Question 2 (16 marks)

For each of the situations (1) to (4), below: (a) identify the most relevant control activity (b) identify the most relevant general audit objective(s) for the control activity (c) design an appropriate test of control for the control activity (d) choose one of the general objectives identified in (b), and design an appropriate substantive test for the general objective. Note: choose a substantive test of details that produces reliable evidence. Do not use analytical procedures unless an accounting estimate is involved. Do not use audit procedures that produce unreliable evidence. (1) The accounting department records only cash transactions. The finance department handles actual cash payments and cash receipts. (2) Inventories are locked inside storage rooms at night. (3) Each employees supervisor has to check and approve the employees pay claims before payment. (4) When a sales invoice number is typed into the accounting system, the system automatically calculates and shows the cost of goods sold amount for the sale.