TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACADEMIC YEAR 2021/22

BACHELOR OF BUSINESS (HONOURS) - ACCOUNTING & FINANCE

BBFD2013 FUNDAMENTALS OF AUDITING

RESEARCH ASSIGNMENT

INTRODUCTION
This assignment contributes 50% towards the total coursework mark for the course
BBFD2013 Fundamentals of Auditing.

LEARNING OUTCOMES
Upon completion of this assignment, students should be able to:

 understand the types of business activities performed in the sales and payroll cycles and
comprehend the flow of accounting data as well as information throughout the
organisation;

 understand the key audit procedures and internal controls relevant to these business
cycles;

 understand the impact of Information Technology related internal controls;

 evaluate and analyse the various types of internal controls and provide recommendations
on the most appropriate internal controls for an organisation.

OBJECTIVES

 To cultivate students’ ability and interest in conducting a research in an area of

knowledge.

 To expose students to the various written sources of information such as the internet,
magazines, textbooks, newspapers and journals as well as oral sources such as interviews,
discussions and brainstorming sessions, to better comprehend the subject matter.

 To promote a holistic learning experience in completing this assignment, by encouraging

students to combine knowledge learnt in the class with knowledge obtained via research,
readings and discussions.

 To sharpen the writing skills of students by encouraging them to articulate their thoughts
and ideas effectively.

 To inculcate teamwork, communication and accountability among the members of the

group.

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NOTE TO STUDENTS

 This assignment is to be completed in groups of 5 to 6 students. Students are strongly

encouraged to organise online meet-ups in order to complete this assignment. Face-to-
face meet-ups are discouraged in view of the current Covid-19 threat.

 Every member in the team is expected to contribute and participate actively in the entire
process of completing this assignment.

 The softcopy of your group's completed assignment must be uploaded (by the group
leader only) onto the folder that will be created in Google Classroom.

 Please ensure that you have run the Originality Report on Google Classroom, before you
submit your assignment. The plagiarism percentage SHOULD NOT exceed 20%.

 The due date for this assignment is on Monday, Week 10 (23 August 2021) by 6 pm.

 Any late submissions of coursework after this date will be penalised.

 The assignment must be type written (The font type is Times New Roman with font size
of 12, justified and 1.5-spaced.

 Pictorial illustrations, specimen documents, diagrams and other useful extracts can be
included in the appendices).

 All pages must be numbered.

RESEARCH ASSIGNMENT QUESTION

You and your team members own a business (Sdn Bhd). Due to the current Covid-19
pandemic, you are required to adhere the restrictions outlined by the government. You are
allowed to operate your business but you are only allowed to have 30% of your staff working
from the office. The rest of the staff would need to work from home. Although your business
is open for walk-in customers, 80% of sales is via online orders.

Provide a detailed introduction (2 Page) about your company.

TIPS: You may include explanations on:

- the nature of the company's business/operations (type of business, what u sell
- the industry in which the company operates (retail,manufact, f&b)
- the product manufactured/sold (what product)
- details about how your business is conducted (how conduct through 5 cycle)
- the key people in the company (top management, org. chart name +postion)
- the location(s) of the premises (outlet, manufacturing, plant,office Where)

The 6 points provided above are just a guideline. You are expected to provide more details
about your business in your write-up. (Refer to Part II of the Marking Criteria in Attachment
3 for guidance).

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Typically, a company will adopt the following transaction cycles (activities?who involved
(what dep+warehouse)?what document used in cycle?),:
 Revenue and receivable cycle / Sales cycle
(receive order, process/policy put in? (eg. Order review, credit sales limit review),
shipping order, prepare invoice, collect money from customer, to close invoice
 Purchases and payable cycle / Expenditure cycle
Order supplier, get invoice, pay supplier
 Production (manufacturing)  covert rw – wip - fg
or Inventory cycle (retailing)  how manage inv?
 Human resources management (HRM) / Payroll cycle
How company process payroll? Hire staff,interviewing, perf evaluation,training
 General Ledger and Reporting System
Provide accurate financial info, include how prepare,record day-today transaction
(Journal – Ledger – TB – adj - FS
OR Financing cycle
 what sources get fund/finance from ? borrow bank, how finance NCA?

