ChapterChapter Name

Questions

1. (b) In addition to audit, users want some other assurance services. Give few
examples.
5. A key issue for accountants is that there are limitations to assurance services, and
therefore there is always a risk involved that the wrong conclusion will be drawn. What
are the limitations of assurance services?
8. (b) What is the `expectation gap in assurance engagement?
1. What is assurance engagement? What are the key elements of an assurance
engagement?

Marks
5
10
6
4+8=12

9. Assurance service is an independent professional service, typically provided by

Chartered Accountants, with the goal of improving the information or the context of
the information so that decision makers can make more informed, and presumably
better decisions. Assurance services provide independent and professional opinions
that reduce the information risk (risk that comes from incorrect information)
a. Audit and Assurance are always used together. What is the exact difference
6+3+6=
between these?
15
b. Under the International Framework for Assurance Engagements, how many types
of assurance engagement a practitioner is permitted to perform? Define all.
01

Concept of
and need for
assurance
2. In Bangladesh, the auditor will normally express his audit opinion by reference to
the true and fair view, which is an expression of reasonable assurance. Briefly define
the terms true and fair

3. You are an Accountant who has been approached by Mr. X, who wants to invest in
company ABC Ltd. He has asked you for assurance whether the most recent financial
statements of company ABC Ltd. are a reliable basis for him to make his investment
decision.
Identify the key elements of an assurance engagement in this scenario, if you
accepted the engagement.

1. Assurance can never be absolute. Discuss the limitation of assurance. Which three
of the following are benefits of assurance work?
An independent professional opinion
Additional confidence given to other related parties
7+3=10
Testing as a result of sampling is cheaper for the responsible party
Judgments on estimates can be conclusive
Assurance may act as a deterrent to error or fraud

1. (a) List the key elements of an assurance engagement.

1. (c) The code of ethics of ICAB and IFAC sets out some rules under which auditors
should accept new appointments.
What procedures should the new auditors follow to comply with the above set of rules?

3. (a) The form and contents of audit Engagement Letter may vary for each client, but
they would generally include some basic contents.
Write in brief those basic contents of an Engagement Letter.

1. Briefly explain the key elements of an assurance engagement and what the types of
assurance are engagement as per the International Framework for Assurance
engagements.

10

7. The practitioner should comply with the International Framework for Assurance
Engagements (the
Framework) and International Standard on Assurance Engagements (ISAE) when
performing an assurance engagement other than an audit or review of historical
financial information covered by International Standards on Auditing (ISAs) or
International Standards on Review Engagement (ISREs).
(a) What are the factors a practitioner must consider before accepting an assurance
engagement and what are low risks and high risks for assurance?

02

Process of
Assurance : 7. (b) What are the purposes of an engagement letter? Should a practitioner send an
Obtaining & engagement letter to existing clients?
engagement

10

02

Process of
Assurance :
Obtaining &
engagement 1. (b) Write down the purpose of issuing audit engagement letter. Discuss the
situations where it is necessary to issue audit engagement letter each year even for
repetitive audits.
2. Which three of the following will normally be contained within a letter of
engagement? 6
Responsibilities of the auditors;
Responsibilities of the directors;
The scope of the audit;
The staff assigned to the engagement;
1. What forms and contents will normally be contained in a letter of engagement?
2. You own an accounting firm. XYZ Ltd. is your prospective client. However it declines
permission to contact the previous auditors, what should be your course of action?
4. What forms and contents will normally be contained in a letter of engagement?
5. You own an accounting firm. XYZ Ltd. is your prospective client. However, it declines
permission to contact the previous auditors, what should be your course of action?
3. (a) Name five possible of sources of information about the client.
(b) Define Materiality in assurance work. Which factors indicate a risk might be a
significant risk?
1. (d) The audit firm considers whether the client is likely to be high or low risk to the
firm in terms of being able to draw an appropriate assurance conclusion in relation to
that client.
Distinguish between two clients considering high and low risk.
1. (c) BSA-320 Audit materiality provides guidance on the concept of materiality in
planning and performing an audit. Define materiality and describe the relationship
between materiality and audit risk and how audit risk can be reduced to an acceptable
level?
3. (b) What is the risk of material misstatement occurring within the entity and its
environment? Give two examples.

10

4
3
3
2
5+2+4=
11

10

3. What is Audit Risk? What are the different types of Audit Risk? For each of the
following examples, indicate the type of risk:
3. a) Vendors payments are processed, booked and reconciled in the system by the
same person in the Accounts Department.
3. b) The assurance firm may do insufficient work to detect material errors.
3. c) The financial statements contain a number of estimates.
1. a. Which of the following procedures might an auditor use in gaining an
understanding of the entity?
(i) Inquiry
(ii) Recalculation
(iii) Analytical procedures
(iv) Reperformance of a control
(v) Observation and inspection.

03

Process of
Assurance :
Planning the 1. b. The audit team is required to discuss susceptibility of the financial statements to
assignment material statements.
True
False

4+5
3
4
4

6. a. What is Audit Risk? What are the different types of Audit Risk? For each of the
following examples, indicate the type of risk illustrated: 4+4=8
i. Vendors payments are processed, booked and reconciled in the system by the same
person in the Accounts Department.
ii. The organization is highly connected with the building trade.
4+4=8
iii. The assurance firm may do insufficient work to detect material errors.
iv. The financial statements contain a number of estimates.

