the assignment relates to internal controls, audit test, audit evidence, sampling and also.
Question 1 15% of total assessment
You have recently been appointed as an audit senior and have been assigned to the audit of TNO Limited (TNO) a listed public company. It is the beginning of January 2014 and you are gathering information in order to prepare the audit plan for the year ended 31 December 2013. The firm for which you work has been the auditor of TNO for a number of years. The following information has been gathered to date.
The principal activities of TNO are:
· research and development of technologies relating to medical equipment;
· manufacture and distribution of medical equipment;
· investment of surplus funds; and
· investment in the property market.
TNO was incorporated in 1990 and has operated successfully and profitably since that date. In the last few years it has branched out into the property market, acquiring a number of commercial properties which are let mainly to medical practitioners.
The directors of TNO are:
· Mr. John Stanton, Chairman
· Ms Jane Quade, Chief Executive Officer
· Mr. Joe Quade
· Dr Jim Xie
· Dr Jenny Yeo
Doctors X and Y are independent non-executive directors and have been directors since 2001. The other three executive directors have been employed by the company since its incorporation and have considerable experience in the industry. Mr Stanton controls a number of private companies.
In prior years, the audit firm placed reliance on internal controls based on satisfactory results of extensive tests of control. Recent discussions with the client have revealed no changes in the system of internal control since last year.
The company does not have an internal audit function.
In February 2013, research activities relating to a new laser surgery device commenced. Significant costs were incurred in relation to this research. In April 2013 a competitor announced that it had successfully developed and patented a similar device.
In order to finance the research activities noted above the company borrowed from its bankers an additional $5 million during the year. The loan agreement contains a covenant to the effect that should the company's debt to equity ratio (measured as total liabilities: shareholders' equity) increase above 1.2:1.0 at any time, the bankers have the right to demand immediate repayment.
ACC331 201430 Assessment 3 February 2014 Page | 1
Throughout 2013, the property market has been in decline. The interim audit is scheduled to take place in September 2013 for approximately two weeks. The final audit is scheduled to start on 1 February 2014 and should take about two weeks to complete. The client completed a stock count on 31 December 2013. The directors require the signed audited final financial report by 25 February 2014.
Your audit partner, John Richards, has approached you and advised that there are several account areas he is concerned about. Before you complete your audit program he wants you to report back to him about the following accounts:
· Accounts receivable.
· Current investments.
· Property assets.
· Intangible assets.
· Deferred development expenditure.
An unaudited set of financial reports at 31 December 2013 together with audited comparatives for the year ended 31 December 2012 and 2011 is set out below for your review.
|
TNO LIMITED |
|||||
|
Income Statement for the year ended |
|||||
|
for the year ended 31 December |
|||||
|
Notes |
2013 |
2012 |
2011 |
||
|
$'000 |
$'000 |
$'000 |
|||
|
