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    AA Mock 4 Control Deficiency Answer - 1-2

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    hashim
    Swift Co has controls in place for payroll, purchasing, and accounts payable processes. Key controls include segregation of duties between HR and payroll, unique employee IDs, review of payroll changes and calculations, purchase order authorization limits, goods receipt checks, purchase ledger controls totals and reconciliations, and payment authorization. Tests of controls include reviewing documentation, system access tests, recalculating amounts, agreeing samples to documentation, and observing processes. This ensures the accuracy, validity and completeness of payroll payments, purchase transactions and supplier balances.

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    AA Mock 4 Control Deficiency Answer - 1-2

    Uploaded by

    hashim
    16 views2 pages
    Swift Co has controls in place for payroll, purchasing, and accounts payable processes. Key controls include segregation of duties between HR and payroll, unique employee IDs, review of payroll changes and calculations, purchase order authorization limits, goods receipt checks, purchase ledger controls totals and reconciliations, and payment authorization. Tests of controls include reviewing documentation, system access tests, recalculating amounts, agreeing samples to documentation, and observing processes. This ensures the accuracy, validity and completeness of payroll payments, purchase transactions and supplier balances.

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    AA mock 4 control deficiency answer _1-2

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    Swift Co has controls in place for payroll, purchasing, and accounts payable processes. Key controls include segregation of duties between HR and payroll, unique employee IDs, review of payroll changes and calculations, purchase order authorization limits, goods receipt checks, purchase ledger controls totals and reconciliations, and payment authorization. Tests of controls include reviewing documentation, system access tests, recalculating amounts, agreeing samples to documentation, and observing processes. This ensures the accuracy, validity and completeness of payroll payments, purchase transactions and supplier balances.

    Copyright:

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

    AA Mock 4 Control Deficiency Answer - 1-2

    Uploaded by

    hashim
    Swift Co has controls in place for payroll, purchasing, and accounts payable processes. Key controls include segregation of duties between HR and payroll, unique employee IDs, review of payroll changes and calculations, purchase order authorization limits, goods receipt checks, purchase ledger controls totals and reconciliations, and payment authorization. Tests of controls include reviewing documentation, system access tests, recalculating amounts, agreeing samples to documentation, and observing processes. This ensures the accuracy, validity and completeness of payroll payments, purchase transactions and supplier balances.

    Copyright:

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

    Applied Skills, September/December 2020 Sample Answers

    Audit and Assurance (AA) and Marking Scheme

    (b) Key controls and tests of control

    Key control Test of control


    Swift Co has a separate human Review the job descriptions of payroll
    resources (HR) department, which is and HR to confirm the split of
    responsible for setting up all new responsibilities with regards to setting
    employees. up new joiners.

    Having a segregation of roles between Discuss with members of the payroll


    HR and payroll departments reduces department the process for setting up
    the risk of fictitious employees being set new joiners and agree new joiners to
    up and also being paid. documentation initiated by HR.
    All new employees are assigned a Attempt to add a new joiner to the
    unique employee number by HR. The payroll system without a unique
    payroll system is unable to process new employee number, the system should
    joiners without the inclusion of the reject this addition.
    unique employee number.

    As payroll staff are unable to set up


    new joiners without the employee
    number from the joiner form it reduces
    the risk of fictitious employees being set
    up by payroll.
    On a monthly basis an exception report Select a sample of monthly exception
    of changes to payroll standing data is reports and review for evidence of
    produced and reviewed by the payroll review and follow up of any unexpected
    manager. changes by the payroll manager.

    This ensures that any unauthorised


    amendments to standing data are
    identified and investigated on a timely
    basis so that the data used when the
    payroll is run is valid and accurate.
    The payroll supervisor selects a sample Review the monthly payslips sampled
    of payslips and recalculates the gross by the payroll supervisor for their
    to net pay calculations, compares the signature for evidence the review of
    results to the output from the payroll calculations has been undertaken.
    system and investigates any
    discrepancies. For a sample of monthly payrolls
    reperform the gross to net pay
    This reduces the risk that the calculation and compare to the payroll
    automated system generates errors system, discuss any discrepancies with
    during the payroll processing. Any the payroll supervisor.
    errors would be identified on a timely
    basis to prevent wages being over or
    under paid.
    Purchase orders up to $5,000 are Select a sample of purchase orders
    authorised by the purchasing manager and review for evidence of
    and above $5,000 by the purchasing authorisation in accordance with
    Applied Skills, September/December 2020 Sample Answers
    Audit and Assurance (AA) and Marking Scheme

    director. authorisation limits. Agree this to the


    appropriate signature on the approved
    This ensures that goods are only signatories list.
    purchased which are required by Swift
    Co and relate to genuine business
    expenses.
    The warehouse department agrees the During the interim audit observe the
    receipt of goods from suppliers to a warehouse department when receiving
    copy of the purchase order and goods to understand the level of
    confirms the quantity and quality of the checks being undertaken.
    goods received and signs the goods
    received notes (GRNs) to evidence the Review a sample of GRNs held in the
    checks. warehouse department for signature,
    as evidence of checks being
    This ensures that Swift Co is not undertaken on receipt of goods.
    recording liabilities and subsequently
    paying for the receipt of inferior quality
    goods or for goods it did not order.
    Purchase invoices are logged into the Select a sample of control total sheets
    purchase day book in batches, utilising and review for evidence of control
    control totals. totals being utilised and the clerk’s
    signature.
    Utilising control totals ensures both
    completeness and accuracy over the
    input of purchase invoices. If the
    invoices are not all input completely
    and accurately payables may be
    misstated.
    Supplier statement reconciliations are Review the file of reconciliations to
    undertaken on a monthly basis and ensure that they are being performed
    these are reviewed by the financial on a regular basis and that they have
    controller. been reviewed by a responsible official.

    This ensures that any errors in the Re-perform a sample of the


    recording of purchases and payables reconciliations to ensure that they have
    are identified and corrected in a timely been carried out appropriately and
    manner and therefore that payables are discrepancies investigated.
    complete and accurate.
    The finance director authorises the Review the payments list for evidence
    bank transfer payment list for suppliers of review by the finance director.
    after agreeing the amounts to be paid
    to supporting documentation and Enquire of accounts staff what
    reviewing for any duplicate payments. supporting documentation the finance
    director requests when undertaking this
    This reduces the risk that suppliers review.
    could be being paid an incorrect
    amount, or that sums are being paid to
    fictitious suppliers.

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