6. b. If control and internal risk are assessed as sufficiently low, substantive

procedures can be
abandoned completely.
True
False

2. Discuss in brief Audit Strategy and Audit Plan. Which three of the following would
normally be contained
in the overall audit strategy? 7+3
The contract between the audit firm and the client
The result of audit risk assessment
7+3=10
Calculation of preliminary materiality
Detailed plan of audit procedures to be carried out
List of staff to be involved with the audit

1. (a) What do you mean by the term Sufficient and Appropriate audit evidence?
State various factors that help the auditor to ascertain as to what is sufficient and
appropriate audit evidence.
2. An auditor's report is considered an essential tool when reporting financial
information to users, particularly in business. Some have even stated that financial
information without an auditor's report is "essentially unreliable" for investment
purposes.
(a) What is Audit Opinion? How is an unqualified opinion written in an audit report?

04

Process of
Assurance :
Evidence &
reporting

10

3+4

2. (b) What three things the auditors are required to state as explicit opinions in their
audit report?

2. (c) What matters the auditors are required to state by exception as implied opinions
in their audit report?

2. (d) Who should the auditors address to in their audit report of a company according
to BSA 700?

8. An accountant evaluates financial records based on assertions imbedded in the

financial statements.
(a) What are the management assertions under different categories?

11. (b) Name six financial statement assertions.

04

Process of
Assurance :
Evidence &
reporting
4. (a) What are the matter with which the auditors imply satisfaction in an unqualified
report under the
Companies Act 1994? What basic elements, according to BSA 700, the audit report
should include?
4. (b) Which three of the following are implied opinions given in the audit report? 3
All information and explanations required for the audit have been received.
Proper accounting records have been kept.
The directors reports is consistent with the financial statements
The financial statements have been prepared in accordance with the Companies Act
1994.
The preparation of the financial statements is the responsibility of the companys
management.

5. Define Audit Committee. What are likely to include in the terms of reference of the
audit committee as
required for the companies listed in the Bangladesh stock exchanges?
Introduction 3. Internal control is most effective when controls are built into the entitys
to internal infrastructure and properly monitored to assess the quality of the systems
Control
performance over the time.
a. What type of assurance is internal control expected to provide?
3. (c) Why should management establish effective internal control?
4. Most IT controlled weaknesses are rooted in poor management rather than the
technology itself. The general controls are those that equally affect the whole system
within an installation whereas application controls must be designed to address the
specific issues in each separate application or program.
a. What are the objectives of general controls and application controls?
4. (c) What is audit software? Give examples of what audit software can do.
4. Define Audit Committee. What are likely to include in the terms of reference of
audit committee as required for the companies listed in stock exchange of
Bangladesh.

05

4+5=9

2+6=8

5
5

3+3

3+4
3+6

7. The use of an IT system by a client does not change the need to establish effective
internal control; however, it does change the nature of the controls. More advanced IT
features, such as online capabilities, database storage, IT networks, and end user
computing, present special control risks. Therefore, specialized controls are needed,
including passwords, validity tests, and computer logs.
6+6=12
a. How do certain IT areas and IT general controls (ITGC) affect almost all financial
audits? 6
b. How do IT system of an entity cause risk of material misstatement?

05

3. What is Internal Control? Name its components. What are its importance and
limitations?
4.(a) Name three broad types of document used in Internal Control Recording.
4. (b) What are IT General and IT Application Controls? List three examples in each
area.
9. (c) Which two control activities are most likely to reduce the risk of payments being
made twice for the same liability?
7. What is internal control? Name the components of an internal control system.
What are the limitations of internal control systems? Why smaller companies have
problems in implementing internal controls?
3. What tests of control might be appropriate for Sales day book and Receivables
ledger

06

Revenue
System

2+5+8=
15
3
4+6=10
2
2+3+3+
3=11

10

4. Sales invoices are source documents that provide a record for each sale. For control
purposes, sales invoices are sequentially pre-numbered.
a. What are the control objectives to mitigate risk of not receiving payments from a
sales invoice?

4. (b) Which tests of control do you think appropriate for sales day book and suggest
some controls to safeguard cash in hand and at bank?

06

Revenue
System

9. (a) Which three of the following functions should ideally be segregated: 3

Authorization of orders
Invoicing
Recording cash receipts on receivables ledger
Reconciliation of receivables ledger with receivables ledger control account
Credit Control
8. As an assurance provider, how will you perform test of controls in relation to Sales?
Give five examples of tests to be performed on the cash payment book.

07

08

Purchase
System

Employee
Cost

6. (a) List six procedures assurance providers should carry out if wages are paid in
cash.

6. (b) How should assurance providers confirm that wages have been paid at the
correct rate to individual employees?

10

internal Audit 8. What are the key differences between external audit and internal audit? As
objectivity is a key issue for internal auditors, they are likely to routinely be involved in 3+2=5
operational activities do you agree? Explain.
5. Classify the following working papers into Current Audit file and Permanent Audit
file:
Engagement letters, new client questionnaire, financial statements relating to year
under review,
Management letter, Accounts checklist, Audit planning memo, Board minutes of
continuing relevance, and Accounting system notes.