Draw ONE flowchart to illustrate the transaction cycles across the company. Your flowchart
should be able to show the relationships among all of the five cycles mentioned above.

Connect all transaction cycles in flowchart.

Next, you are required to propose(recommendation) a set of:

(i) FIFTEEN (15) internal controls for your sales cycle (please remember that you have
a combination of walk-in customers as well as online sales  internal control for diff types
of orders). Briefly explain the function of each of the proposed internal control
(what obj/purpose to hv this control
 eg. Authorisation approval required of providing promo code to ensure the code
is for 1 time, x use many times
 discount need to reviewed approiately to ensure sales ppl x simply give discount
to boost their sales, need align company policy.
and how it might help in improving the effectiveness and efficiency (benefit/control
objective/purpose  refer to accuracy, cut off, completeness, existence,occurance) of the
operations (eg. By approval discount  ensure approtaitely given)
in the company as well as the potential danger of not implementing the proposed internal
control in your company (discount allowed is expenses to company  if not reviewed,
danger to increase cost to company). The impact of Information Technology related
internal controls (eg. POS for walk-in customer  help generate accurate report, less
human error ) shall be included. Include IT control in sales cycle as well.

Authorisation/approval,independent check doc, prenumbering invoice (sequenceially invoice

order), limited access to certain drawer/locker

EG. E-commerce  how company control this to ensure discount approriate?

- Promo code use for 1 time , x duplicate
-

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(ii) FIFTEEN (15) internal controls for your payroll cycle (please remember that you
have a combination of staff working from the office as well as from home). Briefly explain
the function/purpose of each of the proposed internal control and how it might help (Pos.
impact) in improving the effectiveness and efficiency of the operations in the company as
well as the potential danger (Neg. Impact) of not implementing the proposed internal control
in your company. The impact of Information Technology related internal controls shall be
included (how to hv this related internal control around IT the e-signature eg. Info security –
talk general IT control like firewall, password, limited access to software/computer, user
interface vary across department such as HR only access payroll info in system, x others)
(some company adopt payroll software/ using Autocount to prepare f/s). OR how they
monitor input to ensure staff key in right/accurate date to process to get correct output
(report). All these relate IT !!!

Eg.CCTV in premise, punch in-out card (in premise)/ how monitor their perf work from
home
Eg. At the end of month, need sign payroll report to acknowledge/confirm aldy receive
salary, (now pandemic  hr juz give sofcopy, put in digital signature then involve IT
softcopy & hardcopy needed)

Students are encouraged to make use of various sources of knowledge such as your lecture
notes, tutorial questions and answers, previous/current working experience, recommended
reading materials for this course, internet-based research, e-books, e-journals, discussions
with team members etc.

Your final submission must be professionally structured and will consist of:
I. Cover page
II. Table of contents
III. Acknowledgement
IV. Attachment 1 - Plagiarism Statement
V. Attachment 2 - Originality Report (first page of the report only, indicating the %)
VI. Executive summary (1 page) (overview to expect whole report – include
scope+objective (why important to hv this assgn) of report, what sources use to
produce this report, what tool use (flowchart to understand business operation) in
this assignment, what is the most important highlight in whole report
(sales/payroll cycle))
VII. Company history and background (Introduction)(2 pages) (organisation chart in
appx)
VIII. Flowchart (1 page) (word doc to draw)
IX. Proposed internal controls, rationale for each control and potential danger of not
implementing the internal control (8 pages per cycle  16 pages)
X. Conclusion (1 page) (summary of highlights & findings from contents +
evaluation about internal control how they can help business to achieve goals,
summarise main points/ideas among 30 internal control put in conclusion)
XI. Appendix (org chart, detailed flowchart, pic, document)
XII. References
XIII. Attachment 3 - Marking Grid

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PLAGIARISM

Please take note that Plagiarism or Collusion by students in their coursework is a serious
offence and if caught, the student(s) shall be severely penalised.

Attachment 1 - Plagiarism Statement is to be signed by each team member and MUST be

attached with this assignment.

If the signed Plagiarism Statement is not submitted, the coursework will not be marked.

