Internal Control Implementation and Review

This assignment requires you to critically evaluate the internal control procedures within a hypothetical company named 'Bigger Than Big'. You are tasked with identifying any areas lacking adequate controls or suggesting modifications to existing ones. The assessment emphasizes applying knowledge gained from the course 'Course U - Implement and Maintain Internal Control Procedures' to a practical scenario, demonstrating your understanding of key concepts and their relevance to bookkeeping practices.

Implement and Maintain
Internal Control Procedures
This course is based on the nationally recognised unit of competency:
● FNSACC506 Implement and Maintain Internal Control Procedures
It covers the skills and knowledge required to prepare, document and
manage budgets and forecasts, and encompasses forecasting estimates
and monitoring budgeted outcomes.
ASSESSMENT WORKBOOK
Participant Name:
Learner ID/Username:

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Assessment Workbook U
Implement and Maintain Internal Control Procedures
V1.0
Produced 1 February 2016
Copyright © 2016
All rights reserved. No part of this publication maybe reproduced or distributed in any form or by
any means, or stored in a database or retrieval system other than pursuant to the terms of the
Copyright Act 1968 (Commonwealth).
Date Summary of Modifications
Made
Version
1/02/16 Version 1 produced following
assessment validation
V1.0
Page 1

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Page 2

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Getting Started
Instructions
This workbook contains has two (2) sections:
● Written Questions – A set of generic and workplace questions
testing the student’s general knowledge and understanding of the
general theory behind the unit.
● Case Study – A set of hypothetical questions to test the student’s
analytical skills in project problem solving. Students will be provided
with a set of project management documents to analyse.
The following questions are divided into two categories.
The first set of questions cover generic underpinning knowledge of basic
project management terms and concepts. These questions are all in a short
answer format. The longer questions requiring creative thought processes
are covered in the case studies assessment. You must answer all questions
using your own words. However you may reference your learner guide, and
other online or hard copy resources to complete this assessment.
The second set of questions cover processes you would be likely to
encounter in a workplace. Ideally you should be able to answer these
questions based on the processes that are currently in place in your
workplace. If this is not the case, then answer the questions based on
processes that should be implemented in your workplace.
If you are currently working, you may answer these questions based on
your own workplace. Otherwise consider what you should do if you were
working as part of a team.
Requirements for satisfactory completion
For a ‘satisfactory’ result for each component of this workbook, all tasks
must be addressed to a ‘satisfactory’ standard. It is important you;
1. Provide responses using complete sentences, making direct
reference to the question.
2. Specifically address all parts of the question providing examples
where appropriate.
Page 3

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Competency Based Assessment
Competency based assessment focuses on whether you are able to
perform the task to the standard expected in the workplace. It relies on
you providing evidence that supports your claim of competence. This
evidence is in the form of your completion of the assessments set for each
unit.
Once you have submitted your completed assessments, your instructor will
assess your submission to determine your competence. To be deemed
competent in each course, you are required to achieve a satisfactory result
for all of the assessment components that make up that unit. Where a ‘not
yet satisfactory’ judgement is made, you will be given guidance on steps to
take to improve your performance and provided the opportunity to re-
submit evidence to demonstrate competence. Once a ‘satisfactory’
judgement has been made on all components for a unit, you will be
deemed ‘competent’ in that unit.
Submission
Only submit your workbook once all activities inside are complete. Should
you have any questions regarding your assessments, or not understand
what is required for you to complete your assessment, please feel free to
ask your instructor.
Keep your answers succinct and make sure you are answering the
question. Re-read the question after you have drafted up your response
just to be sure you have covered all that is needed.
Your final assessment result will either be ‘Competent’ or ‘Not Yet
Competent’.
When submitting your assessments please ensure that
1. All assessment tasks within the workbook have been completed
2. You have proof read your assessment
Candidate Declaration
Page 4

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Submission of this workbook means you agree to abide by the terms of the
candidate declaration below.
By submitting this work, I declare that:
● I have been advised of the assessment requirements, have been
made aware of my rights and responsibilities as an assessment
candidate, and choose to be assessed at this time.
● I am aware that there is a limit to the number of submissions that I
can make for each assessment and I am submitting all documents
required to complete this Assessment Workbook.
● I have organised and named the files I am submitting according to
the instructions provided and I am aware that my assessor will not
assess work that cannot be clearly identified and may request the
work be resubmitted according to the correct process.
● This work is my own and contains no material written by another
person except where due reference is made. I am aware that a false
declaration may lead to the withdrawal of a qualification or
statement of attainment.
● I am aware that there is a policy of checking the validity of
qualifications that I submit as evidence as well as the
qualifications/evidence of parties who verify my performance or
observable skills. I give my consent to contact these parties for
verification purposes.
Page 5