Sales Revenue |
20,888 |
25,278 |
27,814 |
||
|
Cost of sales |
(14,254) |
(17,695) |
(20,877) |
||
|
Gross Profit |
6,634 |
7,583 |
6,937 |
||
|
Other revenue |
2 |
1,593 |
1,835 |
2,010 |
|
|
Operating expenses |
3 |
(3,658) |
(2,254) |
(2,381) |
|
|
Finance costs |
4 |
(2,400) |
(2,040) |
(1,600) |
|
|
Profit before tax |
2,169 |
5,124 |
4,966 |
||
|
Tax expense |
(648) |
(1,537) |
(1,489) |
||
|
Net Profit |
1,521 |
3,587 |
3,477 |
||
|
TNO LIMITED |
|||||
|
Statement of comprehensive income |
|||||
|
for the year ended 31 December |
|||||
|
2013 |
2012 |
2011 |
|||
|
$'000 |
$'000 |
$'000 |
|||
|
Net profit |
1,521 |
3,587 |
3,477 |
||
|
Revaluation of building asset (net of tax) |
350 |
||||
|
Total comprehensive income |
1,871 |
3,587 |
3,477 |
ACC331 201430 Assessment 3 February 2014 Page | 2
TNO LIMITED Statement of changes in equity for the year ended 31 December
|
2013 |
2012 |
2011 |
||
|
$'000 |
$'000 |
$'000 |
||
|
Share Capital |
5,000 |
5,000 |
5,000 |
|
|
Asset Revaluation Reserve opening balance |
5,000 |
5,000 |
5,000 |
|
|
Revaluation of asset |
350 |
|||
|
Asset Revaluation Reserve closing balance |
5,350 |
5,000 |
5,000 |
|
|
Retained earnings |
9,272 |
5,685 |
2,208 |
|
|
Profit |
1,521 |
3,587 |
3,477 |
|
|
Retained profit closing balance |
10,793 |
9,272 |
5,685 |
|
|
Total equity |
21,143 |
19,272 |
15,685 |
|
|
TNO LIMITED |
||||
|
Balance Sheet |
||||
|
as at 31 December |
||||
|
2013 |
2012 |
2011 |
||
|
$'000 |
$'000 |
$'000 |
||
|
Cash |
66 |
96 |
69 |
|
|
Trade and other receivables |
5 |
4,980 |
4,200 |
3,800 |
|
Investments |
6 |
1,500 |
2,300 |
2,100 |
|
Inventories |
7 |
6,607 |
6,400 |
6,000 |
|
Other |
100 |
120 |
130 |
|
|
Total Current assets |
13253 |
13116 |
12099 |
|
|
Investments |
8 |
15,000 |
14,500 |
10,000 |
|
Property plant & equipment |
9 |
6,400 |
7,000 |
7,600 |
|
Intangibles |
10 |
4,000 |
4,000 |
2,000 |
|
Other |
11 |
6000 |
300 |
300 |
|
Total non-current assets |
31,400 |
25,800 |
19,900 |
|
|
Total assets |
44,653 |
38,916 |
31,999 |
|
|
Trades & other payables |
12 |
7,050 |
8,000 |
6,800 |
|
Provisions |
13 |
300 |
500 |
510 |
|
Total current liabilities |
7,350 |
8,500 |
7,310 |
|
|
non-current liabilities |
||||
|
Bank Loans |
14 |
15,000 |
10,000 |
8,000 |
|
Provisions |
15 |
1,160 |
1,144 |
1,004 |
|
Total non-current liabilities |
16,160 |
11,144 |
9,004 |
|
|
Total liabilities |
23,510 |
19,644 |
16,314 |
|
|
Net assets |
21,143 |
19,272 |
15,685 |
|
|
Equity |
||||
|
Share capital |
5,000 |
5,000 |
5,000 |
|
|
Reserve |
16 |
5,350 |
5,000 |
5,000 |
|
Retained earnings |
10,793 |
9,272 |
5,685 |
|
|
Total equity |
21,143 |
19,272 |
15,685 |
ACC331 201430 Assessment 3 February 2014 Page | 3
Significant Account Policies
The accounting policy note states that the company complies with Accounting Standards and the Corporations Act 2001. It also reveals the following:
· commercial properties owned but not occupied by the company and which generate rental income are classified as non-current investments. These assets are not depreciated. Some of the investment properties are stated at cost and some are at directors' valuation
· technologies relating to modified equipment are included in the accounts as intangible assets. These assets stated at directors' valuation and are not amortised. The Director's believe that these assets do not have a limited useful life.
· deferred development expenditure is included in the accounts under 'other' non-current assets. This expenditure relates to the new laser surgery device.