10

5+6=11

9. (b)List four examples of purchase documentation on which numerical sequence

should be checked.

8. What does internal audit do? What are the key differences between external and
internal audit?
09

Documentatio 6. BSA 230 Audit Documentation establishes standard and provides guidance
regarding documentation in the context of audit of financial statements. Required: List
n
the purposes of audit working papers

12

10

Documentatio
n
9. Classify the following working papers into Current Audit File and Permanent Audit
File:
Engagement letters, New client questionnaire, Financial Statements relating to year
under review, Management letter, Accounts checklist, Audit planning memo, Board
minutes of continuing relevance, Accounting system notes.
4. (b) What is CAAT? What are the stages in the use of test data?

11

Evidence &
Sampling

3+4

2. Audit evidence is necessary to support the auditors opinion and report. It is

cumulative in nature and is primarily obtained from audit procedures performed
during the course of the audit.
a. Discuss the attributes of evidence as per BSA 500 and list the sources of audit
evidence.

2. (b) Is 100% examination likely in the case of test of controls? Give examples when
100% examination may be appropriate?

2. (c) There will be an impact on sample size when there is an increase in the auditors
assessment of the risk of material misstatement. Explain.

10. What is accounting estimate? What will be auditors approach to audit of

accounting estimates?
10. What includes audit evidence? Briefly explain the procedures to obtain audit
evidence.
5. The auditor should obtain written representations from management on matters
material to the financial statements when other sufficient appropriate audit evidence
cannot reasonably be expected to exist.
5. (a) What does a Letter of Representation provide as audit evidence?
5. (b) What actions should the auditor take when no other evidence is available and
internal confirmations form significant basis of the opinion?

12

Management 5. (c) What actions should the auditor take when management refuses to provide
representatio internal confirmations (representations)?
n

2+4=6
6

12

Management
representatio
n
5. (d) What should auditors do when they receive management representations?
5. What are management representations? How does management representations
work as
audit evidence? When management representations are required?
11. (a) When Management Representation is required? What do auditors do when
receive such representation and in occasions when such evidence does not agree with
other evidences?
3. (b) The financial statements of A Ltd. were prepared on going concern basis,
although there is a significant doubt about the companys ability to continue as a
going concern.
What effects will this situation have on your audit report if the uncertainty over going
concern is
(i) fully disclosed in the financial statements
(ii) not disclosed in the financial statements

(c) List the activities usually undertaken in an internal audit.

4. Inventory is often the largest item in the current assets category, and must be
accurately counted and valued at the end of each accounting period to determine a
companys profit or loss. Entities whose inventory items have a large unit cost,
generally keep a day to day record of changes in inventory (perpetual inventory
method) to ensure accurate and on-going control. Entities with inventory items of
small unit cost generally update their inventory records at the end of an accounting
period or when financial statements are prepared (periodic inventory method). The
value of an inventory depends on the valuation method such as First-In, First-Out
(FIFO) or Last-In, First-Out (LIFO) method.
4. (a) What are the major risks of misstatement of the inventory value in the financial
statements?

4. (b) What are the principal reasons for auditors attendance at annual physical
inventory (stocktaking)?

5
10

13

4. (c) Which of the following analytical procedures is most applicable to inventory;

comparison of sales of current and prior years or comparison of gross profit ratios of
current and prior years? Why?

4. (d) Why do auditors normally record result of their test counts to compare with the
final inventory listing during an inventory observation?

8. Complete the table, showing which tests on tangible non-current assets are
designed to provide evidence about which financial statement assertion:
Completeness Existence
Substantive Valuation Rights and obligations
Procedure - (a) Inspect assets (b) Verify the valuation certificate (c) Refer to the title deeds (d)
Key financial Compare assets in ledger to non-current asset register (e) Review depreciation rates
statement (f) Verify material on self constructed assets to invoices (g) Examine invoices after the
year end (h) Review repairs in nominal ledger.
figures
7. Describe the audit procedures you should apply to the following items in the
balance sheet of a limited company: 16
Stock of finished goods
Accounts receivables
Bank Balances
Fixed deposits
7. A Ltd has a number of long and short terms payables, accruals and provisions in its
Balance Sheet. 7
Required:
Describe the audit procedures you would apply to the following item including those
relating to disclosures.
A 10-years bank loan with a variables interest rate and an overdraft (a bank statement
with a debit balance on the bank statement) both from the same bank.

9. What does assurance provider check if perpetual inventory counting is used? What
will be the Audit plan for perpetual inventory count? In what circumstances is net
realizable value likely to be less than cost?

