Review Questions

Procurement and Audit notes revision

Audit planning
1. Discuss the importance of audit planning
2. Factors an auditor need to consider when planning for procurement audit
3. Recommend the steps the auditor should undertake when planning for procurement auditing

4. Explain the advantages that a procurement auditor gets from preparing audit programme
5. Define what is an audit programme
6. Design an audit programme for stock audit for a company of your choice
7. Explain what is peer review and why it is done
8. Discuss the audit planning procedure of a new client
Procurement audit document
1. Discuss the reasons for preparing sufficient and appropriate audit documentation
2. List five contents of working papers
3. Discuss five factors that may affect the form and content of working papers
4. Explain five qualities of a good working paper
5. Explain the Advantages of standardized Working Papers

Internal Control
1. Identify five Internal Control objectives
2. Discuss five elements which together make up the internal control system
3. Explain the internal control environment and internal control procedures to achieve internal control objective
4. Discuss the factors that influence the control of environment
5. Explain the importance of the internal control system in procurement departments
Procurement audit tests
1. Define what is procurement audit test
2. DDB, a limited liability company in Kenya, operates a computerized purchase system. Invoices and credit notes are posted to the purchases ledger the purchases ledger department. The computer subsequently raises a cheque when the invoice has to be paid.
Required
List the controls that should be in operation:
(a) Over the addition, amendment and deletion of suppliers, ensuring that the standing data only includes suppliers from the company’s list of authorized suppliers
(b) Over purchase invoices and credit notes, to ensure only authorized purchase invoices and credit notes are posted to the purchase ledger

3. An external procurement auditor should do a verification of inventory in the warehouse to ascertain whether the delivery note, goods received note

and stores ledger accounts the same number of stock received from supplier so as to determine whether there was procurement fraud. Based on the above the procurement auditor must do physical observation of stocktaking exercise.
Required:
a) Discuss three reasons why procurement auditor need to attend a stock-take of the procurement entity that he audits
b) List five procedures that a procurement auditor need to undertake prior to attending a procurement entity stock-take.
c) Explain the audit tests that the procurement auditor would apply to establish the physical qualities of stock and their ownership
d) How does the procurement auditor satisfy himself that the procedure adopted the management with regard to stocks have been applied throughout the financial period?

Audit Evidence
1. What is audit evidence?
2. Discuss two essentials of good audit evidence
3. List five sources of obtaining audit evidence
4. Discuss five techniques of obtaining or gathering procurement audit evidence
5. Explain five situations where the auditor may require work of an expert/specialist
6. Describe the factors considered before relying on the work of the expert
7. Discuss the information required in determining the extent of external audit reliance on internal audit’s will be:
8. Explain the circumstances in which it would not be possible to rely on the work of internal audit
9. Discuss five factors an external auditor considers when evaluating internal audit function

Audit sampling
1. Discuss the importance of audit sampling in procurement audits
2. Explain the situations when a sampling approach is appropriate
3. Discuss five types of sampling techniques that a procurement auditor can use when carrying out assignment
4. Explain reasons why an auditor should consider materiality when selecting a sample size.
5. Factors to be considered a procurement auditor when determining the sample size

6. Differentiate between sampling risk and non-sampling risk

Audit Report
1. Discuss the contents of a procurement audit report
2. Explain five qualities of a good procurement audit report
3. Identify five practical circumstances requiring emphasis of matter paragraph
4. List five consequences of a qualified audit report
5. State the elements of the introductory paragraph of a procurement audit report.
6. Distinguish the following as used in procurement audit reporting:
a) Unqualified opinion and qualified opinion
b) Adverse opinion and Disclaimer of opinion
c) Circumstances of uncertainty and Circumstances of disagreement.
d) Except for and the subject to

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