Assignment Solution ACC311
(Fundamentals of Auditing) Fall 2019
Due Date: 29 November, 2019
According to Companies Act 2017 [Section 247], the person who is a partner or employee of a director, other officer or employee of the company cannot be appointed as auditor. So, the appointment of M/s Shafee & Co as external auditor is not legally permissible as Mr. Waseem – director of Barkat enterprises is also a partner of M/s Shafee & Co
According to Companies Act 2017 [Section 247], the public company having paid up capital of three million or more must hired the chartered accountant or chartered accountancy firms as external auditors. So, the appointment of Nabi Associates as external auditor is legally permissible as MTM (Pvt) have 3.2M paid up capital.
According to Companies Act 2017 [Section 247], the person who is a spouse of company’s director cannot be appointed as auditor. So, the appointment of Mr. Ahsan’s company as external auditor is not legally permissible as Mr. Ahsan is a spouse of company’s director i.e. Miss Sara.
As per Companies Act 2017 [Section 247], a persons who is Present directors, other officer or employees of the company or who held these offices during the last three years cannot be appointed as external auditor. So, Mr. Shahbaz cannot be appointed as external auditor as he holds the company office as an officer in preceding 2 years.
Mr. Zeeshan cannot be appointed as external auditor of Hussain Enterprises as he is still employee of the company which is against the conditions of Companies Act 2017 [Section 247] for appointment of auditors.
SOLVED ACC311 Quiz 2 Solution and Discussion
Quiz No.2 Total Questions : 10
Please read the following instructions carefully!
Quiz will be based upon Multiple Choice Questions (MCQs).
You have to attempt the quiz online. You can start attempting the quiz any time within given date(s) of a particular subject by clicking the link for Quiz in VULMS.
Each question has a fixed time of 90 seconds. So you have to save your answer before 90 seconds. But due to unstable internet speeds, it is recommended that you should save your answer within 60 seconds. While attempting a question, keep an eye on the remaining time.
Attempting quiz is unidirectional. Once you move forward to the next question, you can not go back to the previous one. Therefore before moving to the next question, make sure that you have selected the best option.
DO NOT press Back Button / Backspace Button while attempting a question, otherwise you will lose that question.
DO NOT refresh the page unnecessarily, specially when following messages appear
Question Timeout: Now loading next question…
If for any reason, you lose access to internet (like power failure or disconnection of internet), you will be able to attempt the quiz again from the question next to the last shown question. But remember that you have to complete the quiz before expiry of the deadline.
If any student failed to attempt the quiz in given time then no re-take or offline quiz will be held.
Which one of the following statements is correct with respect to obtaining an understanding of a client? ACC311
Auditors are not required to obtain an understanding with their clients
Analytical procedures used in planning an audit should focus on identifying which one of the followings?
Areas that may represent specific risks relevant to the audit
Material weaknesses in the internal control structure
The predictability of financial data form individual transactions
The various assertions that are embodied in the financial report
Which one of the following statements is TRUE about the auditors? ACC311
The auditor is not required to apply all the risk assessment procedures for each aspect of the understanding required
Which of the following is NOT one of the five major components of internal control?
A. Risk assessment
B. Control activities
C. Information and communication system
D. Human resource background checks
Which one of the following is an appropriate form of documenting the auditor’s understanding of the client’s internal control system? ACC311
Trend analysis and vertical analysis are two important examples of: ACC311
Test of controls
All of the following should be observed and inspected by the auditors during the risk assessment process of an entity EXCEPT: ACC311
A. Observations of Activities and operations
B. Inspection of Documents and records
C. Reading Management reports
D. Visit to other companies in the industry
While considering internal control system of an entity, the auditor is basically concerned that the system provides reasonable assurance about which one of the following? ACC311
That the management can not override the system
Operational efficiency has been achieved according to management plans
Errors have been prevented or detected
Controls have not been circumvented by collusion
The various methods of ascertaining and documenting the internal control system of an entity include all of the following EXCEPT: ACC311
If the auditor makes an assessment that there is a low level of control risk and inherent risk for a client, what would you expect from an auditor to do? ACC311
Perform no substantive procedures