AUD339 – SS TEST 1 NOV 2020

(SESSION 1 = 30 marks)

Question 1

Which of the following is an incorrect phrase? (1 mark)

a. Auditing is a systematic process.
b. Auditing is subjectively obtaining and evaluates evidence.
c. Auditing evaluates evidence regarding assertions.
d. Auditing communicates results to interested users.
Which of the following best describes the appropriate relationship between internal and external
auditor? (1 mark)
a. The internal auditor often competes with the external auditor for audit assignments.
b. The internal auditor’s work supplements that of the external auditor.
c. The internal and external auditors coordinate their work whenever possible.
d. The internal auditor and the external auditor work independently of each other.
The main purpose of an audit of an organization is to ________ (1 mark)
a. assess the accuracy of the postings to the books of account.
b. examine the evidence from which the financial statements have been prepared.
c. ensure that errors, omissions and fraud have not taken place.
d. prepare the financial statements from the books of account.
The primary responsibility of the adequacy of disclosure in the financial statements and
footnotes rests with the ________ (1 mark)
a. partner assigned to the engagement.
b. auditor in charge of field work.
c. management of the company.
d. registrar of the company.
In an audit made in accordance with standard auditing practices, an auditor _________ (1 mark)
a. has the responsibility to discover all material errors or irregularities.
b. has the responsibility to detect errors but not irregularities.
c. guarantees the discovery of all material errors or irregularities.
d. has the responsibility to inform management for material errors and irregularities.
Below are the functions of Malaysian Institute of Accountants (MIA) in relation to the
accountancy profession in Malaysia except ______ (2 mark)
a. to regulate the accountancy profession in Malaysia.
b. to review accounting and related practice for Malaysian Accountant.
c. to issue certification for internal auditors’ members.
d. to conduct research on the accounting professions.
Below are among the external stakeholders that exerts demand for financial audit except
_________ (1 mark)

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 a. investors
b. financial providers
c. employees
d. suppliers

T/F Mark
Every company, regardless of size, registered under the F 1
Companies Act 2016 is required to have its financial
statements audited at any time.
Accounting is a process to examine financial statement to F 1
prove true and fair view of company’s affair.
The scope of the internal auditor’s work is usually T 1
determined by the client’s management.
An external auditor is responsible for determining the nature F 1
and extent of the internal control system appropriate to a
company.
Compliance auditing reports on fairness of the financial F 1
statement.
Among the responsibilities of an auditor is to assist the audit F 1
client in the preparation of the financial statement.
International Standards on Auditing are the guidance F 1
statements prepared and issued by the Council of Malaysia
Institute of Accountants.

Question 2 A
Operational auditing is oriented primarily toward ____________ (1 mark)
a. future improvement to accomplish the goals of management.
b. the accuracy of data reflected in management’s financial records.
c. verification that a company’s financial statements are fairly presented.
d. past protection provided by existing internal control.
An auditor investigates company financial records to derive suitable evidence for use in litigation
is an example of _____________ (2 mark)
a. performance audit
b. compliance audit
c. syariah audit
d. forensic audit
Evaluate the policies and procedures of the Kementerian Kesihatan Malaysia in terms of
bringing new drugs to the market is an example of government audit. True (2 mark)

Question 2 B
For each of the following situations, you are required to identify the most likely type of audit and
the type of auditor:

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 Type of audit Type of
(i) auditor (ii)
i. The auditor observes the procedures of processing Operational/ Internal
cash payment by the Finance Department of Mewah Performance
Ria Sdn Bhd in order to determine any weaknesses in
the internal control system.

ii. The auditor evaluates the disbursement of Pejabat Compliance Government

Tanah dan Galian Daerah Maran for a special
research project to determine whether the
expenditures were consistent with the approved
procedures.

iii. Evaluate a company’s IT Department in terms of the Operational/ Internal

efficient and effective use of corporate resources. Performance

iv. The auditor did thorough inspection of official receipts Forensic External
to obtain evidence on alteration of amounts written on
the official receipts.

v. Determine the fair presentation of DDC Chemical’s Financial External

balance sheet, income statement, and statement of Statement
cash flow.

Marks 5 5

(SESSION 2 = 20 marks)

Question 3: Part A

N Questions TRU FALSE

o E
1. An approved company auditor is a chartered accountant as defined
under the Accountants Act 1967 with automatic approval from the
Finance Minister after fulfilling the requirements as per the 1st and 2nd √
schedule of the Act without the need to make an application to the
Minister.
2. For certain public companies, the appointment of an auditor is not
√
mandatory.
3. The auditor will be automatically re-appointed in the next annual
general meeting (AGM) if no appointments were made by the √
members or board or registrar.
4. A special notice is required for a resolution to remove an auditor from
√
office at a general meeting.
5. Resignation of the auditor takes effect immediately upon sending up
√
the resignation notice to the company’s registered office.

(√5 x 1 mark = 5 marks)

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 Part B

An auditor of a company shall have a duty to form an opinion regarding the financial statement
of the company. State any THREE (3) matters in relation to the company’s financial statement
that the auditor needs to form the opinion. (3 marks)
 whether he has obtained all the information and explanations that he required√
 whether proper accounting and other records, including registers, have been kept by the
company as required by this Act√
 whether the returns received from branch offices of the company are adequate√
 whether the procedures and methods used by a holding company or a subsidiary in
arriving at the amount taken into any consolidated accounts were appropriate to the
circumstances of the consolidation√
(√Any 3 x 1 = 3 marks)

Briefly explain the possible action that may be taken by the company in dealing with the
deceased of the auditor. (2 marks)
This is the situation of filling the casual vacancy of auditor√. According to Co. Act, the Board
@ BOD shall appoint the auditor in this case. √
(√2 x 1 = 2 marks)

Part C

N Violated/ Explanation
o Not Violated
1. Based on CA, all companies must appoint auditor except certain
Violated √
companies that categorized as exempt private company. √
2. Auditor is not allowed to have business partnership with the officer
Violated √
of the client. √
3. Because En Zainal has become the officer in the client company
Not Violated √
not less than 12 months previously. √
4. It is provided under CA that members @ s/h could fix the
Not Violated √
remuneration. √
5. CA provides that auditor must state whether the company comply or
Violated √
not with the reporting framework @ regulations. √

(√10 x 1 = 10 marks)

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