a) Explain the meaning of each of the following terms in relation to audit reports: i. Circumstances of uncertainty. (5 marks) ii. Circumstances of disagreement. (5 marks) b) Distinguish between the “except for” and the “subject to” audit opinions. (5 marks)

Explain how auditors distinguish their responsibility from those of the directors in respect of financial statements.

Clearly discuss the basic element of the scope paragraph of an audit report.

(a) A company manufactures mountain and racing bikes. Each mountain bike is sold at Sh. 6.375 and a racing bike is sold at Sh. 9,000. A racing bike requires 6 kilogrammes of aluminium while a mountain bike requires 4 kilogrammes of aluminium. Aluminium cost Sh. 750 per kilogramme. It costs […]

State the evidence, which you, as the auditor, would like to find in place and pay attention to when vouching the following payments made by RR Paper Mills Ltd., during the financial year ended 31 October 2002. a) Loans to three employees totaling Sh. 6 million. (4 marks) b) The […]

Explain the economic effects of a high rate of inflation. (20 marks)

a) Define inflation. (3 marks) b) What are the major causes of inflation? (12 marks)

The table below shows the sales of new cars by quarters during a period of three years: Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sh. “million” Sh. “million” Sh. “million” Sh. “million” 2001 55.0 76.5 61.2 77.8 2002 54.4 65.9 52.7 81.4 2003 59.3 83.2 78.5 93.0 Required: […]

(a) State the principal components of a time series. (3 marks) (b) (i) Explain the difference between multiplicative and additive models as used in time series. (8 marks) (ii) State the conditions under which each model is used. (4 marks)