CONFIDENTIAL AC/APR2023/AUD339

UNIVERSITI TEKNOLOGI MARA

COMMON TEST

COURSE : AUDITING
COURSE CODE : AUD339
EXAMINATION : APRIL 2023
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of three (3) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of :

i) the Question Paper

ii) an Answer Booklet – provided by the Faculty

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages

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CONFIDENTIAL 2 AC/NOV 2022/AUD339

QUESTION 1

A. Auditing plays an important role in providing assurance to the intended users. The
qualities that auditors possess makes the public especially the shareholders
confident to make investment decisions.
Required:

a. Define auditing.
(2 marks)
b. Briefly explain the qualities below that a professional accountant should
possess:
i. Competence
ii. Independent person
(2 marks)
c. Explain any THREE (3) benefits of auditing to the employees of an audited
company.
(6 marks)
B. A natural conflict of interest between a manager of a company and the absentee
owner may occur especially when their goals do not coincide.
Required:

Briefly explain how auditing overcome this natural conflict of interest.

(5 marks)
(Total: 15 marks)

QUESTION 2

A. Auditor’s main objective when performing audit of financial statement is to provide his
opinion whether the audited company prepared its financial statements with truthful
dan fairness.

a. Define ‘true and fair view’ phrase in the scope of financial statement audit.
(3 marks)
b. Briefly explain TWO (2) responsibilities of auditor in financial statement audit
other than providing opinion.
(4 marks)

c. Provide TWO (2) reasons for the demand of auditing and assurance services.
(3 marks)
B. For each of the following situations, state the type of audit it refers to:

Situation Type of audit

i. The auditor evaluates the disbursement of Pejabat
Tanah dan Galian Daerah Kuantan for a special
research project to determine whether the expenditures
were consistent with the approved procedures.
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CONFIDENTIAL 3 AC/NOV 2022/AUD339

ii. The auditor conducted an interview with credit officer of

AIM Bhd to obtain information on the loan approval
process to ensure that it is done according to the
company’s policy and procedures.

iii. The auditor of Triple H Sdn Bhd conducts an audit to

identify whether the business sale processes are
sufficient to produce an optimum level of efficiency and
effectiveness.

iv. An independent auditor assisting the Bukit Aman

financial criminal division for money laundering cases.

v. Their primary role is to serve the needs of third parties

and provide reasonable assurance of the reliability of
the report.

(5 marks)
(Total: 15 marks)

QUESTION 3

A. An independent auditor appointed by any company is subject to relevant provisions

under Companies Act 2016.

i. State the relevant provisions regarding the auditor provided by Section 8 of

the Act.
(2 marks)

ii. The importance of independence concept to an auditor has been emphasised

by Companies Act 2016. State any FOUR (4) situations where the auditor will
be disqualified to be appointed as an independent auditor under section 264
of companies act 2016.
(4 marks)

iii. The powers and duties of an auditor are clearly defined under Section 266 of
the Companies Act, 2016. Here, the law states that an auditor has a statutory
duty to report to members with regards to the financial statements, company's
accounting and other records related to those financial statements.
Describe why an audited financial statement is very important?
(2 marks)

iv. Give TWO (2) circumstances under which an auditor can resign from his
appointment in a company.
(2 marks)

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CONFIDENTIAL 4 AC/NOV 2022/AUD339

B. In each of the following independent circumstances, explain whether the relevant

provision of the Companies Act 2016 is violated or not. Present your answer in the
following format:

Situation Violated/Non violated Reason

i.

Situations:

i. LCS Sdn Bhd is a newly incorporated company. The company appointed

its first auditor 21 days before the end of its first financial statement
submission date to the Registrar.

ii. The auditor of Madani Pharma Sdn Bhd submitted a resignation

notice before expiry of his term to the company. Subsequently, the
company informed the Registrar of the auditor's resignation within
seven days from the receipt of the notice.

iii. Aliya was appointed to be the external auditor of Cantik Rias Bhd. His
wife owned a furniture supplier company, whose partner was the
financial controller of Cantik Rias Bhd.

iv. In the previous year Radzi experienced financial problem and

borrowed money amounting RM5,000 from Perdana Citra
Bhd.Recently, Perdana Citra Bhd appointed Rafizi, Radzi & Co. as its
external auditor and Radzi is the audit partner of Rafizi, Radzi & Co.

v. Fazlina & Co. is a new audit firm, being in operation for the previous
three years. To secure her audit clients, she fixed the audit fee at
RM5,000 for her existing clients.

(10 marks)
Total: 20 marks

(TOTAL: 50 MARKS)

END OF QUESTION PAPER

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