You are an audit senior in Brennon & Co., a firm providing audit and assurance services....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are an audit senior in Brennon & Co., a firm providing audit and assurance services. At the request of an audit partner, you are preparing the audit program for the income and receivables systems of Seeley Co. Audit documentation is available from the previous year's audit, including internal control questionnaires and audit programmes for the despatch and sales system. The audit approach last year did not involve the use of computer- assisted audit techniques (CAATs) the same approach will be taken this year. As far as you are aware, Seeley's system of internal control has not changed in the last year. Client background-sales system Seeley Co is a wholesaler of electrical goods such as kettles, televisions, MP3 players, etc. The company maintains one large warehouse in a major city. Seeley customers are always owners of small retail shops, where electrical goods are sold to members of the public. Seeley only sells to authorised customers and, following appropriate credit checks, each customer is given a Seeley identification card to confirm their status. The card must be used to obtain goods from the warehouse. Despatch and sales system The despatch and sales system operates as follows. 1. 2. Customers visit Seeley's warehouse and load the goods they require into their vans after showing their Seeley identification card to the despatch staff. A pre-numbered goods despatch note (GDN) is produced and signed by the customer and a member of Seeley's despatch staff confirming goods taken. One copy of the GDN is sent to the accounts department, the second copy is retained in the despatch department. 3. 4. Accounts staff enter goods despatch information onto the computerised sales system. The GDN is signed. 5. The computer system produces the sales invoice, with reference to the inventory master file for product details and prices, maintains the sales day book and also the receivables ledger. The receivables control account is balanced by the computer. 6. Invoices are printed out and sent to each customer in the post with paper copies maintained in the accounts department. Invoices are compared to GDNs by accounts staff and signed. Paper copies of the receivables ledger control account and list of aged receivables are also available. Error reports are produced showing breaks in the GDN sequence. 7. 8. Required (a) Explain the steps necessary to check the accuracy of the previous year's internal control questionnaires. (b) Using information from the scenario, list six tests of control that an auditor would normally carry out on the dispatch and sales system at Seeley Co, and explain the reason for each test. You are an audit senior in Brennon & Co., a firm providing audit and assurance services. At the request of an audit partner, you are preparing the audit program for the income and receivables systems of Seeley Co. Audit documentation is available from the previous year's audit, including internal control questionnaires and audit programmes for the despatch and sales system. The audit approach last year did not involve the use of computer- assisted audit techniques (CAATs) the same approach will be taken this year. As far as you are aware, Seeley's system of internal control has not changed in the last year. Client background-sales system Seeley Co is a wholesaler of electrical goods such as kettles, televisions, MP3 players, etc. The company maintains one large warehouse in a major city. Seeley customers are always owners of small retail shops, where electrical goods are sold to members of the public. Seeley only sells to authorised customers and, following appropriate credit checks, each customer is given a Seeley identification card to confirm their status. The card must be used to obtain goods from the warehouse. Despatch and sales system The despatch and sales system operates as follows. 1. 2. Customers visit Seeley's warehouse and load the goods they require into their vans after showing their Seeley identification card to the despatch staff. A pre-numbered goods despatch note (GDN) is produced and signed by the customer and a member of Seeley's despatch staff confirming goods taken. One copy of the GDN is sent to the accounts department, the second copy is retained in the despatch department. 3. 4. Accounts staff enter goods despatch information onto the computerised sales system. The GDN is signed. 5. The computer system produces the sales invoice, with reference to the inventory master file for product details and prices, maintains the sales day book and also the receivables ledger. The receivables control account is balanced by the computer. 6. Invoices are printed out and sent to each customer in the post with paper copies maintained in the accounts department. Invoices are compared to GDNs by accounts staff and signed. Paper copies of the receivables ledger control account and list of aged receivables are also available. Error reports are produced showing breaks in the GDN sequence. 7. 8. Required (a) Explain the steps necessary to check the accuracy of the previous year's internal control questionnaires. (b) Using information from the scenario, list six tests of control that an auditor would normally carry out on the dispatch and sales system at Seeley Co, and explain the reason for each test.