10

16

3+3+4=
10

12. What could be the possible reasons for disagreements of Accounts Receivable
balances between the client and the customer? Balance confirmation from individual
customers is the ideal substantive procedure, what are the alternative procedures to
verify existence/rights of Accounts Receivables?
13. Complete the table, showing which tests on tangible non-current assets are
designed to provide evidence about financial statement assertion.
Completeness Existence Valuation Rights and Obligations
(a) Inspect assets, (b) Verify to valuation certificate, (c) Refer to title deeds, (d)
compare assets in ledger to non-current asset register, (e) Review deprecation rates,
(f) verify material on self-constructed assets to invoices, (g) Examine invoices after the
year end, (h) Review repairs in nominal ledger.
17. Explain walk-through test with suitable examples.
9. What are the general sources of threat identified by the IFAC Code? Give one
example against each source?
6. The Code of Ethics for Professional Accountants (IESBA Code) establishes ethical
requirements for professional accountants. The fundamental principles for professional
ethics for professional accountants provides a conceptual framework that professional
accountants shall apply to identify threats to compliance with the fundamental
principles; evaluate the significance of the threats identified; and apply safeguards,
when necessary, to eliminate the threats or reduce them to an acceptable level.
a) What are the fundamental principles a Chartered Accountant shall comply with?

14

6. b) What are the threats that relationships or circumstances could compromise a

Codes of
members compliance with the rules?
professional
6. c) What are the actions or others measures to be taken to eliminate threats or
ethics
reduce them to acceptable levels?
15. a. The IFAC Code of Ethics applies only to statutory audits.
True
False

4+4=8

3
10

5
5
2

15. b. As per IFAC Code of Ethics, audit engagement partners of listed companies
should be rotated
away from the engagement:
i. Every year
ii After 2 years
iii After 3 years
iv. After 5 years
v. After 7 years.

2. (c) How will you manage conflict of interest in accepting an assurance client?
5. ABC & Co., is a Chartered Accountancy firm and its engagement partner for XYZ
Company has been in place for approximately eighteen years and his son has just
accepted a job offer from XYZ Company as Chief Financial Officer. If ABC & Co. is
appointed as internal and external auditors, then XYZ Company has suggested that
the external audit fee should be renegotiated with at least 20% of the fee being based
on the profit after tax of the company as they feel that this will align the interests of
ABC & Co. and XYZ Company. From the given information, mention the ethical threats
which may affect the independence of ABC & Co. in respect of the audit of XYZ
Company, and for each threat explain how it may be reduced.

15

15

6. Section 220 of Code of Ethics says that the principles of objectivity impose an
obligation on all professional accountants not to compromise their professional or
business judgment because of biasness, conflict of interest or the undue influence of
others.
a. What should a professional accountant do where there is a conflict of interest and
what safeguards are available for a professional accountant in different
Integrity,
Objectivity & circumstances?
Independence

6. (b) What should the professional accountant do if his request for consent to act for
another party having conflict of interest is refused by the client?

Independence

14. What are independence of mind and independence in appearance? Why do

independence and objectivity matter so much? What can the auditor do to preserve
objectivity? Name different categories of threats to independence.
16. List the different situations of conflict of interest those an accountant in business
might face. Monower is a qualified accountant. He has recently moved out of practice
and taken up the position of financial controller of a small company, XYZ Ltd. The
company has a short-term cash flow problem. Monower was recently called into the
board meeting and asked if he could defer some income from the previous financial
year so as to influence when the tax (both VAT and corporate tax) would be due to
those sales. The directors were insistent that such deferral was necessary and that he
should consider this request more in the nature of an order. What should be
Monowers course of action?

16

4+3+3=
10

4+4=8

2. Confidentiality is an assurance that information is shared only among authorized

persons or entities.
Breaches of confidentiality can occur when data is not handled in a manner adequate
to safeguard the confidentiality of the information concerned. Such disclosure can take
place by word of mouth, by printing, copying, e-mailing or creating documents etc.
The classification of the information should determine their confidentiality for
determination of the appropriate safeguards.
(a) What is the importance of confidentiality? What are the safeguards to
Confidentialit confidentiality?
y
3+3=6
2. (b) What should be your actions if you are compelled by the law that you have to
disclose confidential information of your client in the public interest?

2. (d) How an auditor can maintain Chinese Walls to safeguard clients

confidentiality?

11. Why is confidentially important? Discuss the security procedures which might be
wise to prevent accidental disclosure of information?

3+5=8

Session Chapter Weight

June, 2013
June, 2012
June, 2012
June, 2011

December,2
011

9%

June, 2010

June, 2010

December,2
010

June, 2013

June, 2013

June, 2013

June, 2012

June, 2012

June, 2012

15%

15%
December,2
012

June, 2011

December,2
011
December,2
011
June, 2010
June, 2010
December,2
010

June, 2013

December,2
012
December,2
012

December,2
011
December,2
011
December,2
011

June, 2010

20%
June, 2010

June, 2010

June, 2010

December,2
010

December,2
012

December,2
012

December,2
012
December,2
012
December,2
012
June, 2012
8%
June, 2010

8%

December,2
010

December,2
010

December,2
010

June, 2012
June, 2012

June, 2012

June, 2012
December,2
011

12%

12%
December,2
011

June, 2011
June, 2011
June, 2011
June, 2011
June, 2010

June, 2012

June, 2012

June, 2012
5%

5%
June, 2011

December,2
010

June, 2011

1%

June, 2011
1.3%
June, 2011

June, 2011
2.14%
June, 2010

December,2
011

December,2
010

3%

3%

June, 2010

December,2
012

June, 2012

June, 2012

5%

June, 2012
December,2
010
June, 2010

June, 2013

June, 2013

June, 2013

5%

5%
June, 2013
June, 2011

June, 2010

June, 2013

June, 2013

June, 2013

June, 2013

June, 2013
June, 2013

December,2
011

June, 2011

December,2
010

December,2
010

13%

June, 2010

June, 2010

June, 2010
June, 2012

December,2
011

December,2
011
December,2
011
June, 2010

4%

June, 2010

June, 2013

December,2
012

June, 2012
7%

June, 2012

June, 2010

June, 2010

June, 2013

3%

June, 2013
June, 2013
December,2
010

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06
07
08
09
10
11
12

Revenue System
Purchase System
Employee Cost
internal Audit
Documentation
Evidence & Sampling
Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions
1. (b) In addition to audit, users want some other assurance services. Give few
examples.
1. (a) List the key elements of an assurance engagement.