NOTE 2 - Other revenue from continuing operations Rental revenue
Dividends
NOTE 3 - Operating Expenses
Impairment expenses
Other operating expenses
NOTE 4 - Finance costs
Interest expense
NOTE 5 - Trade receivables (Current)
Trade receivables
Allowance for doubtful debts
NOTE 6 - Investments (Current)
Shares - listed (at cost)
Provision for impairment
NOTE 7 - Inventories (Current)
Raw materials at cost
Work in progress (at cost)
Finished goods (at net realisable value)
NOTE 8 - Investments (Non-Current) Investment properties - at cost - 2010
Investment properties - at directors’ valuation - 2010 Investment properties - at directors’ valuation - 2012
2013 2012 2011 $’000 $’000 $’000
|
1,500 |
1,740 |
1,785 |
|
93 |
95 |
97 |
|
1,593 |
1,835 |
1,882 |
|
800 |
- |
- |
|
2,858 |
2,254 |
2,381 |
|
3,658 |
2,254 |
2,381 |
|
2,400 |
2,040 |
1,600 |
|
5,108 |
4,400 |
4,000 |
|
128 |
200 |
200 |
|
4,980 |
4,200 |
3,800 |
|
2,300 |
2,300 |
2,100 |
|
(800) |
- |
- |
|
1,500 |
2,300 |
2,100 |
|
2,107 |
2,000 |
1,850 |
|
400 |
400 |
400 |
|
4,100 |
4,000 |
3,750 |
|
6,607 |
6,400 |
6,000 |
|
9,000 |
9,000 |
6,500 |
|
5,500 |
5,500 |
3,500 |
|
500 |
- |
- |
|
15,000 |
14,500 |
10,000 |
ACC331 201430 Assessment 3 February 2014 Page | 4
NOTE 9- Property Plant and Equipment (Non-Current) Freehold land - at directors’ valuation - 2010 Freehold land - at directors’ valuation - 2013
Buildings on freehold land - at directors' valuation - 2010 Provision for depreciation
Plant & equipment - at cost
Provision for depreciation
Total written-down Property, Plant and Equipment
NOTE 10 - Intangible assets (Non-Current)
Technologies - directors' valuation - 2009
NOTE 11 -Other
Deferred development expenditure
NOTE 12- Trade and other payables
Trade payables
Bank loans unsecured
NOTE 13 - Provisions (Current)
Income tax
Employee entitlements
NOTE 14 - Borrowings (Non-Current)
Bank loans - secured
NOTE 15 - Provisions (Non-Current)
Deferred tax liability
Employee entitlements
NOTE 16 - Reserves
Asset revaluation reserve
|
2013 |
2012 |
2011 |
|||
|
$’000 |
$’000 |
$’000 |
|||
|
- |
2,000 |
2,000 |
|||
|
2,500 |
- |
- |
|||
|
2,500 |
2,000 |
2,000 |
|||
|
2,500 |
2,500 |
2,500 |
|||
|
(150) |
(100) |
(50) |
|||
|
2,350 |
2,400 |
2,450 |
|||
|
9,550 |
10,050 |
6,900 |
|||
|
(8,000) |
(7,450) |
(3,750) |
|||
|
1,550 |
2,600 |
3,150 |
|||
|
6,400 |
7,000 |
7,600 |
|||
|
4,000 |
4,000 |
4,000 |
|||
|
6,000 |
300 |
300 |
|||
|
6,550 |
6,000 |
7,300 |
|||
|
500 |
2,000 |
1,500 |
|||
|
7,050 |
8,000 |
8,800 |
|||
|
200 |
300 |
300 |
|||
|
200 |
200 |
210 |
|||
|
400 |
500 |
510 |
|||
|
15,000 |
10,000 |
8,000 |
|||
|
260 |
200 |
40 |
|||
|
900 |
944 |
964 |
|||
|
1,160 |
1,144 |
1,004 |
|||
|
5,350 |
5,000 |
5,000 |
ACC331 201430 Assessment 3 February 2014 Page | 5
REQUIRED:
1. Use Excel to undertake detailed analytical procedures covering all three years and comprising:
§ a trend statement;
§ a common size statement;
§ a simple comparison between years on the Income Statement and Balance Sheet; and
§ profitability, efficiency (activity), liquidity and solvency ratios where applicable.
The results of your analytical procedures are to be included as an appendix to the report you complete for John. Note: A copy of your Excel file is to be separately lodged via EASTS.
2. Prepare a report (excluding an executive summary) for John that outlines:
a. Your analysis and other information provided, to make an assessment of the risk associated with the five accounts identified by John and the reasons for that assessment.
b. The key assertion common to all the identified account balances and, for each of the account balances, one substantive audit procedure that verifies the key assertion.
c. Details of other business risks identified from your analytical procedures and background details.
