DEC 2010 Q

Please download to get full document.

View again

of 7
14 views
PDF
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Document Description
Fundamentals Level – Skills Module Audit and Assurance (International) Wednesday 8 December 2010 FOR FREE ACCA RESOURCES VISIT http://acuteacca.tk SEND YOUR REQUESTS AT email@acuteacca.tk PAST PAPERS ARE UNDER COPYRIGHT©. Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FIVE questions are compulsory and MUST be attempted. Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write
Document Share
Documents Related
Document Tags
Document Transcript
  Fundamentals Level – Skills Module Time allowed Reading and planning:15 minutesWriting:3 hoursALL FIVE questions are compulsory and MUST be attempted. Do NOT open this paper until instructed by the supervisor.During reading and planning time only the question paper maybe annotated. You must NOT write in your answer booklet untilinstructed by the supervisor.This question paper must not be removed from the examination hall.    P  a  p  e  r   F   8   (   I   N   T   ) Audit and Assurance(International) Wednesday 8 December 2010 The Association of Chartered Certified Accountants FOR FREE ACCA RESOURCES VISIThttp://acuteacca.tkSEND YOUR REQUESTS ATemail@acuteacca.tkPAST PAPERS ARE UNDER COPYRIGHT©.  ALL FIVE questions are compulsory and MUST be attempted1(a) Auditors have a responsibility under ISA 265 Communicating Deficiencies in Internal Control to those Chargedwith Governance and Management , to communicate deficiencies in internal controls. In particular SIGNIFICANTdeficiencies in internal controls must be communicated in writing to those charged with governance. Required:Explain examples of matters the auditor should consider in determining whether a deficiency in internalcontrols is significant. (5 marks)Greystone Co is a retailer of ladies clothing and accessories. It operates in many countries around the world and hasexpanded steadily from its base in Europe. Its main market is aimed at 15 to 35 year olds and its prices are mid tolow range. The company’s year end was 30 September 2010.In the past the company has bulk ordered its clothing and accessories twice a year. However, if their goods failed tomeet the key fashion trends then this resulted in significant inventory write downs. As a result of this the companyhas recently introduced a just in time ordering system. The fashion buyers make an assessment nine months inadvance as to what the key trends are likely to be, these goods are sourced from their suppliers but only limitednumbers are initially ordered.Greystone Co has an internal audit department but at present their only role is to perform regular inventory counts atthe stores. Ordering process Each country has a purchasing manager who decides on the initial inventory levels for each store, this is not done inconjunction with store or sales managers. These quantities are communicated to the central buying department at thehead office in Europe. An ordering clerk amalgamates all country orders by specified regions of countries, such asCentral Europe and North America, and passes them to the purchasing director to review and authorise.As the goods are sold, it is the store manager’s responsibility to re-order the goods through the purchasing manager;they are prompted weekly to review inventory levels as although the goods are just in time, it can still take up to fourweeks for goods to be received in store.It is not possible to order goods from other branches of stores as all ordering must be undertaken through thepurchasing manager. If a customer requests an item of clothing, which is unavailable in a particular store, then thecustomer is provided with other branch telephone numbers or recommended to try the company website. Goods received and Invoicing To speed up the ordering to receipt of goods cycle, the goods are delivered directly from the suppliers to the individualstores. On receipt of goods the quantities received are checked by a sales assistant against the supplier’s delivery note,and then the assistant produces a goods received note (GRN). This is done at quiet times of the day so as to maximisesales. The checked GRNs are sent to head office for matching with purchase invoices.As purchase invoices are received they are manually matched to GRNs from the stores, this can be a very timeconsuming process as some suppliers may have delivered to over 500 stores. Once the invoice has been agreed thenit is sent to the purchasing director for authorisation. It is at this stage that the invoice is entered onto the purchaseledger.2   FOR FREE ACCA RESOURCES VISIThttp://acuteacca.tkSEND YOUR REQUESTS ATemail@acuteacca.tkPAST PAPERS ARE UNDER COPYRIGHT©.  Required:(b)As the external auditors of Greystone Co, write a report to management in respect of the purchasing systemwhich:(i)Identifies and explains FOUR deficiencies in that system;(ii)Explains the possible implication of each deficiency;(iii)Provides a recommendation to address each deficiency.A covering letter is required. Note: Up to two marks will be awarded within this requirement for presentation. (14 marks) (c)Describe substantive procedures the auditor should perform on the year-end trade payables of Greystone Co. (5 marks) (d)Describe additional assignments that the internal audit department of Greystone Co could be asked toperform by those charged with governance. (6 marks) (30 marks) 3[P.T.O.   FOR FREE ACCA RESOURCES VISIThttp://acuteacca.tkSEND YOUR REQUESTS ATemail@acuteacca.tkPAST PAPERS ARE UNDER COPYRIGHT©.  2(a)Explain the concept of TRUE and FAIR presentation. (4 marks) (b)Explain the status of International Standards on Auditing. (2 marks) (c) ISA 230  Audit Documentation deals with the auditor’s responsibility to prepare audit documentation for an auditof financial statements. Required:State FOUR benefits of documenting audit work. (4 marks) (10 marks) 4   FOR FREE ACCA RESOURCES VISIThttp://acuteacca.tkSEND YOUR REQUESTS ATemail@acuteacca.tkPAST PAPERS ARE UNDER COPYRIGHT©.
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks