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QUESTION ONE Tasty ice cream employs thirty salesmen each with defined geographical area coverage. Each salesperson is supplied with a car which is changed every
QUESTION ONE Tasty ice cream employs thirty salesmen each with defined geographical area coverage. Each salesperson is supplied with a car which is changed every three years. At end of each week, each salesperson is submits claim on a preprinted form for expenses with supporting vouchers. Expenditure is on petrol, repairs and servicing the car, hotels, lunches and entertainment. Each claim is scrutinized by Beatrice who is the deputy chief accountant. She verifies that the claims are supported by the vouchers. She clears any inconsistencies with the salesperson concerned and makes out cheques for signatures by two company directors. The total amount paid in year ended 31/12/2006 was Kshs. 25,000,000. The company made a profit of Kshs. 125,000,000. Required: a. Discuss the short comings of this system and suggest ways of improving the system. b. List and describe the tests of control the auditor would undertake in this system. C. During the audit, the auditor discovered that a salesperson in one area was submitting false claims for entertaining customers. What actions should the auditor take
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