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Auditing Assignment | Internal Control Process

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Added on  2020-04-01

Auditing Assignment | Internal Control Process

   Added on 2020-04-01

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1Name:Course Professor’s nameUniversity nameCity, StateDate of submission
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2IntroductionUnderstanding and evaluating the internal control process of the entity is the responsibility of theauditor to design tests that allow identifying controls, risks and testing the processes established in the company. Testing of controls An audit procedure designed to evaluate the operational effectiveness of controls to prevent, or detect and correct, misrepresentations of material importance at the level of assertion (Ricchiute, 2006). During the process of an audit of financial statements, the auditor should evaluate and design the procedures that respond to significant identified risks of errors in their audit, affecting the audited financial statements as a whole, or an assertion specific.Strengths and weaknessesStrengthsThe company has very robust internal control mechanisms that safeguard it against internal frauds. Some of the strengths include the following;Orders are received in all manner therefore sales is at 100% recording. Some make sales order via telephone, fax mails and even sales representatives. The sales are then recorded by the data entry clerk and nobody else is supposed to record the sales entries. After recording there is a computer generated check, which checks the orders against the entries. The orders that have met the requirements proceed and the goods are ordered. The orders that don’t meet the criteria are recorded on a file for review subject to approval by the credit control clerk (Furnell, 2011). The rejected order is then noted by the credit control clerk and then passed to the supervisors in the department for further review. On picking, the slips are printed in the dispatch office and then it
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3is forwarded. To check on this, physical goods is done on checking slip to see if there is any discrepancies in the system. The last step in the control and checks is to send two copies of the invoice to the customer in whom he keeps one invoice and the other he sends back for confirmation that he received the order. At the end of the day, the master file is updated for the accounts receivable for comparison at the end of the month.WeaknessesThe following are the weaknesses;1.The staff may collude right from the entry of data point and the order of goods.2.The computer generated checker may fail and the system has no manual backup system in case of an electronic fail.3.No checker for the person who is putting in the entries and making orders.4.Accounts receivable at the end of the day may not vary with the actual balance of the creditors account.5.In the store, the goods ordered may be changed if they are not labeled well.Implications of the of each weaknessesI'm not sure what to do, but I'm not sure what to expect. I, what more will it give if the collections are recorded as separate stocks or included in the work in progress? If it comes to having a simple and inexpensive system of valuing stocks, it does not matter, does not it? In my judgment it is not the same. One thing is the stock of goods, distributed by different works, store,etc. (Guidance on monitoring internal control systems, 2009), This does not include "unmounted" merchandise. Therefore, they are stocks, but for different concepts. When the company registers "executed work pending invoicing", it would be exclusively for this concept.
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