Consider the following quotations:

  1. Computer systems give rise to such possibilities as lack of visible evidence and systematic errors.
  2. The nature of computer based accounting systems is such that the auditor is afforded opportunities to use the client’s computer to assist him in the performance of his audit work.
  3. In choosing the appropriate combination of CAATs and manual procedures, the auditor will need to take into account a number of factors.
  4. In performing tests on computer based accounting systems application or general controls, the auditor should obtain evidence which is relevant to the control being tested.


  1. Explain the meaning of the phrases- lack of visible evidence and systematic errors and state in respect of each three ways in which the auditor might attempt to overcome the problems arising from these two possibilities (9 marks)
  2. State briefly two types of CAATS which the auditor can use in the audit (4 marks)
  3. State and explain five factors which the auditor will need to take into account in choosing the appropriate combination of CAATs and manual procedures (7 marks)

(Total 20 Marks)


  1. What are the unique characteristics of a computerized information system that pose additional challenges to the auditor (12 marks)
  2. Distinguish between application and general controls (8 marks)

(Total 20 Marks)


  1. What is a contingency? (5 marks)
  2. What audit tests would you carry out in respect of an amount of KShs 4,000,000 in the notes as a contingent liability? (15 marks)

(Total 20 Marks)


  1. Discuss the difference between substantive procedures and tests of controls (5 marks)
  2. What are cut off procedures (5 marks)
  3. What is purpose of attending a stock take by the auditor (5marks)
  4. List down the procedures you would carry out in verifying your client’s bank balance. (5 marks)

(Total 20 Marks)


  1. What are the elements of an audit report (8 marks)
  2. What are post balance sheet events? Give examples of adjusting and non adjusting events (12 marks)

(Total 20 Marks)