You may like to present your answers to 2a. and 2b. in the following table format:
|
Account |
Assessment of risk |
Substantive audit procedure (test of |
|
detail) |
||
Source: This case was adapted from 1991 Audit module material in the CA Program of the ICAA and modified for currentASAs.
ACC331 201430 Assessment 3 February 2014 Page | 6
Question 2 10% of total assessment
You have been given another client, CTL Limited, to audit. CTL Limited (CTL) sells clay titles to the construction industry and has been in existence for the last four years. During this period, the financial controller has been refining the system of internal controls and informs you, at the planning stage of the current year's audit, that he has put together an internal control manual for the company. He has stated that this manual will create greater awareness of controls in the company, particularly with management which, in the past, has not been overly conscious of the need to implement and enforce effective internal controls.
Management staff receive bonuses based on certain agreed-upon target ratios which include measures such as targeted monthly sales volumes, variance of actual to budget departmental overheads and profit before interest and tax. The major shareholder takes an active interest in the performance of the company and is quick to request explanations on variances from the agreed-upon monthly budgets.
Two years ago, the company devoted significant time and resources to the development and implementation of a new IT system. All teething problems associated with the implementation phase have now been resolved, and the financial controller is satisfied that the automated controls in place are assisting in producing accurate and complete accounting records. The sales director also looks after the IT function as the position is not regarded by management as being a full-time job. Once application programs have been tested, strict password control exists over access to the programs. Passwords are not required for access to databases.
To assist in the planning for the current year's audit engagement, the audit manager has extracted the following information from a review of the systems notes in the permanent file and perusal of the new internal control manual:
I. Manual delivery notes for dispatch of tiles to customers are raised by the dispatch department from the sales order form. Where a delivery is only partially filled, the delivery note is marked 'hold for invoice' and placed on the incomplete deliveries file. At month end, the supervisor of the dispatch department is responsible for follow-up of the reasons why incomplete deliveries have been outstanding for greater than 30 days.
II. Returns of tiles by customers due to breakages, inferior quality, incorrect specifications or oversupply are received by the dispatch department where staff are required to check quantity and condition of the returned tiles. Details noted by the dispatch personnel, including the reason for the return, are recorded on a ‘goods returned’ note. Once completed, this document is passed on to the trade receivables clerk who raises a credit note and sends it to the customer.
III. Once a delivery has occurred, the office copy manual delivery note is forwarded to the trade receivables clerk who is responsible for generating an invoice on the computer system. An invoice is raised by inputting the total quantity delivered (Note: this could be a number of partial deliveries) and the stock code which is also recorded on the delivery
note. The computer then automatically retrieves the stock code price from the selling price master file. Posting to the debtors account occurs automatically once the trade receivables clerk has performed a screen check on the accuracy of the input of delivery details.
IV. For valued customers, discounts are applied in accordance with the company's volume rating system. The trade receivables clerk is responsible for updating the individual customer volume ratings every six months after preparing the 'sales volume analysis by customer' report. This report is authorised by the sales director prior to updating the customer discounts.
V. A sales journal summarising all sales invoices is prepared monthly by the computer system. This journal is then used by the trade receivables clerk for posting to the general ledger.
ACC331 201430 Assessment 3 February 2014 Page | 7
|
VI. |
Receipts from debtors are passed on to the trade receivables clerk after having been |
|
opened by the mail room. The trade receivables clerk lists all receipts from the debtors and |
|
|
then prepares a bank deposit slip. The list prepared by the trade receivables clerk is used |
|
|
to enter the debtors’ payments on the computer system. The batch total of postings to the |
|
|
individual debtors’ accounts is balanced to the bank deposit slip before processing occurs |
|
|
on the system. At each month end, the trade receivables clerk prepares a reconciliation of |
|
|
the trade receivables ledger to the debtors control account in the general ledger. |
|
|
VII. |
The computer generates an aged analysis at month end based upon all invoices that have |
|
been processed onto the system for the period up until the last day of the month. |
|
|
VIII. |
The financial controller obtains the latest trade receivables aged analysis at the end of each |
|
month and reviews all amounts out-standing for longer than 90 days. The trade receivables |
|
|
clerk is required to detail reasons for delays in payment by long outstanding debtors and |
|
|
the financial controller discusses items of concern with the clerk. |
|
|
IX. |
Usually an action plan is agreed for follow-up; this may include involvement of debt |
|
collectors or the issuing of writs. Where necessary the financial controller records details |
|
|
of amounts that should be provided for as doubtful debtors. Whilst performing this re- |
|
|
view, the financial controller notes the level of individual debtors’ balances and, in |
|
|
instances where he is uncomfortable with the level of this balance, he instructs the |
|
|
dispatch area to withhold any shipments until a minimum prescribed payment is received. |
John your partner on the audit has mentioned to you that, in the past, a substantive approach had been adopted for the audit of CTL. He now feels that, with the improvements that the client claims to have made to the systems of internal control, an opportunity exists to place reliance on the internal controls and therefore reduce the extent of substantive work.
