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Question 1 Part A Essay Example
- Category:Finance & Accounting
- Document type:Essay
- Level:Undergraduate
- Page:1
- Words:490
Question 1 Part A
i). Key Account |
ii). Primary Assertion |
iii).Explanation given for the account being at possible risk |
iv). Substance test of detail |
Inventory |
Valuation and Allocation |
Inventory is at risk of being overstated due to the following reasons;
|
It is important to evaluate inventory levels to ascertain whether or not write-down of flawed inventories is necessary |
Intangible Asset |
Valuation and Allocation |
Such intangible asset as Research & Development is at a higher level of risk of being overstated due to a number of reasons;
|
Conduct an immediate review and analysis of the R&D capitalised account and thereafter, make sure to write-down costs attributed to the recalled Ossicly gadgets have been appropriately written down. |
Machineries/ PPE |
Valuation and Allocation |
Machineries purchased are at a risk of being overstated due to;
|
Review all of the four product lines and those underdeveloped to ascertain whether or not new machineries have undergone capitalisation process by the management. |
Part B (a)
Key Assertion |
Justification |
The key assertion rests with valuation and allocation |
There is a sophisticated form of production process, which might result to possible costing errors |
Audit Approach |
The situation calls for a combined approach |
Procedure |
|
Test of controls |
Extensive |
Substantive tests of details |
|
Substantive analytical procedures |
Extensive or eve medium |
Justifications:
|
Question 2 a)
General control: administration control; controls that oversees the entire data center as well as network operations and access security.
Testing Effectiveness: assess procedural manuals, elements of unauthorised amendments to specific customer data files
Limit Field 9: Enter test data entries inserting debt overdue dates using both valid and invalid formats
All valid forms should be accepted while invalid ones rejected indicating uncollectible.
Exception Report |
How it will be Used |
Field 7 > X No. of Days |
The auditor will follow to establish the immediate reason for the debt taking more than the recommended 90 days due period. |
d) GAS will assist to provide extensive tests of controls with a further manual procedure calling for review over proper installation and maintenance of the entire Accounts receivables system software through such aspects as proper documentation.