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i) An error can be considered to be an unintentional mistake. Thus. a transactional
amount as a documents may read 1,2,3,4,5 Yet on recording that transaction into the
related day book_ a clerk may pick and enter the amount as 1,2,3.5 unintentionally.
Thus, the records will contain an error. In preparing a trial balance, the clerk may enter
a balance on the debt side yet it is a credit balance unintentionally.
ii) What can happen accidentally can also happen by design. Thus, the clerk mentioned in
above (i) may deliberately record the transaction mentioned as 1,235 instead of
12,345. When it is such a deliberate act than it becomes an irregularity and not an error
iii) An irregularity becomes a fraud when it involves criminal deception that is seeking
unfair financial advantages. Thus when directors deliberately overvalue the stocks at
the period end to increase profits and therefore their performance based bonus, then an
irregularity has become a fraud.
Kavungya answered the question on May 14, 2019 at 13:16
- Propose three ways in which a company might prevent or minimise accounting errors.(Solved)
Propose three ways in which a company might prevent or minimise accounting errors.
Date posted: May 14, 2019. Answers (1)
- a) Explain the potential errors that could occur in the processing of sales transactions.
b) Highlight four preventive measures that could be put in place for...(Solved)
a) Explain the potential errors that could occur in the processing of sales transactions.
b) Highlight four preventive measures that could be put in place for the areas you have
identified in (a) above.
c) Identify three examples of discrepancies in the accounting records that could indicate
the possibility of fraud.
Date posted: May 14, 2019. Answers (1)
- The opening statement of ISA 315 paragraph 64 notes that "internal control no matter how well
designed and operated, can provide an entity with only reasonable...(Solved)
The opening statement of ISA 315 paragraph 64 notes that "internal control no matter how well
designed and operated, can provide an entity with only reasonable assurance about achieving the
entity's financial reporting objectives. The likelihood of achievement is affected by limitations
inherent to internal control".
With reference to above-statement, briefly explain the limitations inherent in an internal control
system.
Date posted: May 14, 2019. Answers (1)
- The risk of fraud in the sales systems of XYZ Ltd. has been assessed as higher than normal.
Briefly describe how the assessment would influence your...(Solved)
The risk of fraud in the sales systems of XYZ Ltd. has been assessed as higher than normal.
Briefly describe how the assessment would influence your work as an external auditor of XYZ
Ltd.
Date posted: May 14, 2019. Answers (1)
- Describe the audit procedures you would carry out when auditing a charity organisations:
i) Cash donations
ii) Non-cash donations(Solved)
Describe the audit procedures you would carry out when auditing a charity organisations:
i) Cash donations
ii) Non-cash donations
Date posted: May 14, 2019. Answers (1)
- The auditor has a duty to certify the amount of stock in the financial statement.
Outline the auditor's duties before stocktaking in a manufacturing enterprise.(Solved)
The auditor has a duty to certify the amount of stock in the financial statement.
Outline the auditor's duties before stocktaking in a manufacturing enterprise.
Date posted: May 14, 2019. Answers (1)
- Highlight seven limitations of an internal control system in an organisation.(Solved)
Highlight seven limitations of an internal control system in an organisation.
Date posted: May 14, 2019. Answers (1)
- a) Explain the effectiveness of the following controls in preventing fraud in an organisation
i. Segregation of duties.
ii. Physical controls.
b) Outline a suitable internal control system...(Solved)
a) Explain the effectiveness of the following controls in preventing fraud in an organisation
i. Segregation of duties.
ii. Physical controls.
b) Outline a suitable internal control system for wage payments
Date posted: May 14, 2019. Answers (1)
- Summarise four measures that a company could put in place for safeguarding its cash
balances(Solved)
Summarise four measures that a company could put in place for safeguarding its cash
balances
Date posted: May 14, 2019. Answers (1)
- State five controls of fixed assets in an organisation.(Solved)
State five controls of fixed assets in an organisation.
Date posted: May 14, 2019. Answers (1)
- Describe three cut-off procedures the auditor would perform on inventory at the period end.
Assume that inventory is a material amount in the financial statements.(Solved)
Describe three cut-off procedures the auditor would perform on inventory at the period end.
Assume that inventory is a material amount in the financial statements.
Date posted: May 14, 2019. Answers (1)
- Explain how the establishment Fan internal audit functions in a large manufacturing company
might prevent perpetration of errors and frauds.(Solved)
Explain how the establishment Fan internal audit functions in a large manufacturing company
might prevent perpetration of errors and frauds.
Date posted: May 14, 2019. Answers (1)
- For each of the following assets, suggest seven internal control procedures that the owner of a
retail hardware shop should implement to minimize possible losses through...(Solved)
For each of the following assets, suggest seven internal control procedures that the owner of a
retail hardware shop should implement to minimize possible losses through errors and fraud;
i. Cash
ii. inventory
Date posted: May 14, 2019. Answers (1)
- Explain four characteristics of a small entity that make it difficult for the auditor to rely on the
entity's system of internal control(Solved)
Explain four characteristics of a small entity that make it difficult for the auditor to rely on the
entity's system of internal control
Date posted: May 14, 2019. Answers (1)
- Explain the internal controls necessary in each of the following areas:
(i) Sales.
(ii) Purchases.
(iii) Cash.(Solved)
Explain the internal controls necessary in each of the following areas:
(i) Sales.
(ii) Purchases.
(iii) Cash.
Date posted: May 14, 2019. Answers (1)
- a) Outline six matters that should be checked while vouching a sales invoice.
b) As the audit assistant in XYZ Ltd., identify six procedures that you...(Solved)
a) Outline six matters that should be checked while vouching a sales invoice.
b) As the audit assistant in XYZ Ltd., identify six procedures that you would carry out to
verify payments from petty cash.
c) Accounting and internal control systems cannot provide management with conclusive
evidence that objectives are reached because of their inherent limitations.
With reference to the above statement, discuss four inherent limitations of accounting and
internal control systems.
Date posted: May 14, 2019. Answers (1)
- (a) Describe five purposes of an internal control system.
(b) Explain five actions that an auditor should take if the internal control system is found to...(Solved)
(a) Describe five purposes of an internal control system.
(b) Explain five actions that an auditor should take if the internal control system is found to be
weak.
Date posted: May 14, 2019. Answers (1)
- a) Explain the matters that an auditor should consider during the planning stage °Ian audit
of a continuing client.
b) Define the following audit risks:
i. Inherent risk:
ii....(Solved)
a) Explain the matters that an auditor should consider during the planning stage °Ian audit
of a continuing client.
b) Define the following audit risks:
i. Inherent risk:
ii. Control risk.
c) Briefly describe the procedure an auditor could use to assess the risks in (b above in the
course of his audit of a company.
Date posted: May 14, 2019. Answers (1)
- Outline four challenges that an audit firm might face in planning an audit.(Solved)
Outline four challenges that an audit firm might face in planning an audit.
Date posted: May 14, 2019. Answers (1)
- Explain how the external auditor reduces audit time by relying on the work of the client's internal
audit function.(Solved)
Explain how the external auditor reduces audit time by relying on the work of the client's internal
audit function.
Date posted: May 14, 2019. Answers (1)