1.Fashion Forward, a clothing distributor, wants to ensure it has strong information system controls over the purchasing and payables cycle. Which of the following should be implemented?

A. The same person should do the buying and the receiving; however, that person should not have access to the accounting records to ensure appropriate segregation of duties.

B. Only accept requisitions against the account code entered by all employees who have identified that goods are needed.

C. There should be a periodic check of invoices where no goods have been received.

D. The computer should check the requisition against the inventory master file to confirm that the re-order point has been reached.

E. Orders placed for supplies not on the approved list should be accepted if they are needed.

F. Receiving should enter the details of goods received on the computer against the order.

G. Details of invoices should be entered into the computer on receipt, and the computer will match the invoice with the purchase order. Once matched, payment should be processed.

2.From the list of inherent risks provided, identify which relate to purchases, payables and payroll.

List of inherent risks:

A.Pressure to overstate cash and accounts receivable to avoid going concern debts.

B.Pressure to overstate sales to achieve profitability targets

C.Pressures to understate payables in order to report a higher level of working capital in the face of liquidity problems or going concern doubts.

D.Pressures to understate expenses in order to falsely report the achievement of announced profitability targets or industry norms.

3.From the list of analytical procedures provided, identify which relate to purchases, payables and payroll.

List of analytical procedures:

A.Expected staff costs based on average pay rate and average number of staff.

B.Sales turnover ratio.

C.Monthly analysis of sales trends.

D.Days in accounts payable.

E.Gross margin analysis.