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Written Questions
Instructions
The following questions are divided into two categories.
The first set of questions cover generic underpinning knowledge of basic
project management terms and concepts. These questions are all in a short
answer format. The longer questions requiring creative thought processes
are covered in the case studies assessment. You must answer all
questions using your own words. However you may reference your learner
guide, and other online or hard copy resources to complete this
assessment.
The second set of questions cover processes you would be likely to
encounter in a workplace. Ideally you should be able to answer these
questions based on the processes that are currently in place in your
workplace. If this is not the case, then answer the questions based on
processes that should be implemented in your workplace.
If you are currently working, you may answer these questions based on
your own workplace. Otherwise consider what you should do if you were
working as part of a team.
Generic Questions and Calculations
UQ1: The Federal and State Governments play an important role in
regulating companies and ensuring good corporate governance.
UQ1A What legislation was introduced by the Commonwealth
Government?
Answer: The legislation introduced by the commonwealth government are
as follows;
a. Australian law reform commission Act
b. Best practice regulations
Commonwealth of Australia constitution act
Page 6

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ1B Which body is Australia’s corporate, market and financial services
regulator?
Answer: Australian Securities and Investments Commission is considered
as the Australia’s integrated corporate, markets, financial service and
consumer credit regulator.
UQ2: Describe in your own words the functions performed by the
following regulatory authorities:
UQ2A Australian Securities Exchange (“ASX”);
Functions of ASX are as follows;
a. The primary functions of ASX is to act as the market operator, clearing house and
facilitator of the system for the purpose of payments.
b. It also oversees the compliance with the help of its operating rules, and promotes
standards of corporate governance among the listed companies of Australia’s and
additionally assists the retail investors in educating about investments.
The function of ASX is to make sure that a fair, or4derly and transparent
market for operations is formed.
UQ2B Australian Competition and Consumer Commission (“ACCC”);
Functions of Australian Competition and Consumer Commission
a. The primary functions of Australian Competition and Consumer Commission is to
provide information to the consumer and the business in order to take complains
Page 7

Assessment Workbook U: Implement and Maintain Internal Control Procedures
from the consumer regarding the exploitation of price.
b. Australian Competition and Consumer Commission also functions as the price
monitor as it supplements the information from the hotline regarding the price
monitoring and survey activities.
c. Australian Competition and Consumer Commission is considered as the
commonwealth statutory authority whose primary functions is to enforce the
competition and consumer act with the range of additional legislation for promoting
competition, fair trading and regulations of national infrastructure for the benefit of
the Australians.
UQ2C Commonwealth Department of Public Prosecutions (“CDPP”);
The functions of Commonwealth Department of Public Prosecutions are
as follows;
a. It upholds the functions by carrying out the prosecutions relating to crimes against
the commonwealth by providing advice to referring agencies
b. Another functions performed by the Commonwealth Department of Public
Prosecutions is by referring to the agencies so that it can investigate into the alleged
offences and prepare briefs of evidences to support the prosecutions and recovery of
assets.
c. Commonwealth Department of Public Prosecutions contributes to the safety and
wellbeing of the people of Australia and to assist in the protection of the resources of
the commonwealth by the upkeep of law and order and by battling crimes.
Page 8

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ2D Financial Reporting Panel (“FRP”).
The functions of Financial Reporting Panel are as follows;
a. The primary functions of the Financial Reporting Panel is the resolution of the
disputes amid the ASIC and companies regarding the accounting treatment in their
financial reports.
b. The panel was established with the objective of removing the need to initiate the
legal proceedings in the court so that it can resolve the dispute regarding the financial
reporting matters.
c. The Financial Reporting Panel functions is designed with providing an efficient and
cost effective way of dealing with the dispute and eliminate the concern of the court
restricted to the understanding of the accounting.
UQ3: Briefly discuss the principle behind corporation law
The principles of corporation Law are as follows;
a. Corporation law is designed to provide the individuals with the general framework
for understanding of how the corporations work and the rights along with the rights
and responsibilities of the shareholders and the directors.
b. The fundamental principle of the corporation law is that a company is considered as
Page 9

Assessment Workbook U: Implement and Maintain Internal Control Procedures
the separate legal person who will be held liable for their own actions.
Another principle of Corporation Law is that the directors of the company
are held accountable to the third parties of the organizations through
derivative personal liability.
UQ4: Describe three (3) main differences between a:
● public company;
● private company.
Difference between public company and private company are as follows
a. The public company can be defined as the company which is listed on the well-
known stock exchange and it is traded publicly. On the other hand, a private
company can be defined as the company which is not listed on the stock exchange
and it is held privately by the members.
b. The public company must have a minimum of seven members to commence the
functions of the public company. On the other hand, the private company can
commence its business with a minimum of two members.
c. A public company must have a minimum of three directors while the private
company must have a minimum of two directors.
Page 10

