The EnTaRe charity was established in 1960. The charity's aim is to provide support to chilidren from disadvantaged backgrounds who wh to ake part in sports such tenns badminton and football EnTaRe has a detailed constitution which explains how the charity's income can be spenL The constitution also notes that administration expendinure cannot eceed 10of incomein any year. The charity's income is derived wholly from voluntary donations. Sources of donations include: () Cash collected by volunteers asking the public for donations in shopping aieas, (1) Cheques sent to the charity's head office () Donations from generous individuals. Some of these donations have specific clauses attached to them indicating that the initial amount donated (capital) cannot be spent and the the income (interest) from the donation must be spent on specific activities, for example, provision of sports equipment The rules regarding the taxation of charities in the country EnTaRe is based are complicated, with only certain expenditure being alowable for taxation purposes and donations of capital being treated as income in some situations. (a) Determine the 'audit risk' and the three elements of risk that contribute to total audit risk. Question 19 Bonsal Trading Co (Bonsal) manutactures electrical equipment, and its year end is30 September 201s You are te uperor er programmes for the forthcoming interim audit. The company's internal audit department has provided you wh Frelated controls listed below cumentation reatng - Bonsal has a capital expenditure committee and all purchase orders for tapital items are requlred to be authorised by this commmee co e de ret oondatingt - On receipt, each asset is assigned a unique serial number and this is recorded on the asset and in the noncurrent assets regter - When the asset arrives, a goods received note (GRN) is completed which details the nature of the expenditure e whetheris capita sr veenu and the a datnK eviewed and initialled by a responsible official, Copies of the GRNS relating to capital expenditure are then submitted to the finance degatmers for upating thenoncarem es egister. Perlodically, internal audit undertakes a review of assets in the register and compares them to assets on site, using the serial numiber to confirm etence t the wet. ccess to the non-current assets register is restricted through passwords to a small number of staff in the finance department. 15 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment describes the five components of an entinys interme Fred: Identify and briefly explain the FIVE components of an entity's internal control. T Arial 3 (12pt) : T 15 888 F4 Remaining Time 1 houur, 23 minutes 14 seconds Question Completien Statu Question 14 16 37 18 Clapstick Co operates a chain of hotels across the country. Clapstick Co employs in excess of 250 permanent empinyees and year endis 31 Aug u then ero of Viola & Co and are currently reviewing the documentation of Clapstick Co's payroll system, detated below, in preparation for the interm aud 10 pints Set Clapstick Co's payroll system Permanent employees work a standard number of hours per week as specified in their employment contracL However, when the hotels are buny, at can be requested by management to work adaitional shifts as overtime. This can either be paid on a monthly basis or taken as days oft. Employees record any overtime worked and days taken off on weekly overtime sheets which are sent to the payroll department. The standard hours per employee are omcaly sa up in the system and the overtime sheets are entered by clerks into the payroll package, which automatically calculates the gross and net pay ong wth relevan dedudions. These calculations are not checked at all. Wages are increased by the rate of inflation each year and the clerks are responsible for updating the standing data in the payrollsyem. Employees are paid on a monthly basis by bank transfer for their contracted weekly hours and for any overtime worked in the previous month. it employees chooe to be pals for overtime, authorisation is required by department heads of any overtime in excess of 30% of standard hours. If employees choose instead to take days off, the payro derks so check back to the 'overtime worked report: however, this report is not always checked. The 'overtime worked report, which details any overtime recorded by employees, is run by the payroll department weekly and emalled to department heads tor authoraion, The payroll department asks department heads to only report if there are any errors recorded. Department heads are required to arrange for overtime sheets to be authorised by an alternative responsible official if they are away on annual leave; however, there are instances where this arrangement has not occurred. The payroll package produces a list of payments per employee; this links into the bank system to produce a list of automatic payments. The finance director revews the total st of ba transfers and compares this to the total amount to be paid per the payroll records, if any issues arise then the automatic bank transter can be manualy changed by the finance direr in respect of the payroll system of Clapstick Co: () Determine and explain FIVE threats to Control risk; (ii) Recommend a control to address each of these threats; T T TArial 3 (12pt) :T 888 