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ACC311 FUNDAMENTALS OF AUDITING-ASSIGNMENT NO. 02 SEMESTER SPRING 2014 of Virtual University Due date 23RD JULY, 2014

SEMESTER SPRING 2014
FUNDAMENTALS OF AUDITING (ACC311)
ASSIGNMENT NO. 02 
DUE DATE: 23RD
JULY, 2014 
MARKS: 10


LEARNING OBJECTIVES: 
This assignment aims to give an understanding to the students to identify different control 
procedures and related tests of control used in a sales and payroll departments of any 
trading concern.


LEARNING OUTCOMES: 
After going through this assignment student would be able to apply the different control 
procedures and related tests of control used in a sales and payroll departments at any 
trading concern.


Read carefully the following paragraph and give answer accordingly. 

Ali is an auditor having satisfactory quality control review (QCR) rating issued by ICAP. 
He has been appointed as an auditor of Model Manufacturing Limited. He has started his 
audit work, understanding the entity’s internal control environment and obtains various 
assertions from different executives and employees of the entity. After going through a 
preliminary assessment of the entity’s environment, Ali feels that there is a problem in 
the working of internal control system in handling the sales & debtors and payroll 
departments. Now, he is planning to check the internal control system of sales and payroll 
departments of the entity. 
Describe various appropriate internal control procedures and tests of control, Ali may 
apply to determine the strength of internal control measures over the client’s: 
(i) Sales & debtors (2.5 + 2.5 Marks) 
(ii) Payroll system (2.5 + 2.5 Marks)

IMPORTANT: 
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Replies to This Discussion

DUE DATE: 23RD JULY, 2014


Read carefully the following paragraph and give answer accordingly.


Ali is an auditor having satisfactory quality control review (QCR) rating issued by ICAP. He has been appointed as an auditor of Model Manufacturing Limited. He has started his audit work, understanding the entity’s internal control environment and obtains various assertions from different executives and employees of the entity. After going through a preliminary assessment of the entity’s environment, Ali feels that there is a problem in the working of internal control system in handling the sales & debtors and payroll departments. Now, he is planning to check the internal control system of sales and payroll departments of the entity.


Describe various appropriate internal control procedures and tests of control, Ali may apply to determine the strength of internal control measures over the client’s:


(i) Sales & debtors (2.5 + 2.5 Marks)


(ii) Payroll system (2.5 + 2.5 Marks)

Please discuss about this assignment 

do u prepare the assignment????

Please Discuss here about this assignment.Thanks

Our main purpose here discussion not just Solution

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Internal Controls
Internal control is all of the policies and procedures management uses to achieve the following goals.

Safeguard University assets - well designed internal controls protect assets from accidental loss or loss from fraud.
Ensure the reliability and integrity of financial information - Internal controls ensure that management has accurate, timely and complete information, including accounting records, in order to plan, monitor and report business operations.
Ensure compliance - Internal controls help to ensure the University is in compliance with the many federal, state and local laws and regulations affecting the operations of our business.
Promote efficient and effective operations - Internal controls provide an environment in which managers and staff can maximize the efficiency and effectiveness of their operations.
Accomplishment of goals and objectives - Internal controls system provide a mechanism for management to monitor the achievement of operational goals and objectives.

Framework for Internal Control
The framework of a good internal control system includes:

Control environment: A sound control environment is created by management through communication, attitude and example. This includes a focus on integrity, a commitment to investigating discrepancies, diligence in designing systems and assigning responsibilities.


Risk Assessment: This involves identifying the areas in which the greatest threat or risk of inaccuracies or loss exist. To be most efficient, the greatest risks should receive the greatest amount of effort and level of control. For example, dollar amount or the nature of the transaction (for instance, those that involve cash) might be an indication of the related risk.


Monitoring and Reviewing: The system of internal control should be periodically reviewed by management. By performing a periodic assessment, management assures that internal control activities have not become obsolete or lost due to turnover or other factors. They should also be enhanced to remain sufficient for the current state of risks.


Information and communication: The availability of information and a clear and evident plan for communicating responsibilities and expectations is paramount to a good internal control system.
Control activities: These are the activities that occur within an internal control system. These are fully described in the next section.

Testing Controls in an Audit of Financial Statements


 Controls to be Tested. If the auditor plans to assess control risk at less than the maximum by relying on controls,12/ and the nature, timing, and extent of planned substantive procedures are based on that lower assessment, the auditor must obtain evidence that the controls selected for testing are designed effectively and operated effectively during the entire period of reliance.13/ However, the auditor is not required to assess control risk at less than the maximum for all relevant assertions and, for a variety of reasons, the auditor may choose not to do so.

Also, tests of controls must be performed in the audit of financial statements for each relevant assertion for which substantive procedures alone cannot provide sufficient appropriate audit evidence and when necessary to support the auditor's reliance on the accuracy and completeness of financial information used in performing other audit procedures.14/

Tests of Controls

Tests of Controls are audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.

An auditor might use inspection of documents, observation of specific controls, reperformance of the control, or other audit procedures to gather evidence about controls

plzz give some idea about this 

Sales & debtors

There are a large number of controls that may be required in the sales cycle due to the importance of this area in business and the possible opportunities that exists for diverting sales and cash receipts way form the business.

There are some control procedures of the sales are:

1.Orders

2.Dispatch

3.Invoicing and credit notes

4.Returens inward

5.Receivables

6.Bad debts

part 2 ka bhi koi idea de do plzzz 

kisi ka subject nahi hai yeh kya ??? 

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