Marks
5
5

1. (c) The code of ethics of ICAB and IFAC sets out some rules under which
auditors should accept new appointments.
What procedures should the new auditors follow to comply with the above set
of rules?

3. (a) The form and contents of audit Engagement Letter may vary for each
client, but they would generally include some basic contents.
Write in brief those basic contents of an Engagement Letter.

1. (d) The audit firm considers whether the client is likely to be high or low risk
to the firm in terms of being able to draw an appropriate assurance conclusion
in relation to that client.
Distinguish between two clients considering high and low risk.

5. The auditor should obtain written representations from management on

matters material to the financial statements when other sufficient appropriate
audit evidence cannot reasonably be expected to exist.
5. (a) What does a Letter of Representation provide as audit evidence?

5. (b) What actions should the auditor take when no other evidence is available
and internal confirmations form significant basis of the opinion?

5. (c) What actions should the auditor take when management refuses to
provide internal confirmations (representations)?

5. (d) What should auditors do when they receive management

representations?

3. (b) The financial statements of A Ltd. were prepared on going concern basis,
although there is a significant doubt about the companys ability to continue as
a going concern.
What effects will this situation have on your audit report if the uncertainty over
going concern is
(i) fully disclosed in the financial statements
(ii) not disclosed in the financial statements

(c) List the activities usually undertaken in an internal audit.

4. Inventory is often the largest item in the current assets category, and must
be accurately counted and valued at the end of each accounting period to
determine a companys profit or loss. Entities whose inventory items have a
large unit cost, generally keep a day to day record of changes in inventory
(perpetual inventory method) to ensure accurate and on-going control. Entities
with inventory items of small unit cost generally update their inventory records
at the end of an accounting period or when financial statements are prepared
(periodic inventory method). The value of an inventory depends on the
valuation method such as First-In, First-Out (FIFO) or Last-In, First-Out (LIFO)
method.
4. (a) What are the major risks of misstatement of the inventory value in the
financial statements?

4. (b) What are the principal reasons for auditors attendance at annual physical
inventory (stocktaking)?

4. (c) Which of the following analytical procedures is most applicable to

inventory; comparison of sales of current and prior years or comparison of gross
profit ratios of current and prior years? Why?

4. (d) Why do auditors normally record result of their test counts to compare
with the final inventory listing during an inventory observation?

2. (c) How will you manage conflict of interest in accepting an assurance client?

2. Confidentiality is an assurance that information is shared only among

authorized persons or entities.
Breaches of confidentiality can occur when data is not handled in a manner
adequate to safeguard the confidentiality of the information concerned. Such
disclosure can take place by word of mouth, by printing, copying, e-mailing or
creating documents etc. The classification of the information should determine
their confidentiality for determination of the appropriate safeguards.
(a) What is the importance of confidentiality? What are the safeguards to
confidentiality?
3+3=6

2. (b) What should be your actions if you are compelled by the law that you
have to disclose confidential information of your client in the public interest?

2. (d) How an auditor can maintain Chinese Walls to safeguard clients

confidentiality?

Session Chapter Weight

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06
07
08

Revenue System
Purchase System
Employee Cost

09
10
11
12

internal Audit
Documentation
Evidence & Sampling
Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions

Marks

1. (b) Write down the purpose of issuing audit engagement letter. Discuss the
situations where it is necessary to issue audit engagement letter each year
even for repetitive audits.

10

1. (c) BSA-320 Audit materiality provides guidance on the concept of

materiality in planning and performing an audit. Define materiality and
describe the relationship between materiality and audit risk and how audit risk
can be reduced to an acceptable level?

10

3. (b) What is the risk of material misstatement occurring within the entity and
its environment? Give two examples.

1. (a) What do you mean by the term Sufficient and Appropriate audit
evidence? State various factors that help the auditor to ascertain as to what is
sufficient and appropriate audit evidence.

10

2. An auditor's report is considered an essential tool when reporting financial

information to users, particularly in business. Some have even stated that
financial information without an auditor's report is "essentially unreliable" for
investment purposes.
(a) What is Audit Opinion? How is an unqualified opinion written in an audit
report?

3+4

2. (b) What three things the auditors are required to state as explicit opinions in
their audit report?

2. (c) What matters the auditors are required to state by exception as implied
opinions in their audit report?

2. (d) Who should the auditors address to in their audit report of a company
according to BSA 700?

3. Internal control is most effective when controls are built into the entitys
infrastructure and properly monitored to assess the quality of the systems
performance over the time.
a. What type of assurance is internal control expected to provide?