REQUIRED:
Prepare an additional report (excluding an executive summary) for John that outlines:
1. The internal controls in the system that are potentially effective, the risk that the control could mitigate and one ‘test of control’ for each of the identified potentially effective controls.
2. The weaknesses in internal control for sales and trade receivables that you would bring to
CTL management’s notice in your management letter.
3. Your assessment of the reliance that can be placed on the internal controls covering the sales and accounts receivable cycles and the reasons for that assessment.
You may like to present your answers to 1.in the following table format:
|
Effective control |
Risk addressed |
Test of control |
Source:This case was adapted from 1991 Audit module material in the CA Program of the ICAA and modified for current ASAs.
ACC331 201430 Assessment 3 February 2014 Page | 8
Question 3 5% of total assessment
The final report that John wants you to prepare for him is for the audit client Malos Ojos Limited (MO), who imports and distributes sunglasses. The sunglasses industry in Australia is extremely seasonal.
Background
MO is a well established company in a very competitive market. The company competes with a number of established manufacturers and distributors with well recognised brand names. MO's main competitors in the Australian sunglasses market are Reflecta and Zest.
MO has a handful of suppliers for its products, all of which are based in Australia. The company distributes to retail stores where stock is held on consignment within the stores. Major customers in this segment include Myer, David Jones and Sunglass Hut. This segment comprises 70% of MO's total sales.
The company has a high volume of casual employees who work during the peak seasonal periods. Casual staff are needed during the busy times to support the increase in workload in the areas of administration on (data operators and clerical staff), distribution (warehouse), delivery(truck drivers), sales and marketing.
It is currently 30 May 2013. You are in the process of finalising the planning for MO audit engagement for the financial year ending 31 December 2013. Your team has identified sales, payroll expense, trade receivables and inventory as the significant risks.
Sales
In respect of sales, the specific audit concern is the timing of the recognition of the consignment stock sales as thereis a lag of up to two weeks in the sales information being transferred to MO by the retail stores.
You are also concerned about the high level of credit notes historically processed in the first two weeks of January each year. This is due to incorrect information supplied by retailers' stores as to mid to late December sales attributed to MO, but actually belonging to Reflecta and Zest. These errors are a result of the large number of pre-Christmas transactions that the retailers’ computer systems have difficulty capturing correctly.
Trade receivables
You have now turned yourattention to trade receivables balance.Given the issues identified withconsignment sales,you areparticularly concerned aboutthe existence assertionwith respect to theretail debtorsat yearend. Youare considering usingalternative procedures to debtorconfirmations asthe retail storeshave apolicy ofnot responding to audit confirmationrequests.
Payroll
The company has a high volume of casual employees who work during the peak seasonal periods. Casual staff are needed during the busy times to support the increase in workload in the areas of administration on (data operators and clerical staff), distribution (warehouse), delivery(truck drivers), sales and marketing.
ACC331 201430 Assessment 3 February 2014 Page | 9
Other information
Other relevant facts about MO's employee profile are as follows:
· The peak selling periods when casual staff are required represent approximately eight months of the calendar year. For the past three years the average number of casual staff hired has been 120 staff per annum.