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ5: Describe in your own words the terms “replaceable rules” and
“constitution” and how do they apply to a company’s internal
management system.
Replaceable rules: Replaceable rules can be defined as the corporation
act and the basic collection of rules for the management of the company.
Given the circumstances that a company does not wants to have the
constitution they can make the use of the replaceable rules.
Constitution: The constitution can be defined as the contract between the
company and each member or the company and the each of the director
or the company and the secretary of the company and the member and
each of the member.
An organization’s internal management might be governed by the
provision of the corporation act 2001 which is applicable to the company
namely the replaceable rules or the constitution or even the combination
of both. An organization can make the adoption of the constitution prior
to or after the registration and can change or repeal its constitution by
passing the special resolution within 28 days to the public listed
companies and within 21 days for other types of companies. A
replaceable rules is not applicable to the proprietary company given the
same individual is the sole director or the shareholder. If the organization
undertakes the decision of changing the replaceable rules they would be
required to have the constitutions which demonstrates the changes.
Page 11

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ6: With respect to the operations of a public company:
UQ6A Are all public companies listed on the ASX?
Not all the public companies are listed on the stock exchange. While
companies that are listed on the Australian stock exchange are ranked in
terms of their market capitalisation. Exchange traded funds and listed
invested companies are not regarded.
UQ6B List two (2) advantages of having a company listed on the ASX.
The advantages of having the company listed on the Australian stock
exchange are as follows;
a. Companies that are listed on the stock exchange are under the desirable situation of
accessing a large pool of capital for the purpose of growth and expansion. This will
help the companies in accessing capital with exposure of wide network for investors
in Australian and across the world.
b. Another advantage of getting the company listed on the stock exchange of Australia
is that follow up capital raising for the listed companies is considered to be vastly
simplified with the help of the reduced cost and time.
UQ7: “Accountability” and “transparency” are two (2) important issues in
corporate governance. What is meant by these two (2) terms?
Accountability under corporate governance refers to the method through
which a company can act with transparency and can be held accountable
Page 12

Assessment Workbook U: Implement and Maintain Internal Control Procedures
to the shareholders and the stakeholders of the company. Accountability
under the literal procedure refers to the procedure of giving an account
of the event that happens or has already taken place.
Transparency: Transparency can be defined as the means of openness or
in other words it refers to the willingness of the company to offer a strong
information to the shareholders and other stakeholders. For instance,
transparency is considered as the openness and the willingness to the
reveal figures of the financial statements that are truthful and accurate.
UQ8: Describe two (2) features of a company with a good corporate
governance structure.
Two features of a company with good corporate governance structure are
as follows;
a. Effective management of risk: A company cannot avoid the business risk hence it is
vital for the company to implement the effective management of risk. This would
help the company in diversifying their business operations in order to count on the
revenue from numerous different markets instead of remaining reliant on one.
Transparency of business information: Managers sometimes keep their
counsel by restricting their information which filters to the employees.
However, the corporate transparency helps in unifying the organization
by monitoring the financial performance of the company.
Page 13

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ9: List three (3) bodies and/or committees that have been responsible
for setting up corporate governance standards and best practice
methods.
The three bodies that are responsible for setting up the corporate
governance council are as follows;
a. ASX Corporate Governance Council
b. Audit committee
c. Corporate governance committee
UQ10: What is the role of the ASX Corporate Governance Council? List
the eight (8) main principles for corporate governance developed by the
Council that can be used as a guide by listed companies.
Role: The main role of the corporate governance council is to establish
and issue principles that are based on the suggestion of the corporate
governance practices to be undertaken by the listed entities of ASX. The
recommendations are usually intended to uplift the confidence of the
investors and to assist the listed entities to meet the expectations of the
shareholders in regard to the corporate governance.
Principles: The principles are as follows
Page 14

Assessment Workbook U: Implement and Maintain Internal Control Procedures
1. Laying down the solid foundations for the management and oversight
2. Structuring the board to add value
3. Promotion of the ethical and responsible making of decision
4. Safeguarding the integrity of the financial reporting
5. Making on time and balanced disclosure
6. Respecting the rights of the shareholders
7. Identifying and managing the risk
8. Remunerating in a fair and responsible manner
UQ11: The main focus for most definitions of corporate governance is on
the role and function of the board of directors as the body responsible for
the decisions and performance of the organisation. What are the
directors’ duties under common law?
The duties of directors under the common law are as follows:
a. Directors have the duties to exercise discretion to delegate their discretion based on
the matters that are valid for the better management of the company.
b. Directors have the duties of having the right to deliberate by making a positive
contribution in exercising discretion on the matters of the company
c. Directors have the duties of exercising power for proper purposes such as new issue
Page 15

Assessment Workbook U: Implement and Maintain Internal Control Procedures
of shares or restructuring of company.
UQ12: List four (4) assumptions that external stakeholders can make as
to the powers of the company and the authority of its officers under s129
of the Corporations Act 2001 (Cth)?
The assumptions are as follows;
a. An outsider would now be usually able to make assumption that any individual that
are acting on behalf of the company has the appropriate authority and acts inside the
section 129 of the constitution
b. An individual that is engaged in the dealings of the company can make a certain
assumption regarding the procedure of the company and the people with whom the
dealing is made.
c. An external stakeholder can make assumption that a person appointed even though it
is defective and executing a particular role in the company has the power which
would normally be conversed on that office.
d. An external stakeholder that are dealing with the company can make assumption that
the organization’s constitution and replaceable rules have been adhered with.
Page 16

