Assessment Feedback Form

Paper: Audit and Assurance Semester: Semester 2 2020 Assessment date: 24/7/2020

Lecturer: Magdalene Chia

Assessment: Please circle one: Test 1 | Test 2 | Mock Exams

Student name: Sukhdeep Kaur

Marks:

Sections Feedback
Section A – MCQs

Section B

Q.16

Q.17
Section A

1.
B
2.
A
3.
B
4.
A
5.
A
6.
C
7.
D
8.
D
9.
D
10.
A
11.
B
12.
D
13.
A
14.
D
15.
A
16.

a)

Risk Identification
Inherent risk Risk posed by an error or omission in
financial statement due to a factor other
than a failure of internal control. In a
financial audit, inherent risk is most
likely to occur when transactions are
complex, or in situations that require a
high degree of judgement in regard to
financial statements.
Control risk Is the probability that financial
statements are materially misstated,
due to failures in the system of controls
used by a business. When there are
significant control failures, the business
is more likely to experience
undocumented asset losses, which
mean that its financial statements may
reveal a profit when there is actually a
loss.

b)

Audit risk Audit response

c)

Concept of materiality The concept of materiality is applied by

the auditor both in planning and
performing the audit, and in evaluating
the effect of identified misstatements on
the audit and of uncorrected
misstatements, if any, on the financial
statements and in forming the opinion in
the auditor's report.
17)
a)
Key controls
Customer ordering
Goods dispatched to customers
Invoice process
b)
Control deficiency
New customers’ creditworthiness is
assessed by a salesperson who sets
the credit limit which is authorised by
the sales director
The sales staff have sales targets, and
hence may suggest that new
customers are creditworthy simply to
meet their targets. This could result in
sales being made to poor credit risks.
Sales staff are able to make changes
to the customer master data file, in
order to record discounts allowed and
these changes are not reviewed.
Description
To ensure sales are made to valid
customers i.e. customers with good
credit ratings.
To ensure sales orders are recorded
accurately and completely for fulfilment
of orders to customers.
To ensure goods and services are
promptly fulfilled and sent to right
customers.
To ensure goods are correctly sent to
customers (quantities, availability of
stock) to avoid loss of goodwill.
To ensure sales orders are correctly
invoiced in terms of amounts and
customers.
To ensure there are no missing sales
invoices.
Control recommendation
New customers should complete a
credit application which should be
checked through a credit agency with a
credit limit set. Once authorised by the
sales director, the limit should be
entered into the system by a credit
controller.
Sales staff should not be able to
access the master data file to make
amendments. Any such amendments
to master file data should be restricted
so that only supervisors and above can
make changes.