Question 1: (3 Marks)

a)
1. Inquire from the management of the holding company about the
nature of activities of the subsidiaries and the most important
accounts which reflect the activities of the company.
2. Inquire about the qualification and experience of the board of
directors and their ability to manage the company effectively and
efficiently.
3. Study the financial statements of the subsidiaries to understand the
financial position and results of the companys operations taking
into consideration circumstances conditions and circumstances
associated with the industry and all types of risks ( operational,
functional and administrative)faced by the holding and the
subsidiaries.
4. Study and assess the basis under which the fair value of the assets
were calculated and whether the value is fair or not.
5. Prepare a schedule showing the sample size and items to be
selected with the sample from the companys financial statements
including the value of the trademark and goodwill for L.E 30
millions.
6. Identify the members of the audit team who are going to . the
audit.
b)
Reperformance: check the mathematical accuracy of the intangible
Inspection: examine the market value of the assets which resulted in
both trademark and goodwill.
Inquiry: assess the value of trademark and goodwill in light of
similar account embedded in competitors financial statements.
c)

Audit the current value of assets 120000 and the calculation of that
trademark and goodwill.
Check the proper amortization of the trademark and impairment
tests for the goodwill.
Ensure that all receivables were collected and payable are paid ,
adjustments are made for non- moving balances.

Question 2: (7 Marks)
1.
2.
3.

False
False
False

Limited assurance and not reasonable assurance like auditing

Consulting is primary source of CPA fees
Form an opinion about the reliability of the financial statements

4.

False

5.

False

6.

False

7.

False

8.

False

The auditor not providing his services according to auditing

standards
The prime objective of auditing standards is to provide
guidelines to help auditors perform the audit of financial
statements
Independence means the auditor must maintain his
independence in mind and appearance.
The auditor should consider the matter non- compliance with
GAAP , IFRS and issue qualified audit report
The auditor must apply all types of audit evidence to check the
opening balances.

Question 3: (4 Marks)
a. See handout for chapter 1
b. 1. Understand , test, assess the IC permanent file
2. Assess the results of the audit current file
3. Issue the auditors report current file
4. Test the companys internal control current file
5. Test of transaction/audit plan/ balances current file
6. Contracting with the client permanent / current file
7. Assess the results of the audit current file
Question 4: (3 Marks)
1. Non compliance with GAAP Material adverse opinion
2. Scope restriction Material qualified opinion.
3. Non compliance with laws Material Qualified report.