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ13: Name the accounting standards that relate to:
UQ13A Presentation of financial reports, Statement of cashflows,
Disclosure of property, plant and equipment and Materiality.
UQ13B How are these standards legally binding?
UQ13A
Presentation of financial reports: AASB 101
Statement of cash flows: AASB 107
Disclosure of property: AASB 116
Plant and equipment: AASB 116
Materiality: AASB 1031
UQ13B
The Australian accounting standards are considered to be legally binding
in respect of the corporation act and are presently equivalent to
international financial reporting standards. All the organizations are
required to report under the corporation act and are also under the
obligations of preparing financial reports in compliance with the AASB
and IASB standard from 1st January to 2005.
UQ14: Is it possible for a significant breach of ethics to prevent an
accountant from continuing in practice? Explain.
Preventing an accountant from continuing in practice cannot be termed
as the breach of duties since the accountant failed to comply with the
internal rules of the organization and might have acted in a manner that
may have breached its power or duties.
Page 17

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ15: The ASIC has been responsible for carrying out investigations with
respect to the corporate governance practices of companies.
Conduct research of the ASIC website and locate one of these cases. In
your own words summarise the findings of the ASIC and the outcome of
the matter. The reference to this information must be included in your
answer.
As stated in the case of Metropolitan Fire System Pty Ltd v Miller (1997)
23 ACSR 699 the metropolitan bought forward an action against the
directors of Raydar and required declarations that the directors of the
Raydar had breached the Section 588 G of the corporation act by enable
the company to trade while being insolvent. The decision of the court
stated that the onus of the proof relating to defence is reliant on the
director that seek to remain dependent on them. The directors should
establish all the elements of the defence based on the balance of
probabilities. The court ultimately rejected the defence that was bought
by the directors since the company was clearly insolvent when the debt
was incurred to the metropolitan.
Page 18

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ16: Perform research on the ASX to obtain information with respect to
an Australian public listed company, select “company announcements”
and provide answers to the following questions:
UQ16A Name of the company; BHP Billiton
UQ16B Official listing date; 13 August 1885
UQ16C Select half year or annual reports and describe the contents of
the report;
Contents of the annual report:
a. Strategic report
b. Governance at BHP
c. Remuneration Report
Page 19

Assessment Workbook U: Implement and Maintain Internal Control Procedures
d. Directors Report
e. Financial Statements
f. Additional Information
Shareholder Information
UQ16D Using the corporate governance statement provided in the ASX
website, describe in your own words whether or not the company has
complied with ASX Corporate Governance Council principles and
recommendations.
Corporate governance:
The corporate governance report of the BHP Billiton is in compliance with
the disclosure and transparency rules. Additionally, the BHP billiton
corporate governance standard is in compliance with the governance
standard of Australia and the United Kingdom along with the
requirements of governance which is applicable to the results of New
York Stock Exchange.
UQ17: Audit risk can be measured as inherent risk (“IR”), control risk
(“CR”) and detection risk (“DR”). Calculate the risk of detection if the IR
is 85%, CR is 20% and the acceptable level of overall risk e.g. AR is 2%.
Audit risk
Audit Risk = Inherent Risk x Control Risk x Detection Risk
0.02 = 0.85 x 0.20 x Detection Risk
0.02 = 0.17 x Detection Risk
Detection risk = 0.118 = 11.8%
Page 20

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UQ18: Why do you consider it is good corporate governance practice for
a company to have a board composed of mainly non executive directors?
A good corporate governance practices for the company makes sure that
a. The company possess a sufficient system of internal control
b. A good corporate governance system makes sure that the equal treatment for all the
stakeholders is imposed
c. It makes sure that the accountability is held with the managers and the controllers of
the organizations
d. A good corporate governance makes sure that the investors are better able to make
informed decisions
Case Studies
These case studies are hypothetical situations which will not require you to
have access to the workplace, although your past and present workplace
experiences may help with the responses you provide.
Case Study One
UCS1.1: George is a senior manager of Xenta Pty Ltd, a small mining
company. The company is in the process of being taken over by much
larger company although this has not become public knowledge. George
decides to increase the number of shares he has with the company as he
is sure they will increase in value if the takeover goes ahead. Has
George committed an offence under the Corporations Act 2001 (Cth)?
Give an explanation for your decision.
Page 21

Assessment Workbook U: Implement and Maintain Internal Control Procedures
George has not committed an offence under the corporation act 2001
since the George has anticipated that the stock price of the company
might increase once the takeover has been finalized. As a result of this
the shares of the company to be acquired will systematically increase at
the level which could be the near the price of the company per share
which the acquiring company might consider to pay and higher than the
market value of the targeted firm.
Therefore, it can be stated that George has not committed any breach
under the corporation act 2001.
UCS1.2: What is the formal means by which company decisions are
made? How is this process achieved?
The formal means of making decision is that selecting choices by
recognizing the decision, assembly of information and evaluation of the
alternatives.
Means of making business decision are as follows;
a. Identification of decision
b. Gathering of the important decision
c. Identification of the alternatives
d. Weighting of the evidence
e. Selecting among the alternatives
f. Implementing from the alternative available
g. Reviewing the decision and its consequences
Page 22

