Control Objectives

Question 1

What are the control objectives of the sales system

Answer 1

Ordering:
1) goods are only supplied to customers who pay promtly and in full
2) all orders are processed

Despatch:
3) orders are dispatched promptly and in full to the correct customers
4) all orders are dispatched

Invoicing
5) all goods dispatched are invoiced
6) invoices are raised accurately

Recording:
7) only valid sales are recorded
8) all sales and related receivables are recorded and in the correct accounts
9) revenue is recorded in the period to which it relates
10) sales are recorded accurately and related receivables are recorded at appropriate value

Cash received:
11) cash received is allocated against the correct customer and invoices to minimize dispute
12) overdue debts are followed on a timely basis
13) irrecoverable debts are identified and written off appropriately

Question 2

control objectives of a purchase system?

Answer 2

ordering:
-all purchases are made with suppliers who have been checked for quality, reliability, and pricing
-only for valid business use
-lead times are accounted for to avoid disruption

good received:
-only goods ordered are accepted
-goods received are recorded promptly

invoices:
-invoices received are for goods actually received
-invoices relate to the company
-invoices are correct in terms of quantity, discount and prices

recording:
-all purchases and related payables are recorded
-purchases are recorded accurately and payables are recorded at appt value
-purchases are recorded in the period to which they relate
-purchases and payables are recorded in the correct accounts

cash payments:
-payments are only made for goods received
-payments are only made once
-payments are made on time

Question 3

control objectives for NCA?

Answer 3

-only for business purpose
-purchased at appropriate price
-company can afford the capital expenditure proposed
-capital exp is appropriately treated in accounting records
-capital exp is completely and accurately recorded in accounting records
-adequate insurance for assets to prevent loss
-documents are safeguarded from theft or damage

Question 4

control objectives for payroll

Answer 4

-employees are paid for hours actually worked
-only genuine employees are paid
-employees are paid the correct wage rate
-gross/ net pay is calculated and recorded accurately
-standing data is kept up to date
-access to standing data is restricted to prevent fraud and errors
-all payroll amounts are recorded accurately
-costs are recorded in the period they relate to
-payments are made on time
-correct amounts are paid to employees and tax authorities

Question 5

control objectives of inventory system?

Answer 5

-inventory levels meet the need of production and customer demand
-inventory levels are not excessive, leading to storage costs and obsolescence
-inventory is safeguarded from theft, loss, or damage
-inventory received and dispatched is recorded on a timely bases
-inventory is recorded at appropriate value
-all inventory is recorded
-only company own inventory is recorded

Question 6

objectives of bank and cash system?

Answer 6

-petty cash levels are kept to a minimum, preventing theft
-payments can be made for legit business expense only
-cash can be withdrawn only for business purpose
-cash is safeguarded to prevent theft
-receipts are banked on a timely basis to prevent theft
-cash movements are recorded on a timely basis.