ISA 400 Risk Assessments and Internal Control deals with internal control objectives and internal controls. ISA 500 Audit Evidence deals with audit objectives and audit procedures. A proper understanding of internal controls is essential to auditors in order that they understand the business and are able to effectively plan and […]

Auditors obtain several different confirmations from various sources during the course of their audit. Required: Describe the audit evidence provided by each of the confirmations listed below, the practical difficulties in obtaining them and the alternative audit evidence available when they are not provided: (a) Management representations. (7 marks) (b) […]

Mr. Mteta has approached you with a view to obtaining help in determining his taxable income for 2005. He has supplied the following information: 1. Business Income He runs a small garage that generate taxable income of Sh.60,000. In 2004, he had a tax loss of Sh.40,000 from this business. […]

Company B has a provision in its balance sheet for claims made by customers for product defects under 1-year company warranties. Required: Describe the matters you would consider and the audit evidence you would require for the provision.

Company A has a number of long and short-term payables, accruals and provisions in its balance sheet. Required: Describe the audit procedures you would apply to each of the three items listed below, including those relating to disclosure. i)A 10-year bank loan with a variable interest rate and an overdraft […]

Flowers Anytime sells flowers wholesale. Customers telephone the company and their orders are taken by clerks who take details of the flowers to be delivered, the address to which they are to be delivered, and account details of the customer. The clerks input these details into the company’s computer system […]

List and explain any three deductions that may be available against gains or profits from employment

i) Mr. Ali Ming is a hardware merchant. He purchases cement from Athi Cement Ltd. which he then sells to his customers. Both Ali Ming and Athi Cement Ltd. require a profit margin of 20% on cost. Cement attracts 18% VAT. If the cost of production by Athi Cement Ltd. […]

What are the rules governing the payment of VAT? Specify the additional tax that may arise from failure to comply with those rules.