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS1.3: List three (3) ways a person may become a member of a
company. What rights do members have?
Way to become a member:
Membership through subscription
Way to become a member:
Membership through the application and registration
Way to become a member:
Membership through the help of shares
Members Rights:
Page 23

Assessment Workbook U: Implement and Maintain Internal Control Procedures
The rights of the members are as follows;
a. Statutory right that are assigned to the member through the corporation act
b. Documentary right that is provided to the member through the memorandum and
article of association
c. Legal rights is granted by the general law
d. Proprietary right is assigned to participate in the distribution of dividend
Remedial right that is defines the right to information and inspection of
company records.
UCS1.4: Describe in 150 – 200 words the roles of both internal and
external auditors. How are these roles interrelated?
The role of internal auditor are as follows;
a. Internal auditor places focus on making sure that the system and processes of a firm
are working well.
b. Internal auditors act as the consultants for the organization in offering assurance on
the risk management governance and the internal control procedure
Role of external auditor are as follows;
a. External auditor play an important role in examining the yearly reports of the
company to which they does not have any involvement.
b. External auditors state their opinion on whether the information that is presented in
the financial statement demonstrates the financial position of the company at any
Page 24

Assessment Workbook U: Implement and Maintain Internal Control Procedures
time.
The roles of internal and external auditors are interrelated in following
manner
a. Both the internal and external auditor performs testing routinely and this might
consist of the assessing and analysing several transactions
b. Both the internal and external auditor general formal audit report based on the
business activities
UCS1.5: Public companies are required to hold an AGM each calendar
year. How much notice should members receive? Are private companies
required to hold AGMs? Give reasons as to why or why not.
The general rule states that a minimum of 21 days of notice should be
given to the members of the board. A private company is not required to
hold meeting every year even though the company may take the decision
of doing so and the article of association might contain the provision that
requires the company to hold AGM every year.
Page 25

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS1.6: Directors of public companies, (including listed companies), are
required to present reports to members at the AGM:
UCS1.6A List the internal reports required to be presented to members;
The list of internal reports required to be presented to the members are
as follows;
a. Cash reports
b. Status reports
c. Payroll reports
d. Sales and expense report
UCS1.6B Provide a brief description of each report.
Description of each report:
a. Cash reports: Cash report is required by the internal management for determining the
level of accuracy for making forecast on weekly basis.
b. Status report: The status report is required by the management for gauging into the
line of the financial statements.
c. Payroll reports: Payroll report is required by the manager for annualizing the
budgeted salary or the level of wages to be paid to each person.
d. Sales and expenditure report: Sales and expense report is required to understand the
variance that arise and the cause of such variance in respect of the consumer to
consumer.
Page 26

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS1.7:
UCS1.7A Explain the main objectives of implementing a sound system of
internal controls in an accounting system to prevent the risk of fraud and
error and the production of timely information.
UCS1.7 B How will you be able to determine if the system of internal
control is cost effective?
UCS1.7A
Internal control is necessary for providing a reasonable assurance
concerning the achievement of the operational objectives in the form of
effectiveness and efficiency of operations, accurate and dependable
monetary reports and adherence with the applicable rules. Internal
control helps in the prevention of fraud and detection of error by
performing a fraud risk assessment and assess related controls. Internal
control assist in recognition of the situations that could result in detection
of theft or loss which could occur and ascertaining whether the control
procedure are sufficient to manage risk.
UCS1.7B
Creating a strong culture of control is considered to be the most cost
effective and efficient method of ascertaining that the internal control
Page 27

Assessment Workbook U: Implement and Maintain Internal Control Procedures
over the financial reporting can be implemented. In order to make sure
that the internal control are cost effective they must be proactive and
value added to address the risk of exposure.
UCS1.8: You are the manager of an accounting firm and you have
discovered some substantial misstatements and abnormalities in the
financial reports namely cash shortages, increases in expenditure and
payments to suppliers and an increase in wages expenditure. You
suspect there may be more than human error involved:
UCS1.8A What do you consider could be the five (5) main causes of these
variations?
Five main causes of variance in the financial statements are as follows;
a. Lack of transparency
b. Insufficient management of information
c. Non independent department of internal audit
d. Inadequate accounting controls
e. Complex structure of the organization
UCS1.8B What action may be taken by the company in this situation?
Actions that can be taken by the company under such situations are as
follows;
a. Educating the management regarding the indicators of fraud by implementing
internal controls
Page 28