REFERENCE MATERIAL

You may refer to any related materials in the form of textbooks, magazines, journals,
conference papers, newspapers, annual reports etc. from any related area, that could assist
you in your research. You may also download your sources from the website.

However please note that you are required to use the HARVARD METHOD OF
REFERENCING.

Reference / Bibliographies consisting of limited sources will be deemed as ‘weak

referencing’ and your team will receive a minimum mark for that particular part of the
assignment.

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 ATTACHMENT 1
TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE
PENANG BRANCH CAMPUS

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

Plagiarism Statement

Read, complete and sign this statement. Submit this statement with your written work. Digital
or electronic signatures are encouraged.

We confirm that the submitted work is completely our own work and is in our own
words.

NAME ID NUM
SIGNATURE

1. ……………………………… …………………………… ……...……………

2. ……………………………… …………………………… ……...……………

3. ……………………………… …………………………… ……...……………

4. ……………………………… …………………………… ……...……………

5. ……………………………… …………………………… ……...……………

Programme ………………………………………………

Tutorial Group ………………………………………………

Date ………………………………………………

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 ATTACHMENT 3
MARKING CRITERIA VERY POOR POOR SATISFACTORY GOOD VERY GOOD %
PART I
Writing a clear and concise executive There is no clear Unclear and Fairly clear and Clear and Very clear and
summary. (10%) and concise inconcise concise summary. concise concise
summary. summary. (5-6%) summary. summary.
(0-2%) (3-4%) (7-8%) (9-10%)

PART II
Writing a clear and detailed introduction of There is no clear Vague Fair presentation Clear and Excellent and
your business. (20%) presentation and presentation and and clarity of concise concise
clarity of introduction. introduction. presentation and presentation
introduction. (5-8%) (9-12%) clarity of and clarity of
(0-4%) introduction. introduction.
(13-16%) (17-20%)

PART III
Drawing a comprehensive flowchart (10%) Fail to Weak Fair demonstration Good Outstanding
demonstrate demonstration of critical thinking demonstration demonstration
critical thinking of critical in knowledge & of critical of critical
in knowledge & thinking in overall thinking in thinking in
overall knowledge & understanding of knowledge & knowledge &
understanding of overall client's business overall overall
client's business understanding flow. understanding understanding
flow. of client's (5-6%) of client's of client's
(0-2%) business flow. business flow. business flow.
(3-4%) (7-8%) (9-10%)

PART IV
No effort in Minimal effort Fair effort in Good effort in Extensive
Proposal of FIFTEEN (15) internal controls for research skills. in research research skills. research skills. effort in
EACH sales and payroll cycle, explanation of Scarce skills. Weak Sufficient Comprehensive research skills.
the function of each of the proposed internal explanations on explanations on explanations on the explanations on Critical
control and how it might help in improving the the subject the subject subject matter. the subject explanations
effectiveness and efficiency of the operations matter. matter. (17-24%) matter. on the subject
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**SME segregation of duty unpractical (bcuz staff limited, one staff do many roles)
** owner supervise whole operation of company

- The assignment of custodian to responsible person together with approved prenumbered documents for
authorizing movement of inventory also protects assets from improper use.
- Copies of inventory issuing document are sent directly to the accounting department.

Perpetual inventory records

- Perpetual inventory record to be maintained by persons who do not have access to physical assets.
- Perpetual inventory record is used for investigating differences between physical counts and the amount shown
on the record.
- Adequate controls over the integration of production and accounting records so as to obtain accurate costs for
all products.

 Unit cost records and standard costs- Cost accounting records must be properly maintained and integrated with production and
related accounting records.

 to frequently and regularly perform inventory counts to understand the turnover rate or demand for
a particular item.

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is counted at a specific day or time. The goal is to move through all inventory on a regular basis. Cycle counting
yields more accurate inventory results.

Retailers may also look at cycle stock inventory, or on-hand inventory, which is the sum of what is on the
shelves and what is in the warehouse or storeroom. The quantity of a cycle stock inventory is equal to the total
on-hand inventory. If the safety stock inventory is maintained, it does not count. The goal is to prevent running
out of stock, while managing cash flow, and economize as much as possible on shipping and storage. uncover
any discrepancies in inventory count 

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