AUI3702 EXAM PACK

MAY/JUNE 2014 QUESTION 1 MULTIPLE CHOICE 1-D 2-A 3-A 4-C 5-D 6-D 7-D 8-B 9-C 10-B QUESTION 2 2.1. Weaknesses Controls Overtime hours are not approved by section head of supervisors and employees work overtime as the feel. Having to work overtime should be approved by the section head or the supervisors The security personal who mans the entrance is only in place during busy periods. Security personnel should be present at all times to ensure that employees clocks only once with the clock card There is no segregation of duties as Apple Smith now almost everything in the department There should be segregation on duties in respect to duties carried out by apple smith probably a senior personnel who reviews the duties carried out by him The clock cards are not made in terms of authorized employee list The personnel department should prepare the clock cards in terms of the authorized employee list No segregation of duties Apple smith should not perform all the duties, there should be segregation of duties in respect to duties performed by apple smith There are no independent reconciliations and reviews on the work performed by apple smith and there are only random Independent reviews and checks on the work performed by apple smith should be carried out regularly and not on random AUI3702 EXAM PACK checks basis Granny tree cashes the cheque, prepares the pay packets and updates the accounting records Segregation of duties is more essential at this level as fraud can be facilitated by having one person performing all functions Employees are not required to present their identification when collecting their payment Employees are required to present their identification when collecting their payment The two senior personnel who have conducted the payment have not reconciled the unclaimed wages with the register The two senior personnel should have reconcile the unclaimed wages with the register Question 3 3.1 Explain step by step how you would select a sample Establish the objectives of the sampling plan -define the extent and composition of the population -select a sampling method -determine the sample size to be taken -evaluate and report results 3.2. Calculate sample size Sample size = total value of population J,Factor = 500 000 10869,6 = 46.10 Calculation of J Factor = precision Reliability factor =(0,05 x 500 000) 2.3 =10869,6 Sample interval = total value of PP Sample size 500 000 46,10 =10845,99 3.5. Ratio analysis will be used by an auditor when performing analytical procedures. During the performance stage an auditor when auditing transactions and account balances, for different classes of transactions NB Analytical procedures are classified as substantive procedures. 3.6. Calculate the following ratios 36.1 Inventory turnover rate /ratio = cost sales Average invent =21 000/1100 000 + = 20 There is a remarkable improvement 36.3. Gross profit Ratio 2014 Gross profit Sale X 100 = – x 100 =25% 2013 – X100 =26,67% The gross profit percentage deteriorated during the current year this is attributable to a decline in sales in relation to increase in cost of sales. Q37 The short comings on the working Paper -the letter is not dated, does not show dates when it was prepared -it does not contain names of the preparers and reviewers -dates of the reviews -there is no isolation of responsibility no signatures use of signatures by the preparers -it doesn’t contain the subject matter It does not contain significant deficiencies internal controls and the possible effects to the entity -it does not contain audit procedures used to gather sufficient and appropriate evidence. Q 4. Inspect the requisition forms and purchases order for the buyer signature confirms authorization. Inspect the purchases orders once the requisition to confirms whether the goods are of as type used by the company (ii). Select a sample of supporting documentations and trace for orders with material amounts in the purchases journal and the creditors control in the general ledger and trial balance -Inspect the goods received, note last number and confirm whether is it lower than date number (ii) Select a sample of purchase orders and recalculate costs, extensions discounts and vat extensions -reperform edge analysis -compare the opening balances of the individual credits list against the creditors ledger balances and confirm whether there are no significant fluctuations. Question 5 Audit findings Condition Inability to find a correlation between the stock items on the 1st and the sales in either branch. -the number of stock write offs, due to obsolete stock at these branches has increased annually at approximately 5% and 3% for both. Criteria