Assessment Workbook U: Implement and Maintain Internal Control Procedures
b. The firm can segregate the functions of accounting
c. Creating a strong environment of control
d. Performing annual examinations of the financial statements from the external parties
UCS1.9: The organisation you work for uses Key Performance Indicators
(“KPIs”) to measure how well the business is performing in relation to its
strategic goals and objectives and effectiveness of internal control
structure. Calculate how well the business is performing in the quarter
by using the following indicators:
UCS1.9A Net profit – total revenue is $320,000,. total
expenses - $200,295;
UCS1.9B Net profit margin as a %;
UCS1.9C Customer or client retention rate as a % – 225
clients at the beginning of the period 245 at the end of the
period.
UCS1.9D Energy consumption– energy used in previous
period $14,200, energy used in current period$13,875;
UCS1.9E IT cost as a % of revenue –IT cost for the quarter
$5,550.
UCS1.9A- 119705
UCS1.9B- Net profit margin = 37.4
UCS1.9C- Beginning of the period= 225
Customer at the end of the period = 245
Customer retention rate = 245-225*100
= 20/225*100 = 8.89
Page 29

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS1.9D – (2.28%)
UCS1.9E- 1.73%
UCS1.10: Which of the following is not a function of the board of
directors:
● setting policies and guidelines for the selection of executives and
other staff appointments;
● oversight of management in the application of policies and
guidelines for human resources;
● selection of staff;
● selection of the Chief Executive Officer (“CEO”).
Selection of Staff
UCS1.11: Which of the following would not result in a conflict of interest
by a director:
● The director bought shares in the company to show his
commitment to the company;
● The director borrowed money from the company to invest in the
property market and will give the money back when makes a profit
from the investment.
The director borrowed by the money from the company to invest in the
property market and will give the money back when makes a profit from
the investment
Page 30

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS1.12: Describe the importance of using triple bottom line principles
(“TBLs”) for a company’s strategic vision?
By evaluating the financial, social and environmental performance of the
business triple bottom line accounting not only assist in traditional
businesses to illustrate their corporate social responsibility but also helps
in useful framework for the most socially accountable companies. Triple
bottom line is important in proving that business can be a force for the
positive change in the world.
UCS1.13: Which of the following methods is not used by companies to
communicate with shareholders:
(a) AGMs;
(b) financial reports;
(c) email, fax and post;
(d) teleconferencing.
Teleconferencing
UCS1.14: What would you consider to be a material financial risk of a
financial services organisation?
Page 31

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Market risk is considered to be material financial risk for the financial
services organization. This is because under the market risk there is a
possibility of suffering loss because of factors that would impact on the
performance of the financial markets in which an individual is involved.
UCS1.15: Describe the main ethical requirements and workplace health
and safety policies that you have to comply with in the accounting
industry.
Ethical business requirements are as follows;
a. A written code of conduct of ethics along with the ethical code of standards
b. Ethical training of the executives, managers and employees
c. Confidential system of reporting
The following the workplace health and safety policies are;
a. Notification of incident
b. Resolution of issue
c. Consultation with the workers
UCS1.16:
UCS1.16A Can you eliminate all risk? Explain.
UCS1.16B Describe the term “diversification”.
Page 32

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS1.16A
Whatever the types of risk a business adopts each course of actions is
accompanied by the anticipated business benefits or rewards. Therefore
it can be stated not all risk can be eliminated however a better risk
management does not imply avoiding or eliminating all the business risk
at all the cost. Alternatively it represents that making an informed
choices would help in mitigating risks.
UCS1.16B
Diversification: Diversification can be defined as the method of allocating
capital in a manner that helps in lowering the exposure of risk to any one
of the particular asset or risk.
UCS1.17: The Finance Manager of Morgan Enterprises Pty Ltd wants to
claim the largest amount of depreciation expenditure as possible as a tax
deduction on the organisation’s computer equipment.
You have been requested to do a comparison between the reducing
balance and straight line methods over a five (5) year period.
Information relating to the non-current asset is set out below:
● Purchase price of the computer equipment is $60,000.
● Estimated residual value after five (5) years is $10,000.
● The equipment is to be depreciated over the full accounting period
eg. 1 July to 30 June each year.
● Depreciation rate is 20% for the reducing balance method and 15%
for the straight line method.
You are required to prepare a comparison of the two (2) methods. Your
calculations are also to include an advice for the finance manager as to
which method will result in the greatest savings over the five (5) year
period and an explanation for the reasons for the variances in the two
totals.
Guidance: You will need to show your working for these calculations.
Page 33

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Fixed Line Method
Value of the Asset (begin)
Depreciatio
n Value of the Asset at the end
60000 10000 50000
50000 10000 40000
40000 10000 30000
30000 10000 20000
20000 10000 10000
Diminishing Value method
Value of the Asset (begin)
Depreciatio
n Value of the Asset at the end
60000 12000 48000
48000 9600 38400
38400 7680 30720
30720 6144 24576
24576 4915.2 19660.8
As evident from the above stated computation of depreciation it can be
stated that the it is better to consider the diminishing value method since
under the straight line method of depreciation the value of the asset is
entirely written off. However under the diminishing value method the
value of depreciation is at first higher however in the later stages it
remains constant. The value at the end of five years under the straight
line method is 10,000 however under the diminishing value method is
19660.8. therefore, it is advisable to consider diminishing value of
depreciation.
Page 34