3. (c) Why should management establish effective internal control?

4. Most IT controlled weaknesses are rooted in poor management rather than
the technology itself. The general controls are those that equally affect the
whole system within an installation whereas application controls must be
designed to address the specific issues in each separate application or
program.
a. What are the objectives of general controls and application controls?

4. (c) What is audit software? Give examples of what audit software can do.

3+3

3+4

4. (b) What is CAAT? What are the stages in the use of test data?

5. ABC & Co., is a Chartered Accountancy firm and its engagement partner for
XYZ Company has been in place for approximately eighteen years and his son
has just accepted a job offer from XYZ Company as Chief Financial Officer. If
ABC & Co. is appointed as internal and external auditors, then XYZ Company
has suggested that the external audit fee should be renegotiated with at least
20% of the fee being based on the profit after tax of the company as they feel
that this will align the interests of ABC & Co. and XYZ Company. From the given
information, mention the ethical threats which may affect the independence of
ABC & Co. in respect of the audit of XYZ Company, and for each threat explain
how it may be reduced.

3+4

15

Session Chapter Weight

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06

Revenue System

07
08
09
10

Purchase System
Employee Cost
internal Audit
Documentation

11

Evidence & Sampling

12

Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions

Marks

5. A key issue for accountants is that there are limitations to assurance

services, and therefore there is always a risk involved that the wrong
conclusion will be drawn. What are the limitations of assurance services?

10

8. (b) What is the `expectation gap in assurance engagement?

1. Briefly explain the key elements of an assurance engagement and what the
types of assurance are engagement as per the International Framework for
Assurance engagements.

6
10

7. The practitioner should comply with the International Framework for

Assurance Engagements (the
Framework) and International Standard on Assurance Engagements (ISAE)
when performing an assurance engagement other than an audit or review of
historical financial information covered by International Standards on Auditing
(ISAs) or International Standards on Review Engagement (ISREs).
(a) What are the factors a practitioner must consider before accepting an
assurance engagement and what are low risks and high risks for assurance?

10

7. (b) What are the purposes of an engagement letter? Should a practitioner

send an engagement letter to existing clients?

8. An accountant evaluates financial records based on assertions imbedded in

the financial statements.
(a) What are the management assertions under different categories?

3. What tests of control might be appropriate for Sales day book and
Receivables ledger

10

4. Sales invoices are source documents that provide a record for each sale. For 3
control purposes, sales invoices are sequentially pre-numbered.
a. What are the control objectives to mitigate risk of not receiving payments
from a sales invoice?
4. (b) Which tests of control do you think appropriate for sales day book and
suggest some controls to safeguard cash in hand and at bank?

2. Audit evidence is necessary to support the auditors opinion and report. It is 8

cumulative in nature and is primarily obtained from audit procedures performed
during the course of the audit.
a. Discuss the attributes of evidence as per BSA 500 and list the sources of
audit evidence.
2. (b) Is 100% examination likely in the case of test of controls? Give examples 4
when 100% examination may be appropriate?
2. (c) There will be an impact on sample size when there is an increase in the
auditors assessment of the risk of material misstatement. Explain.

9. What are the general sources of threat identified by the IFAC Code? Give one 10
example against each source?
6. Section 220 of Code of Ethics says that the principles of objectivity impose
7
an obligation on all professional accountants not to compromise their
professional or business judgment because of biasness, conflict of interest or
the undue influence of others.
a. What should a professional accountant do where there is a conflict of interest
and what safeguards are available for a professional accountant in different
circumstances?

6. (b) What should the professional accountant do if his request for consent to
act for another party having conflict of interest is refused by the client?

Session Chapter Weight

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06

Revenue System

07

Purchase System

08

Employee Cost

09

internal Audit

10

Documentation

11

Evidence & Sampling

12

Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions

Marks

9. Assurance service is an independent professional service, typically provided 6+3+6

by Chartered Accountants, with the goal of improving the information or the
=15
context of the information so that decision makers can make more informed,
and presumably better decisions. Assurance services provide independent and
professional opinions that reduce the information risk (risk that comes from
incorrect information)
a. Audit and Assurance are always used together. What is the exact difference
between these?
b. Under the International Framework for Assurance Engagements, how many
types of assurance engagement a practitioner is permitted to perform? Define
all.

1. What forms and contents will normally be contained in a letter of

engagement?

2. You own an accounting firm. XYZ Ltd. is your prospective client. However it
declines permission to contact the previous auditors, what should be your
course of action?

3. What is Audit Risk? What are the different types of Audit Risk? For each of
4+5
the following examples, indicate the type of risk:
3. a) Vendors payments are processed, booked and reconciled in the system by 3
the same person in the Accounts Department.
3. b) The assurance firm may do insufficient work to detect material errors.

3. c) The financial statements contain a number of estimates.

4. Define Audit Committee. What are likely to include in the terms of reference 3+6
of audit committee as required for the companies listed in stock exchange of
Bangladesh.

7. The use of an IT system by a client does not change the need to establish
effective internal control; however, it does change the nature of the controls.
More advanced IT features, such as online capabilities, database storage, IT
networks, and end user computing, present special control risks. Therefore,
specialized controls are needed, including passwords, validity tests, and
computer logs.
a. How do certain IT areas and IT general controls (ITGC) affect almost all
financial audits? 6
b. How do IT system of an entity cause risk of material misstatement?

