Dashboard MyLab & Masteri... PDF, ... U , Cengage Learnin... moodle.pdf 1 / 3 100% + Question 1 The following misstatements are found in the accounting records of Hong Kong Manufacturing Ltd: 1. Stationery expenses (Account Code E2343) was unintentionally recorded as Advertising (Account Code F2343). 2. Alice Wong, a Accounts Payable clerk, prepares a monthly cheque to Short Sell Ltd for the amount of invoice #12345 owed and submits the unsigned cheque to the Treasurer for payment. Approved related supporting documents were also submitted. When Alice receives the signed cheque from the Treasurer, she records it as a debit to AP sub-ledger and deposits the cheque in a personal bank account for a company named Shot Shell Ltd. A week later, Alice record invoice #12345 in the Purchase Journal again, resubmits the same documents and obtains a new cheque from the Treasurer. She then sends the signed cheq Short Sell Ltd. 3. A cheque of HK$8542.45 was recorded as HK8452.45 in the Cash Disbursement Journal. 4. Purchases of raw materials are frequently not recorded until a few weeks after the goods are received because the Receiving Reports are late in submission to Accounting Department. Purchases are only recorded in the Purchase Journal and paid accordingly often only after Vendors call the CFO for payment, in a few occasion demonstrations outside the company head office. 8:48 JOE 10 44% 202113 pdf 2 / 3 100% + 5. At every month end, a Receiving Report is often fraudulently created and submitted to the Accounting Department by Ah Kiu, an employee in the Receiving Department. Ah Kiu then a few days later after each month sends an invoice to Hong Kong Manufacturing Ltd for the quantity as stated in the Receiving Report in the name of a small firm owned by his wife and operated by both of them in the evenings and weekends. The Accounts Payable, upon matching the Invoice and Receiving Report, makes payment by cheque. 6. Alice Wong intentionally withhold 5 large amount cheques issued and mailed on March 26th and make sure these are not recorded in Cash Disbursement Journal so that to prevent Cash at Bank from having a negative balance on the General Ledger. After the Balance Sheet date, on 2nd April, these payments are then recorded in the Cash Disbursement Journal. REQUIRED a) Identify the transaction-related audit objective not met for each misstatement. b) Recommend an internal control to prevent each misstatement from happening again c) What is the substantive test of transaction to uncover each of the misstatement? Dashboard MyLab & Masteri... PDF, ... U , Cengage Learnin... moodle.pdf 1 / 3 100% + Question 1 The following misstatements are found in the accounting records of Hong Kong Manufacturing Ltd: 1. Stationery expenses (Account Code E2343) was unintentionally recorded as Advertising (Account Code F2343). 2. Alice Wong, a Accounts Payable clerk, prepares a monthly cheque to Short Sell Ltd for the amount of invoice #12345 owed and submits the unsigned cheque to the Treasurer for payment. Approved related supporting documents were also submitted. When Alice receives the signed cheque from the Treasurer, she records it as a debit to AP sub-ledger and deposits the cheque in a personal bank account for a company named Shot Shell Ltd. A week later, Alice record invoice #12345 in the Purchase Journal again, resubmits the same documents and obtains a new cheque from the Treasurer. She then sends the signed cheq Short Sell Ltd. 3. A cheque of HK$8542.45 was recorded as HK8452.45 in the Cash Disbursement Journal. 4. Purchases of raw materials are frequently not recorded until a few weeks after the goods are received because the Receiving Reports are late in submission to Accounting Department. Purchases are only recorded in the Purchase Journal and paid accordingly often only after Vendors call the CFO for payment, in a few occasion demonstrations outside the company head office. 8:48 JOE 10 44% 202113 pdf 2 / 3 100% + 5. At every month end, a Receiving Report is often fraudulently created and submitted to the Accounting Department by Ah Kiu, an employee in the Receiving Department. Ah Kiu then a few days later after each month sends an invoice to Hong Kong Manufacturing Ltd for the quantity as stated in the Receiving Report in the name of a small firm owned by his wife and operated by both of them in the evenings and weekends. The Accounts Payable, upon matching the Invoice and Receiving Report, makes payment by cheque. 6. Alice Wong intentionally withhold 5 large amount cheques issued and mailed on March 26th and make sure these are not recorded in Cash Disbursement Journal so that to prevent Cash at Bank from having a negative balance on the General Ledger. After the Balance Sheet date, on 2nd April, these payments are then recorded in the Cash Disbursement Journal. REQUIRED a) Identify the transaction-related audit objective not met for each misstatement. b) Recommend an internal control to prevent each misstatement from happening again c) What is the substantive test of transaction to uncover each of the misstatement