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Case Study 2
Bigger than Big Limited ACN 62 123 456 789 was originally a small
private company registered with the ASIC which has increased in size and
has now become a public company listed on the ASX. The company has
an obligation to comply with the ASX Listing Rules and the directors want
to apply good corporate governance principles and practices as
recommended by the ASX Corporate Governance Council. To achieve
this, the directors consider modifications will need to be made to the
existing external control structure. The company has previously used a
manual accounting system but has recently upgraded and installed a
computerised system.
The Bigger than Big file is available from your Course-U-Assessment-
Activities folder.
Bigger than Big has eight (8) employees who are responsible for
accounting operations in the company: Georgia is responsible for
Purchases and Accounts Payable, Monica for Sales and Accounts
Receivable; Marcus for Payroll duties; Gloria for cash accounts and Byron
for banking. Brigette is responsible for petty cash and Gordon controls
the non-current assets and registers. Kelly looks after stock and
inventory. The company has continuous and periodic disclosure
obligations with respect to regulatory authorities including the ASX, the
Australian Taxation Office and the Office of State Revenue.
You are required to provide answers to the questions below with respect
to how Bigger than Big can incorporate good corporate governance
practices and a sound internal control system.
UCS2.1: Auditing standard ASA315 sets out the five (5) basic components
relating to policies and procedures that management should design and
implement. These components are the control environment, entity’s risk
assessment process, information system, control activities and
monitoring of control.
Page 35

Assessment Workbook U: Implement and Maintain Internal Control Procedures
What internal controls would you implement in the control environment
of the company?
A business can implement Internal Control System as the process of
controlling business environment with the set of control activities. To
establish a control business environment it is necessary to implement
a. Effective and efficiency of operations
b. Dependability of the financial information
c. Agreement with the laws and regulations that are applicable
UCS2.2:
UCS2.2A Prepare a schedule to record the reporting requirements and
timeframes with respect to the continuous and periodic disclosure
obligations of the company to the following regulatory authorities:
● ASX
● ATO Company Tax return, IAS, BAS, PAYG (Withholding), PAYG
Page 36

Assessment Workbook U: Implement and Maintain Internal Control Procedures
(Installment), FBT
● (Office of State Revenue) Payroll Tax
● Superannuation fund.
UCS2.2B Prepare an email to your assessor with just the reporting dates
requesting a confirmation of the acceptability of these dates or whether
any need to be adjusted to shorter timeframes. (Print this email to .pdf
and submit with your assessment)
UCS2.2A
ASX listing requirements:
a. A least a minimum of 300 non-affiliated investors @ A$2,000
b. A minimum of 20% free float
c. A minimum of A$4 million net tangible assets
ATO: Entities with one or more than one previous year return outstanding
at 30 June 2017.
IAS and BAS: Registered company will report and pay withholding
through each month and the GST will be reported and paid on each
quarter.
Superannuation: It should be no later than 24th of each month.
FBT: Business does not provide Fringe benefit.
Payroll: Payroll tax should be paid through MYOB on fortnightly basis.
PAYG (Withholding), PAYG (Installment): Due date is 28 October for
superannuation
Reporting requirements are as follows;
a. Balance sheet
b. P/L account
c. Cash flow statement
d. Payroll summary
e. Super accrual fund
f. Payroll register report
Page 37

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS2.2B
Respected Sir,
I would like to draw your kind attention towards my application that it
would be grateful for you to confirm the reporting date by approving the
acceptability of the these due dates. I would therefore, request you to
kindly affirm whether you would be needing any adjustment relating to
the dates provided and make suggestion regarding shorter timeframes.
Thanking You
Yours Faithfully
_____________
UCS2.3: Create a checklist to document the responsibilities of each
employee involved in the accounting operations of the company as set
out in the case study above.
Guidance: Include the internal controls that should be implemented with
respect to the transactions processed by each employee.
Checklist requirements for each of the employee are as follows;
a. Cash accounts
b. Purchase and accounts payable
c. Sales and accounts receivables
Page 38

Assessment Workbook U: Implement and Maintain Internal Control Procedures
d. Non-current assets
e. Inventory
f. Payroll
UCS2.4: Describe in 500-600 words the General CIS controls you would
put in place with respect to the Computer Information System (“CIS”)
namely:
UCS2.4A Computer operation controls;
Computer operation controls is designed to regulate control on the
operations of the CIS. Regular operations can be controlled with the use
of audit log. An audit log provides assistance in automatically recording
the password of the user together with date, time and programs that are
used for the operations of the each computer. It is duty of the CIS
manager to constantly review the audit log or data control group in order
to assure that the computer has been put into use by the authorized
personnel for authorized functions.
UCS2.4B Hardware and software controls;
Page 39