6+6=12

5. Classify the following working papers into Current Audit file and Permanent
12
Audit file:
Engagement letters, new client questionnaire, financial statements relating to
year under review,
Management letter, Accounts checklist, Audit planning memo, Board minutes of
continuing relevance, and Accounting system notes.

8. Complete the table, showing which tests on tangible non-current assets are 10
designed to provide evidence about which financial statement assertion:
Completeness Existence
Valuation Rights and obligations
(a) Inspect assets (b) Verify the valuation certificate (c) Refer to the title deeds
(d) Compare assets in ledger to non-current asset register (e) Review
depreciation rates (f) Verify material on self constructed assets to invoices (g)
Examine invoices after the year end (h) Review repairs in nominal ledger.

6. The Code of Ethics for Professional Accountants (IESBA Code) establishes

ethical requirements for professional accountants. The fundamental principles
for professional ethics for professional accountants provides a conceptual
framework that professional accountants shall apply to identify threats to
compliance with the fundamental principles; evaluate the significance of the
threats identified; and apply safeguards, when necessary, to eliminate the
threats or reduce them to an acceptable level.
a) What are the fundamental principles a Chartered Accountant shall comply
with?

6. b) What are the threats that relationships or circumstances could

compromise a members compliance with the rules?

6. c) What are the actions or others measures to be taken to eliminate threats

or reduce them to acceptable levels?

Session Chapter Weight

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06

Revenue System

07

Purchase System

08

Employee Cost

09

internal Audit

10
11

Documentation
Evidence & Sampling

12

Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions

Marks

1. What is assurance engagement? What are the key elements of an assurance 4+8=12
engagement?

2. Which three of the following will normally be contained within a letter of

engagement? 6
Responsibilities of the auditors;
Responsibilities of the directors;
The scope of the audit;
The staff assigned to the engagement;

3. What is Internal Control? Name its components. What are its importance and 2+5+8
limitations?
=15
4.(a) Name three broad types of document used in Internal Control Recording.

4. (b) What are IT General and IT Application Controls? List three examples in
each area.

4+6=10

9. (c) Which two control activities are most likely to reduce the risk of payments 2
being made twice for the same liability?
9. (a) Which three of the following functions should ideally be segregated: 3
Authorization of orders
Invoicing
Recording cash receipts on receivables ledger
Reconciliation of receivables ledger with receivables ledger control account
Credit Control

9. (b)List four examples of purchase documentation on which numerical

sequence should be checked.

6. (a) List six procedures assurance providers should carry out if wages are paid 6
in cash.
6. (b) How should assurance providers confirm that wages have been paid at
the correct rate to individual employees?

8. What does internal audit do? What are the key differences between external 10
and internal audit?

5. What are management representations? How does management

representations work as
audit evidence? When management representations are required?

10

7. Describe the audit procedures you should apply to the following items in the 16
balance sheet of a limited company: 16
Stock of finished goods
Accounts receivables
Bank Balances
Fixed deposits

Session Chapter Weight

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06

Revenue System

07

Purchase System

08

Employee Cost

09

internal Audit

10

Documentation

11

Evidence & Sampling

12

Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions

Marks

1. Assurance can never be absolute. Discuss the limitation of assurance.

Which three of the following are benefits of assurance work?
An independent professional opinion
Additional confidence given to other related parties
Testing as a result of sampling is cheaper for the responsible party
Judgments on estimates can be conclusive
Assurance may act as a deterrent to error or fraud

7+3=10

3. (a) Name five possible of sources of information about the client.

(b) Define Materiality in assurance work. Which factors indicate a risk might
be a significant risk?

5+2+4
=11

2. Discuss in brief Audit Strategy and Audit Plan. Which three of the following 7+3=10
would normally be contained
in the overall audit strategy? 7+3
The contract between the audit firm and the client
The result of audit risk assessment
Calculation of preliminary materiality
Detailed plan of audit procedures to be carried out
List of staff to be involved with the audit

4. (a) What are the matter with which the auditors imply satisfaction in an
unqualified report under the
Companies Act 1994? What basic elements, according to BSA 700, the audit
report should include?

4+5=9

4. (b) Which three of the following are implied opinions given in the audit
report? 3
All information and explanations required for the audit have been received.
Proper accounting records have been kept.
The directors reports is consistent with the financial statements
The financial statements have been prepared in accordance with the
Companies Act 1994.
The preparation of the financial statements is the responsibility of the
companys management.

5. Define Audit Committee. What are likely to include in the terms of reference 2+6=8
of the audit committee as
required for the companies listed in the Bangladesh stock exchanges?

8. As an assurance provider, how will you perform test of controls in relation to 5+6=11
Sales? Give five examples of tests to be performed on the cash payment book.

6. BSA 230 Audit Documentation establishes standard and provides guidance

regarding documentation in the context of audit of financial statements.
Required: List the purposes of audit working papers

10. What is accounting estimate? What will be auditors approach to audit of

accounting estimates?

