Report on Aspects of Internal Control System of GPSA
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Added on 2020-04-07
Report on Aspects of Internal Control System of GPSA
Added on 2020-04-07
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Running head: AUDITING Auditing Name of the UniversityName of the studentAuthors note
1AUDITING Executive summary:The report is prepared for explaining the various aspects of internal control system of GPSA.Ratio analysis tool has been adopted for evaluating the risks faced by some specific accounts.Evaluation of internal control system has been done by analysing its effective and capabilityof alleviating risks faced in managing accounts. Furthermore, report also demonstrates theweakness of the new internal control manual of GPSA and addressing the specific areas byadopting the effective internal control system.
2AUDITING Table of ContentsIntroduction:...............................................................................................................................2Discussion:.................................................................................................................................3Answer to question 1A:..............................................................................................................3Accounts-...................................................................................................................................3Analysis-....................................................................................................................................3Audit risk-..................................................................................................................................4Following steps can be taken for reducing audit risk faced by GPSA:......................................5Answer to question 1B:..............................................................................................................5Answer to question 2A:..............................................................................................................6Effective control-.......................................................................................................................7Risk alleviated-...........................................................................................................................7Test of control-...........................................................................................................................8Answer to question 2b:...............................................................................................................9Weakness identified in the internal control for sales system and trade receivables of GPSA:..9Conclusion:..............................................................................................................................10
3AUDITING Introduction:The accounting from Miller Yates and Howarth is responsible for preparing adit planof GPSA. GPSA is one of the long standing and significant client of accounting firm that isengaged in research and development of medical equipment’s, acquisition of property andmanufacturing and distribution of medical equipment. Auditors are concerned about specificareas and they are placing great re4laonce on internal control system of business. The internalcontrol system would be reviewed and they have been pursuing new internal control manual(Eilifsen et al., 2013). Extensive work faced by organisation would be reduced by placingreliance on internal control. Discussion:Answer to question 1A:Accounts-The five types of accounts where auditors have expressed their concern are currentinvestment, account receivable, property investment, research and development capitalizationand intangible assets. It is perceived by them that these accounts would pose risks whilecarrying out audit (Brusca et al., 2016). Analysis-New internal control manual has brought changes in the system of trade receivableaccount, as the trade receivable clerk is responsible for handling all the transactions relatingto sales. All entries made in the computer system would be made by him and he would beresponsible for reconciliation of debtor account into general ledger (Hayes et al., 2013). Some
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