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Hardware and software controls is build in the computer at the time of
manufacturing and it is designed to detect the malfunctions in the
equipment. These controls comprises of;
Checking of parity: It helps in ensuring that the information has been
transferred appropriately to other areas within the computer.
Dual arithmetic check: This needs two independent check to be
performed on the same operations in order to compare the results.
Software control programs includes;
1. Appropriate authorization approval, testing and documentation
2. Detection of error within the program
UCS2.4C Data entry and program files;
The method involved in entering the document of source in the machine
in a readable format is known as the data entry. In large companies data
control programs is implemented to make sure that the data entry is
authorized, complete and accurate. This is attained needing the users to
make correct entry of data under a standard format.
UCS2.4D Backup and recovery;
The purpose of maintaining back-up files is to offer a means of recovering
the large sum of data that is already entered and processed in the
system on the event if the data is lost, destroyed or erased. Computer
virus forms the main threat to the data integrity therefore back up
procedures helps in recovering all the data in the operating system
programs. The back up recovery control comprises of the following;
a. Arrangement made for back up and recovery
b. Policies of archival
c. Maintenance of computer programs and computer data in off site mode.
UCS2.4E Data conversion controls.
Data conversion control: Input data conversion controls can be applied by
making use of the online routines of edit and validation which are as
Page 40

Assessment Workbook U: Implement and Maintain Internal Control Procedures
follows;
a. Reports of exception to recognize the problems and notify the group controlling the
data. Exceptions reports are used by the computer software programs to evaluate the
data on files and print the report relating to incorrect and outdated items
b. Computer editing controls: restricting the inaccurate use of data that is being
recorded in the computer system
c. Before and after reports: Summarising the contents of the relevant master file prior to
and following each processing run.
UCS2.5: How can the internal controls implemented above be monitored.
The internal control system can be monitored in following manner;
a. Facilitating comparison between the budgets and accounting data
b. Conducting bank reconciliation on appropriate timely basis
c. Handling the complains received by the customers
Page 41

Assessment Workbook U: Implement and Maintain Internal Control Procedures
UCS2.6: List five (5) KPIs that management can use to monitor and
assess the effectiveness of the financial internal control structure.
Five KPI that can be used to monitor the effectiveness of financial internal
control structure are as follows;
a. The business has generated sufficient revenue to meet its expenses
b. Effective risk management policies
c. A better internal control structure
d. Producing reports in timely manner
e. Providing true and fair view of the books of accounts of the business
UCS2.7: Please access the policies and procedures for Bigger-than-Big
and focusing on the company's accounting controls, please review these
procedures and identify any areas that are lacking in adequate controls,
or suggest changes to existing controls that you believe are appropriate.
The controls are available from your Course-U-Assessment-Activities
folder.
Make general notes on what suggestions or changes you would make.
Suggested changes that could be made to Bigger than Big are as follows;
Page 42

Assessment Workbook U: Implement and Maintain Internal Control Procedures
a. A communication system must be established to meet the ethical code of conduct
b. Should assure that the there is an adherence to the corporate governance
requirements
c. Assuring sufficient training of the employees
d. Performing internal audit by establishing audit committee.
Page 43

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Page 44

Assessment Workbook U: Implement and Maintain Internal Control Procedures
COURSE REVIEW
Provide a short overview of what you have learnt in “course U - Implement and
maintain internal control procedures” and how it will assist you in your role as a
bookkeeper. (Your response must be at least 250 words).
Through this course I was able to understand numerous legislation introduced
by the commonwealth government. Additionally I was able to gain knowledge
on Functions of ASX that are engaged as the market operator, clearing house
and facilitator of the system for the purpose of payments. Simultaneously, I
was able to gain an insight into the Functions of Australian Competition and
Consumer Commission that offer information to the consumer and the
business in order to take complains from the consumer regarding the
exploitation of price. I also understood the functions of Commonwealth
Department of Public Prosecutions and Financial Reporting Panel that helps in
understanding of resolution of the disputes amid the ASIC and companies
regarding the accounting treatment in their financial reports. I also
understood the numerous definitions regarding the Accountability under
corporate governance and Transparency. Effective lessons were learnt in the
areas of Effective management of risk and Transparency of business
information. I was able to understand the main role of the corporate
governance council in establishing and issuing principles that are based on
the suggestion of the corporate governance practices to be undertaken by
the listed entities of ASX. Additionally I learned about the duties of directors
under the common law along with the numerous standard involved in the
preparation of financial reports. The study enabled me to understand good
corporate governance practices and creating a strong culture of control for
efficient internal control over the financial reporting. The course was helpful
in understanding the important aspects of implementation and maintenance
internal control procedures.
FEEDBACK
To help us improve this assessment process for future learners please let us know
what you thought about it. What did you like about this assessment? What' didn't
you like about this assessment? How could we improve this assessment?
The most important thing that I like about the course was the vast source
of knowledge I was able to gain on the implementation of internal control
process. However, to my dislike there could have been more numerical
parts to test the knowledge in the areas of practical accounting tools.
Page 45

Assessment Workbook U: Implement and Maintain Internal Control Procedures
Page 46