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    Audit

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    gzhum20

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    © All Rights Reserved
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    Audit

    Uploaded by

    gzhum20
    10 views2 pages

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    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    10 views2 pages

    Audit

    Uploaded by

    gzhum20

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Marwin

    Marwin is a retailer of books and has ten stores and a central warehouse, which holds the majority of
    the company's inventory.

    Extract of purchases and payables system

    Store managers are responsible for ordering books for their shop. It is not currently possible for store
    managers to request books from any of the other nine stores. Customers who wish to order books,
    which are not in stock at the branch visited, are told to contact the other stores directly or visit the
    company website. As the inventory levels fall in a store, the store manager raises a purchase requisition
    form, which is sent to the central warehouse. If there is insufficient inventory held, a supplier requisition
    form is completed and sent to the purchase order clerk for processing. He sends any orders above
    $1,000 for authorisation from the purchasing director.

    Receipts of goods from suppliers are processed by the warehouse team, who agree the delivery to the
    purchase order, checking quantity and quality of goods and complete a sequentially numbered goods
    received note (GRN). The GRNs are sent to the accounts department every two weeks for processing.

    On receipt of the purchase invoice from the supplier, an accounts clerk matches it to the GRN. The
    invoice is then sent to the purchase ordering clerk, who processes it for payment. The finance director is
    given the total amount of the payments list, which she authorises and then processes the bank
    payments. Due to staff shortages in the accounts department, supplier statement reconciliations are no
    longer performed.

    For the selected Company a team of 3-4 students need:

    1) Describe a control environment in the Company and evaluate whether the control environment
    is strong or not and how it affects on Company’s internal controls.
    (10%)

    2) Understand a business process of the Company (illustrate a flowchart, showing every step of this
    business process and demonstrate whether a step is manual or automated, does it involve hard
    copy or electronic documents). The following template can be used in drawing a flowchart.

    Also you can watch this video to understand each element of flowchart
    (https://www.youtube.com/watch?v=2De4hO3lu14)
    (20%)

    3) Perform a risk assessment, through identification a risk on each business process step, that
    might affect financial reporting process of the company and document what consequence
    might occur on financial statements if the company will not adopt any control on this procedure.
    (20%)

    4) Evaluate a system of internal control and document how you have done it (ICQ and ICEQ)
    (20%)
    5) For each identified risk, that affect the financial reporting of the Company, recommend a
    relevant control procedure that is needed to be adopted in the business process.
    (20%)

    6) For each recommended control procedure, explain what control test should audit team perform
    to confirm that the control is effective.
    (20%)

    Assessment Criteria
    To succeed in this assessment, you need to:
     Demonstrate a deep knowledge of the work of auditors regarding the test of internal controls,
    through identification relevant key controls that the entity put in place to help prevent and
    detect errors in the recording of transactions (comprehension)
     Logically perform risk assessment of the entity’s current business process identifying possible
    risk of material misstatement in financial reporting (critical evaluation).
     Present evidence and reasonable arguments for justifying why the specific control is relevant to
    avoid a risk of material misstatement (analysis).
     Present a clear (e.g., understandable, logically coherent and consistent), structured (i.e., clearly
    corresponding to the 6 points in the question), and convincing (e.g., using relevant terminology)
    presentation (professional writing).

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