a. Reasons for the Audit of Partnership Accounts (4 Marks)

1. Settling Accounts Among Partners: An audit provides a reliable means of settling accounts fairly among partners.
2. Dispute Prevention: Reduces the likelihood of disputes related to financial matters between partners.
3. Retiring or Deceased Partner’s Dues: Facilitates accurate computation of amounts due to retiring or deceased partners.
4. Admission of New Partners: Audited accounts are helpful for examining past financial performance when a new partner is admitted.
5. Bank Reliance: Enables banks to rely on the partnership’s audited accounts when considering loan or overdraft facilities.
6. Tax Computation: Tax authorities may accept audited accounts for computing each partner’s assessable income.
7. Sale or Conversion: Useful for negotiations if the firm plans to sell or convert to a limited liability company.
8. Moral Deterrence: Acts as a check against potential fraudulent activities by partners.

b. Key Issues for Auditors in Partnership Audits (5 Marks)

1. Confirming Audit Scope: Determine and confirm the scope of the audit engagement.
2. Reviewing Partnership Deed: Examine the partnership deed to verify capital contributions, profit-sharing ratios, and other partnership arrangements.
3. Checking Minutes Book: Examine minutes for important policy decisions made by partners.
4. Verifying Business Legitimacy: Confirm that the partnership’s activities comply with the partnership agreement and legal provisions.
5. Compliance with Partnership Act: Ensure that relevant Partnership Act provisions are followed.
6. Profit Sharing Verification: Confirm that profits are shared in the agreed ratios as outlined in the partnership deed.

c. Substantive Procedures for Receipts in a School Owned by Partnership (6 Marks)

1. Review Cash Receipts Ledger: Check entries in the cash receipts ledger to confirm accurate recording of payments received.
2. Reconcile Receipts with Bank Deposits: Reconcile cash receipts with bank deposit slips to ensure all received cash is deposited.
3. Verify Tuition Fees Register: Cross-check entries in the tuition fees register with actual receipts to identify any discrepancies.
4. Examine Receipt Books: Verify that all receipt books are pre-numbered and used sequentially, with no missing numbers.
5. Match Bank Statements: Compare bank statement deposits with receipts entries to confirm completeness.
6. Audit Fundraising Events: Review documentation and records of funds collected from fundraising events to verify accurate recording.