Expert Answer:
Answer rating: 100% (QA)
a Steps to Check the Accuracy of Previous Years Internal Control Questionnaires 1 Review and Update Explanation in Detail Examine Previous Years Questionnaires Begin by thoroughly examining the intern... View the full answer
Related Book For
Ethical Obligations And Decision Making In Accounting Text And Cases
ISBN: 9781264135943
6th Edition
Authors: Steven Mintz
Posted Date:
Students also viewed these accounting questions
-
1 2 3 How many time will the following print statement execute? for i in range (4): for j in range (8) :) print (f" ({i}, {j})")
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
You are an audit senior in Rotstein & Swartz a public accounting firm. You are current working on the audit of one of its clients, Ontario Appliance Source. (OAS) which has a year-end of December...
-
The labor force participation rate is increasing in Japan because... a) there are fewer unemployed people b) the working age population is increasing c) retirement ages are increasing d) more women...
-
Can stars be seen from the Moon's surface in the "daytime" when the Sun is shining?
-
The data from Exercise 16.67 on the lengths, in millimeters, of cuckoo eggs found in the nests of six bird species. Use the technology of your choice to perform and interpret a Tukey multiple...
-
Presented below are summary financial data from the General Electric Company 2015 annual report. Using the ratio definitions from Exhibit 4.6, calculate the following liquidity and solvency ratios:...
-
Briefly discuss Harrahs marketing information system, using Figure as a guide. Joseph, a 30-something New Yorker, recently went on a weekend trip to Atlantic City, New Jersey, where he hoped to stay...
-
Understanding your audience will help you achieve the purpose of your communication.
-
A flight simulator is used to train pilots on how to recognize spatial disorientation. It has four degrees of freedom, and can rotate around a planetary axis as well as in yaw, pitch, and roll. The...
-
Ford Motor Company had realized returns of 10%, 20%, -15%, and 10% over four quarters. What is the quarterly standard deviation of returns for Ford? A. 16.52% OB. 15.69% OC. 14.87% OD. 14.04%
-
BOM $10,700 EOM $8,500 Sales $5,000 00 $2,300 RED% 5% IMU% 30% (2 Points Total; 1 Point Each) A. What is the $OTB@R? B. What is the $OTB@C? Be sure to: Enter either a $ sign or % sign. Provide commas...
-
5. Ikenberry et al. (JFQA 1996) document that firms have positive CAPM alphas for at least a year after they perform the stock split. What do you expect to happen to recent splits at several earnings...
-
Discuss how these measures might impact Jill and Marcus's goals and objectives. (8 marks) The RBA statement also states that: "In the central scenario, GDP growth is expected to be around 6 per cent...
-
You have a job as the middle-level executive in a 250 bed hospital. The hospital is technically a "non-profit" hospital, but it is run as close to a "for profit" goal as possible.As a result of...
-
Core Fitness Inc, is a high+end athletic gear manufacturer. The production gear involves many complex and specialized activities that, before now, have lacked organization or procedural direction....
-
We all know that saving money is important for our future, but so many of us either put off saving money for a later time or believe that we simply don't have the money to save in the first place....
-
Study the pictures/images below. Obviously these was focus on LT sociology, anthropology and poltical science. Try to do some analysis by finding clues that are synonymous with the main concepts....
-
Section 179 of the IRS tax code allows qualifying businesses to deduct the full cost of eligible property on their income taxes as an expense, rather than requiring the cost of the property to be...
-
Do you believe that CPAs in business should be held to the same high ethical standards as CPAs in public practice? Why or why not? Include in your discussion how those standards would apply to CPAs...
-
Danny Boy, a local CPA who owns a tax practice, is being investigated by the IRS for the preparation of false income tax returns for a client. The IRS alleges that the individual taxpayer/client used...
-
a. Apply the following data to evaluate the time-based model of security for the XYZ Company. Does the XYZ Company satisfy the requirements of the time-based model of security? Why? Estimated time...
-
Physical security is extremely important. List and describe the physical secu rity controls that should be used to protect the data center of a financial institution. Read the article 19 Ways to...
-
People often think that only accountants need to know accounting. Many students may not consider taking accounting because they have no interest in being an accountant. Whether students aspire to be...
Study smarter with the SolutionInn App