The EnTaRe charity was established in 1960. The charity's aim is to provide support to chilidren from disadvantaged backgrounds who wh to ake part in sports such tenns badminton and football EnTaRe has a detailed constitution which explains how the charity's income can be spenL The constitution also notes that administration expendinure cannot eceed 10of incomein any year. The charity's income is derived wholly from voluntary donations. Sources of donations include: () Cash collected by volunteers asking the public for donations in shopping aieas, (1) Cheques sent to the charity's head office () Donations from generous individuals. Some of these donations have specific clauses attached to them indicating that the initial amount donated (capital) cannot be spent and the the income (interest) from the donation must be spent on specific activities, for example, provision of sports equipment The rules regarding the taxation of charities in the country EnTaRe is based are complicated, with only certain expenditure being alowable for taxation purposes and donations of capital being treated as income in some situations. (a) Determine the 'audit risk' and the three elements of risk that contribute to total audit risk. Question 19 Bonsal Trading Co (Bonsal) manutactures electrical equipment, and its year end is30 September 201s You are te uperor er programmes for the forthcoming interim audit. The company's internal audit department has provided you wh Frelated controls listed below cumentation reatng - Bonsal has a capital expenditure committee and all purchase orders for tapital items are requlred to be authorised by this commmee co e de ret oondatingt - On receipt, each asset is assigned a unique serial number and this is recorded on the asset and in the noncurrent assets regter - When the asset arrives, a goods received note (GRN) is completed which details the nature of the expenditure e whetheris capita sr veenu and the a datnK eviewed and initialled by a responsible official, Copies of the GRNS relating to capital expenditure are then submitted to the finance degatmers for upating thenoncarem es egister. Perlodically, internal audit undertakes a review of assets in the register and compares them to assets on site, using the serial numiber to confirm etence t the wet. ccess to the non-current assets register is restricted through passwords to a small number of staff in the finance department. 15 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment describes the five components of an entinys interme Fred: Identify and briefly explain the FIVE components of an entity's internal control. T Arial 3 (12pt) : T 15 888 F4 Remaining Time 1 houur, 23 minutes 14 seconds Question Completien Statu Question 14 16 37 18 Clapstick Co operates a chain of hotels across the country. Clapstick Co employs in excess of 250 permanent empinyees and year endis 31 Aug u then ero of Viola & Co and are currently reviewing the documentation of Clapstick Co's payroll system, detated below, in preparation for the interm aud 10 pints Set Clapstick Co's payroll system Permanent employees work a standard number of hours per week as specified in their employment contracL However, when the hotels are buny, at can be requested by management to work adaitional shifts as overtime. This can either be paid on a monthly basis or taken as days oft. Employees record any overtime worked and days taken off on weekly overtime sheets which are sent to the payroll department. The standard hours per employee are omcaly sa up in the system and the overtime sheets are entered by clerks into the payroll package, which automatically calculates the gross and net pay ong wth relevan dedudions. These calculations are not checked at all. Wages are increased by the rate of inflation each year and the clerks are responsible for updating the standing data in the payrollsyem. Employees are paid on a monthly basis by bank transfer for their contracted weekly hours and for any overtime worked in the previous month. it employees chooe to be pals for overtime, authorisation is required by department heads of any overtime in excess of 30% of standard hours. If employees choose instead to take days off, the payro derks so check back to the 'overtime worked report: however, this report is not always checked. The 'overtime worked report, which details any overtime recorded by employees, is run by the payroll department weekly and emalled to department heads tor authoraion, The payroll department asks department heads to only report if there are any errors recorded. Department heads are required to arrange for overtime sheets to be authorised by an alternative responsible official if they are away on annual leave; however, there are instances where this arrangement has not occurred. The payroll package produces a list of payments per employee; this links into the bank system to produce a list of automatic payments. The finance director revews the total st of ba transfers and compares this to the total amount to be paid per the payroll records, if any issues arise then the automatic bank transter can be manualy changed by the finance direr in respect of the payroll system of Clapstick Co: () Determine and explain FIVE threats to Control risk; (ii) Recommend a control to address each of these threats; T T TArial 3 (12pt) :T 888