Bright Lights plc is a company that makes and sells LED advertising displays. For some customers Bright Lights plc must obtain architectural advice to be sure that their displays can be located on the buildings of their clients.

REQUIRED:

a. Which expenditure cycle transaction will be required to identify the demand for architectural services? You should identify the relevant transaction and describe in detail what you would expect to happen in this transaction. [8 marks]

b. Explain exactly how Bright Lights plc might ensure that the receipt of architectural services is recorded by the accounting information system. What controls might be put in place to check that the service received is the service that was requested? [12 marks]

c. One of the accounting objectives in the expenditure cycle is to ensure that purchase transactions are correctly classified. Why would it be important for Bright Lights plc to ensure that this objective is achieved? What three audit tests might be applied to this objective to identify whether it has been achieved? [10 mark