· The turnover of permanent employees is approximately 15 staff per annum. There are 75 permanent employees on the payroll at present. The permanent numbers have risen by 20% per annum for each of the past two years.
· There are a variety of industrial awards that support the wage and salary conditions of MO staff/ depending on whether they are casual or permanent and whether they work in the warehouse operations or as office staff. Casual staff do not receive annual or long service leave entitlements.
The audit team has identified payroll expense to be a significant risk.
REQUIRED:
Prepare a brief report for John that covers the following areas:
1. For MO’s sales account at year end:
a.Identify the key assertion at risk (as per ASA 315.A111) with respect to the timing of the consignment stock sales (other that cut-off) and briefly explain why it is at risk.
b.Identify the key assertion at risk (as per ASA 315.111) in relation to the credit notes processed in early January and briefly explanation why it is at risk.
You may wish to present your answers to a. and b. in the form of a table as follows:
|
Assertion |
Explanation for risk assessment |
a
b
2. Design two (2) practical, relevant substantive tests of detail to substantiate the existence of trade receivables balance at year end.
3. You are also concerned about the impact of the issues in relation to consignment sales on the audit of the inventory balance.
a.Explain the impact of the timing of the recognition of the consignment sales and credit notes issued in January on the inventory account balance at year end.
b. Identify the key assertion at risk (as per ASA 315.A111) for each of these issues.
You may wish to present your answers to 3. in the form of a table as follows:
|
Issue |
Impact on Inventory |
Assertion |
|
Account |
||
|
Timing of recognition of |
||
|
consignment stock sales |
||
|
Credit notes issued in early |
||
|
January |
ACC331 201430 Assessment 3 February 2014 Page | 10
4. Identify the two (2) key assertions at risk (as per ASA 315. A111) at risk with respect to casual employees, briefly explain why they are at risk and outline a specific practical test of detail that would address the risk.
You may wish to present your answers to 4. in the form of a table as follows:
|
Assertion |
Explanation for risk |
Substantive test of |
|
|
assessment |
detail |
||
|
(i) |
|||
|
(ii) |
Source:This case was adapted from 2006 Audit & Assurance Module in the CA Program of ICAA and modified for currentASAs.
ACC331 201430 Assessment 3 February 2014 Page | 11
Marking criteria and standards of performance
|
Question 1 (45 marks) |
High distinction (HD) |
Distinction (DI) |
Credit (CR) |
|
Criteria 1 (10 marks) |
8.5-10 |
7.5-8 |
6.5-7 |
|
Use of Excel in the analysis |
All source data required for |
All source data required for |
All source data require |
|
of financial statements |
analysis accurately |
analysis accurately |
analysis accurately |
|
reproduced and formatted in |
reproduced and formatted in |
reproduced in Excel fu |
|
|
Excel function. Excel |
Excel function. Excel |
Most data formatting |
|
|
formulas used for all |
formulas used for all |
reproduced in Excel. E |
|
|
required financial statement |
required financial statement |
formulas used for all |
|
|
analysis. All formulas |
analysis. Some errors in |
required financial stat |
|
|
correctly calculated. |
formula calculations. |
analysis. Some errors i |
|
|
formula calculations. |
|||
|
Criteria 2a (15 marks) |
12.5-15 |
11.5-12 |
10-10.5 |
|
Application of analytical |
Strong application of |
Application of analytical |
Application of analytic |
|
procedures and other |
analytical procedures and |
procedures and other |
procedures and other |
|
provided information to |
other provided information |
provided information to |
provided information t |
|
assessment of inherent risk |
to assessment of risk in all |
assessment of risk in all five |
assessment of risk in f |
|
five identified accounts. |
identified accounts. |
identified accounts. |
|
|
Criteria 2b (7.5 marks) |
6.5-7.5 |
6 |
5-5.5 |
|
Identified relationship |
Key assertion common to all |
Key assertion common to all |
Key assertion common |
|
between risk, financial |
five identified accounts |
five identified accounts |
five identified account |
|
report assertion and |
