L7- testing and system evaluation Flashcards

1
Q

what stage are we looking at here?

A

Interim stage of the audit

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2
Q

internal control revenue system

A

goes through risk, control and test of controls for each stage e.g., ordering

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3
Q

internal control revenue system e.g., ordering

A

risk- customer cant afford to pay
control- seg of duties
test of control- independent credit checo on all new customers

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4
Q

internal control revenue system e.g., despatch/invoice

A

risk- not invoiced
control- prenumbered sheet
test of control- verify the sales to inventory records

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5
Q

what do you think are objectives of the sales and trade receivables system

A

did they get the goods at the advertised price
recorded sales are genuine, accurate and complete
all cash received is record in full before banking

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6
Q

control points of sales and trade receivables

A

identification
credit sale- supply banks reference
completeness- all boxes filled

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7
Q

how would you evaluate the sales and tr systems?

A
  1. the person that prepares sales of orders is independent of credit control, custody of inventory and recording sales transaction
  2. are sales numbers preordered
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8
Q

management letter

A

communicates with TCWG- ISA265 ( communicate bad things in internal control
*to obtain info relevant to audit
* provide timely obes arising from the audit
* promote effective communication

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9
Q

Management letter contains

A

title, intended recipients
if auditor has no reason to doubt integrity of officials
conclusion
* brief descr
* poss conseq
* recomm

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10
Q

circumstances with management letter

A

maybe not wise to discuss findings with management if integrity in question

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11
Q

what if business small and dont have enough staff

A

management letter- importance of supervision

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12
Q

other outcome of management letter

A

spot weakness that may result in misstatement in fs
no remedial action to take care of weakness- ask why?

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