ACC2105 Question_JAN 2020.docx - ACC2105(F Page 1 of 4 INTI...

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ACC2105 (F) / Page 1 of 4INTI INTERNATIONAL UNIVERSITYDIPLOMA IN ACCOUNTINGACC2105: AUDITING AND ASSURANCEFINAL EXAMINATIONJANUARY 2020Answer all FOUR (4)out of FIVE (5)questions. Question 1 (a)Kim is the new junior in Amy & Partners. She has accepted the offer as an auditor inone of the departments in the firm. Compare and contrast the 3 general types of auditsthat can be performed.(13 marks)(b)Kim had a friend purchase RM5,000 of shares in the company that she was auditing.She lied to the audit firm when responding to the firm’s yearly written requirements tocomply with the firm’s independence policies. (i)Discuss why owning shares in an audit client unacceptable. (6 marks)(ii)Compare and contrast the ideas of independence in fact and independence inappearance in the context of this case.(6 marks)(Total 25 marks)Question 2Your firm was recently appointed as external auditor of Lapwing Car Components Ltd (Lapwing) for the year ended 31 May 2019, following the resignation of the previous auditor.Lapwing is a manufacturer of car components and has two factories in the UK in Manche sterand Cardiff. During the audit of the financial statements for the year ended 31 May 2019, the following issues in relation to inventories were identified:(a)Goods received in the Manchester factory are not checked prior to being accepted.(b) In respect of the storage of materials prior to their use in the manufacturing of car components at the Cardiff factory:Gold and platinum used in the manufacture of catalytic converters are not stored securely; andPoisonous chemicals used in the manufacture of car batteries are kept in open tanks in an area of the factory with unrestricted access.
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