correctly stated. Substantive |
correctly stated. Substantive |
correctly stated. Subst |
|
substantive procedures |
audit procedure stated for |
audit procedure stated for |
audit procedure stated |
|
each identified account that |
each identified account that |
each identified accoun |
|
|
comprehensively addresses |
addresses the assessment of |
limited relationship to |
|
|
the assessment of risk. |
risk. |
assessment of risk. |
|
|
ACC331 201430 Assessment 3 |
February 2014 |
|
Question 1 (45 marks) cont. |
High distinction (HD) |
Distinction (DI) |
Credit (CR) |
|
Criteria 2c (7.5 marks) |
6.5-7.5 |
6 |
5-5.5 |
|
Application of analytical |
Strong application of |
Application of analytical |
Some application of |
|
procedures and other |
analytical procedures and |
procedures and other |
analytical procedures |
|
provided information to |
other provided information |
provided information to |
other provided inform |
|
assessment of business risk |
to provide comprehensive |
provide assessment of at |
to assessment of at lea |
|
assessment of at least four |
least four items of business |
three items of busines |
|
|
items of business risk. |
risk. |
||
|
Criteria 3 (5 marks) |
4.5-5 |
4 |
3.5 |
|
Professional communication |
Use of report format with |
Use of report format with |
Use of report format w |
|
professional language which |
professional language which |
appropriate profession |
|
|
is formal and cautiously |
is formal and cautiously |
language. Minor spelli |
|
|
phrased. Work contains |
phrased. Work contains |
grammar and punctua |
|
|
distinct understandable |
distinct understandable |
errors. Work shows ev |
|
|
statements with no errors. |
statements with very few |
of proofreading. Well |
|
|
Content is structured in a |
errors. Logical structure that |
structured. |
|
|
manner that facilitates the |
aids the reader’s |
||
|
reader’s understanding. |
understanding. |
||
|
Total for Q1 (45 marks) |
|||
ACC331 201430 Assessment 3 February 2014
|
Question 2 (30 marks) |
High distinction (HD) |
Distinction (DI) |
Credit (CR) |
|
Criteria 1 (15 marks) |
12.5-15 |
11.5-12 |
10-10.5 |
|
Identified relationship |
Identification of at least four |
Identification of at least four |
Identification of at lea |
|
between effective internal |
internal controls that are |
internal controls that are |
three internal controls |
|
controls, risk and tests of |
potentially effective, with a |
potentially effective, with an |
are potentially effectiv |
|
control |
full explanation of the risk |
explanation of the risk each |
with an explanation of |
|
each one could mitigate and |
one could mitigate and one |
risk each one could mi |
|
|
one appropriate test for |
appropriate test for each of |
and one appropriate t |
|
|
each of those identified |
those identified controls. All |
each of those identifie |
|
|
controls. All identified |
identified controls are |
controls. All identified |
|
|
controls are potentially |
potentially effective. |
controls are potentiall |
|
|
effective. |
effective. |
||
|
Criteria 2 (7.5 marks) |
6.5-7.5 |
6 |
5-5.5 |
|
Identified internal control |
Identification of and |
Identification of and |
Identification of and |
|
weaknesses |
comprehensive justification |
justification for at least four |
justification for at leas |
|
for at least five sales and |
sales and receivables |
sales and receivables |
|
|
receivables internal control |
internal control weaknesses. |
internal control weakn |
|
|
weaknesses. |
|||
|
Criteria 3 (7.5 marks) |
6.5-7.5 |
6 |
5-5.5 |
|
Assessment of reliance on |
Assessment of reliance on |
Assessment of reliance on |
Statement about relia |
|
controls and control risk |
controls covering the sales |
controls covering the sales |
controls covering the s |
|
and receivables cycles with |
and receivables cycles with |
and receivables cycles |
|
|
clear reference to both |
some reference to both |
only limited reference |
|
|
internal controls identified |
internal controls identified |
both internal controls |
|
|
as potentially effective and |
as potentially effective and |
identified as potentiall |
|
|
those identified as weak. |
those identified as weak. |
effective and those |
|
|
identified as weak. |
|||
|
Total for Q2 (30 marks) |
|||
|
ACC331 201430 Assessment 3 |
February 2014 |
Solution: Weakness in Control Environemet