2+4=6

7. A Ltd has a number of long and short terms payables, accruals and
provisions in its Balance Sheet. 7
Required:
Describe the audit procedures you would apply to the following item including
those relating to disclosures.
A 10-years bank loan with a variables interest rate and an overdraft (a bank
statement with a debit balance on the bank statement) both from the same
bank.

9. What does assurance provider check if perpetual inventory counting is used? 3+3+4
What will be the Audit plan for perpetual inventory count? In what
=10
circumstances is net realizable value likely to be less than cost?

11. Why is confidentially important? Discuss the security procedures which

might be wise to prevent accidental disclosure of information?

3+5=8

Session Chapter Weight

Chapter

Chapter Name

01

Concept of and need for

assurance

02

Process of Assurance :
Obtaining & engagement

03

Process of Assurance :
Planning the assignment

04

Process of Assurance :
Evidence & reporting

05

Introduction to internal
Control

06

Revenue System

07

Purchase System

08

Employee Cost

09

internal Audit

10

Documentation

11

Evidence & Sampling

12

Management representation

13

Substantive Procedure - Key

financial statement figures

14

Cores of professional ethics

15

Integrity, Objectivity &

Independence

16

Confidentiality

Questions

Marks

2. In Bangladesh, the auditor will normally express his audit opinion by

reference to the true and fair view, which is an expression of reasonable
assurance. Briefly define the terms true and fair

3. You are an Accountant who has been approached by Mr. X, who wants to
invest in company ABC Ltd. He has asked you for assurance whether the most
recent financial statements of company ABC Ltd. are a reliable basis for him to
make his investment decision.
Identify the key elements of an assurance engagement in this scenario, if you
accepted the engagement.

4. What forms and contents will normally be contained in a letter of

engagement?

5. You own an accounting firm. XYZ Ltd. is your prospective client. However, it
declines permission to contact the previous auditors, what should be your
course of action?

1. a. Which of the following procedures might an auditor use in gaining an

understanding of the entity?
(i) Inquiry
(ii) Recalculation
(iii) Analytical procedures
(iv) Reperformance of a control
(v) Observation and inspection.

1. b. The audit team is required to discuss susceptibility of the financial

statements to material statements.
True
False

6. a. What is Audit Risk? What are the different types of Audit Risk? For each of 4+4=8
the following examples, indicate the type of risk illustrated: 4+4=8
i. Vendors payments are processed, booked and reconciled in the system by
the same
person in the Accounts Department.
ii. The organization is highly connected with the building trade.
iii. The assurance firm may do insufficient work to detect material errors.
iv. The financial statements contain a number of estimates.

6. b. If control and internal risk are assessed as sufficiently low, substantive

procedures can be
abandoned completely.
True
False

11. (b) Name six financial statement assertions.

7. What is internal control? Name the components of an internal control

system. What are the limitations of internal control systems? Why smaller
companies have problems in implementing internal controls?

2+3+3
+3=11

8. What are the key differences between external audit and internal audit? As
objectivity is a key issue for internal auditors, they are likely to routinely be
involved in operational activities do you agree? Explain.

3+2=5

9. Classify the following working papers into Current Audit File and Permanent 4
Audit File:
Engagement letters, New client questionnaire, Financial Statements relating to
year under review, Management letter, Accounts checklist, Audit planning
memo, Board minutes of continuing relevance, Accounting system notes.
10. What includes audit evidence? Briefly explain the procedures to obtain
audit evidence.

11. (a) When Management Representation is required? What do auditors do

when receive such representation and in occasions when such evidence does
not agree with other evidences?

12. What could be the possible reasons for disagreements of Accounts

4+4=8
Receivable balances between the client and the customer? Balance
confirmation from individual customers is the ideal substantive procedure, what
are the alternative procedures to verify existence/rights of Accounts
Receivables?

13. Complete the table, showing which tests on tangible non-current assets are 6
designed to provide evidence about financial statement assertion.
Completeness Existence Valuation Rights and Obligations
(a) Inspect assets, (b) Verify to valuation certificate, (c) Refer to title deeds, (d)
compare assets in ledger to non-current asset register, (e) Review deprecation
rates, (f) verify material on self-constructed assets to invoices, (g) Examine
invoices after the year end, (h) Review repairs in nominal ledger.

17. Explain walk-through test with suitable examples.

15. a. The IFAC Code of Ethics applies only to statutory audits.
True
False

3
2

15. b. As per IFAC Code of Ethics, audit engagement partners of listed

companies should be rotated
away from the engagement:
i. Every year
ii After 2 years
iii After 3 years
iv. After 5 years
v. After 7 years.

14. What are independence of mind and independence in appearance? Why

do independence and objectivity matter so much? What can the auditor do to
preserve objectivity? Name different categories of threats to independence.

4+3+3
=10

16. List the different situations of conflict of interest those an accountant in

4+4=8
business might face. Monower is a qualified accountant. He has recently moved
out of practice and taken up the position of financial controller of a small
company, XYZ Ltd. The company has a short-term cash flow problem. Monower
was recently called into the board meeting and asked if he could defer some
income from the previous financial year so as to influence when the tax (both
VAT and corporate tax) would be due to those sales. The directors were
insistent that such deferral was necessary and that he should consider this
request more in the nature of an order. What should be Monowers course of
action?

Session Chapter Weight