentation includes: purpose, source, conclusions, departures from ISAs. ICFR involves control environment, risk assessment, control activities, information & communication, monitoring. Audit reports are unqualified, qualified, adverse or disclaimer (Arens et al., 2016).2
Q5. Audit sampling involves statistical and non-statistical selection. Sampling risks are: non-sampling risk (e.g. bias), under-coverage, sampling error (Arens et al., 2016).2
References Part 1:
Ramachandran, J., & Rastogi, R. (2018). Forensic accounting: Concepts and practices for a changing business environment. PHI Learning Pvt. Ltd.
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2016). Auditing and assurance services: An integrated approach. Pearson.
Q1. Information is useful if it is relevant, reliable, timely, understandable and comparable. Relevant information influences decisions. Reliable information is verifiable and free from bias. Timely information is available when needed. Understandable information is clear, concise and presented in a consistent format. Comparable information allows analysis of trends and performance over time or against competitors (Bovee et al., 2002).3
Q2. The components of an accounting information system are: people, procedures, data, software and hardware. People design and use the system. Procedures are the processes and policies. Data are the financial records and transactions. Software includes accounting and database programs. Hardware refers to computers and servers (Bovee et al., 2002).3
Q3. Documentation refers to records of systems, processes and policies. The two techniques are: narrative description which explains the system step-by-step in plain text, and flowcharts which visually depict the flow of transactions through the system using standard symbols (Bovee et al., 2002).3
Q4. Database advantages are: centralized data storage for consistency and control, flexible querying of data, and data integrity through validation rules and restrictions (Bovee et al., 2002).3
Q5. The fraud triangle elements are: pressure/incentive, opportunity, rationalization. An example of each: financial difficulties (pressure), weakness in controls (opportunity), entitlement attitude (“they owe me” rationalization) (ACFE, 2022).4
Q6. Social engineering involves manipulating people into performing actions or divulging confidential information, rather than bypassing physical security measures. Examples of techniques are pretexting (contacting under false pretense), quid pro quo (offering something in exchange), and name-dropping (using authority of another) (Hadnagy, 2011).5
References Part 2:
3. Bovee, C. L., Thill, J. V., & Schatzberg, J. (2002). Business in action. Prentice Hall.
4. Association of Certified Fraud Examiners (ACFE). (2022). Report to the nations on occupational fraud and abuse. https://www.acfe.com/report-to-the-nations/2022/
5. Hadnagy, C. (2011). Social engineering: The art of human hacking. John Wiley & Sons.
Q1. The article discusses how participative budgeting, where subordinates are involved in the budget-setting process, can impact organizational outcomes. The objectives were to identify antecedents and consequences. A questionnaire was used to collect data, and regression analysis was conducted. The findings showed participative budgeting positively influences job satisfaction, performance and organizational commitment (Shields & Shields, 1998).6
Q2. Grounded theory is an inductive research method where theory is developed from data systematically gathered and analyzed through the research process. In accounting, it has been used to explore issues like budgeting behavior and professional identity formation (Glaser & Strauss, 1967).7 It allows theories to emerge from qualitative data rather than testing hypotheses.
Q3. Internal validity checks if research truly measures what it intends to. External validity concerns generalizing findings. Construct validity assesses how well measures represent the concepts studied. For example, using multiple interview questions to understand budgetary slack (rather than one) strengthens internal validity (Babbie, 2013).8
References Part 3:
6. Shields, M. D., & Shields, J. F. (1998). Antecedents of participative budgeting. Accounting, organizations and society, 23(1), 49-76. https://doi.org/10.1016/S0361-3682(96)00043-5
7. Glaser, B. G., & Strauss, A. L. (1967). The discovery of grounded theory. Chicago: Aldine.
8. Babbie, E. R. (2013). The basics of social research. Cengage Learning.