Scribd Logo
Upload

Welcome to Scribd!

  • 11 24 Arens

    Uploaded by

    tszi
    472 views3 pages
    The order clerk placed purchase orders for accessories under $3,000 without authorization. It was discovered the clerk was ordering personal goods up to $3,000. Additionally, purchase orders were not sent to the warehouse, so they paid for three batches of unordered handbags. Invoices were also input daily without controls, resulting in suppliers being paid incorrectly. The finance director only approved total payment amounts without supporting documents, allowing payment to fictitious suppliers.

    Original Description:

    pengauditan

    Original Title

    11 24 arens

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The order clerk placed purchase orders for accessories under $3,000 without authorization. It was discovered the clerk was ordering personal goods up to $3,000. Additionally, purchase orders were not sent to the warehouse, so they paid for three batches of unordered handbags. Invoices were also input daily without controls, resulting in suppliers being paid incorrectly. The finance director only approved total payment amounts without supporting documents, allowing payment to fictitious suppliers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    472 views3 pages

    11 24 Arens

    Uploaded by

    tszi
    The order clerk placed purchase orders for accessories under $3,000 without authorization. It was discovered the clerk was ordering personal goods up to $3,000. Additionally, purchase orders were not sent to the warehouse, so they paid for three batches of unordered handbags. Invoices were also input daily without controls, resulting in suppliers being paid incorrectly. The finance director only approved total payment amounts without supporting documents, allowing payment to fictitious suppliers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 3

    1.

    The order clerk placed purchase orders for accessories items; however, it was
    discovered that only purchase orders above $3000 required authorization. The order
    clerk regularly placed order for personal goods up to value of $3000.

    Ans

    a) Here, the control with respect to Proper Authorization of Transaction and


    Activities is missing has taken advantage of the loophole in Expense Authorization. In
    addition to that one more important control is missing that is Independent Check on
    Performance which is necessary for the continuos verification of other control.

    b) The Transaction related Management assertion that is not met is Authorization as it


    requires that all types of transaction has to be approved by appropriate member of
    Management.

    c) If a proper internal check and verification by an independent person would have been
    in place i.e. Control with respect to Independent Check on Perfomance. It could have
    prevented such missatement by the clerk as his activities would have been regulated
    timely.

    2. When goods were received, the warehouse department verified the quantity to the
    suppliers despatch note and checked the quality of the goods received. The warehouse
    department, however, did not check against the purchase order as no copy of the
    purchase order was ever sent to the warehouse department. It was discovered that
    three batches of handbags, which the company did not order, were received and
    subsequently paidfor.

    Ans

    a) Here, the control with respect to Adequate Document as Records has been
    compramised as vital document such as Purchase Order or its copy is not sent to
    Warehouse for verification of rate and quantity ordered and received. Apart from
    this Independent check on performance is also missing.

    b) Here, the Transaction related Management assertion that is not met


    is Occurance which requires that transaction in accounitng records actually took place.
    In the present case payment has been made for goods which has not been ordered.

    c) If a copy of Purchase order was sent to the Warehouse, the would have verified the
    the quantity mentioned in the dispatch note with the Purchase Order and could have
    prevented the said misstatment.
    3. Purchase invoices were input daily by the purchase ledger clerk. No application
    control was ever applied over the input process. It was discovered that several mistakes
    were made during the input process and suppliers were paid incorrectly.

    Ans

    a) Here, the control with respect to Adequate Segragation of Duties is compramised


    and there is no application control or Information Proceesing Control with respect to
    Accounting Information system which can identify duplicate posting of invoices.

    b) The Transaction related Management Assertion that is not met are Accuracy and
    Occurance. Accuracy requires that transaction are precisely entered and occurance
    required that transaction in accounitng records actually took place. Which in the present
    case are missing.

    c) A system of proper internal check and seperation of duties would have identified the
    error with respect to invoice posting.

    4.The finance director is only provided with the total amount of payments to be made on
    the payment list for payment approval. It was then discovered that some of the payees
    were fictitious suppliers.

    Ans.

    a) Here, the control with respect to Adequate Document and Records is missing as
    relavant supporting documents is not supplied to the Finance Director for approval.

    b) The Transaction related Management Assertion that is not met is Occurance as


    Fictitous supplier has been paid for.

    c) If the Proper supporting document like invoice and Purchase Order is also supplied
    with the Payment list then the same could have been prevented.

    5.The sales ledger clerk was having a long holiday during Christmas times. Upon return
    in January, the clerk entered all the unrecorded sales during his leave as January's
    sales for convenience sake.

    Ans

    a) Here, the control with respect to Information Processing Control is missing as


    Previous year sales is recorded as current year sales.

    b) The Transaction related Management Assertion that is not met is Cut Off as Revenue
    is moving from one period to another Period.
    c) If a Proper Information Proccesing Control of Account Information System in place
    could prevent such type of Misstatement

    7. When processing orders, the sales clerk entered a discount manually into the invoice.
    As the sales clerk was a newly recruited member, it was noted that the employee either
    forgot to enter the discount or entered an incorrect level of discount.

    Ans

    a) Here, the control with respect to Independent Check and Control is Missing. Since
    the Sales Clerk is new his work should be cross checked by another experienced
    person.

    b)The Transaction related Management Assertion that is not met is Accuracy whict
    requieres the Transaction to be Precise.

    If the proper information processing system would have been in place which could have
    performed the calculation of Discount automatically, this error could have been
    prevented. If a proper timely internal check and balance is in place then such error can
    be detected earlier.

    You might also like