Semester Spring 2023

Fundamentals of Auditing (ACC311)

Assignment
Due Date: May 29,2023 Total Marks: 10
Topic To Be Tested:
• Understanding the Entity and Its Environment

Learning Outcomes:

After going through this activity, the students would be able to understand:
• the importance for auditors to know entity and its environment;
• the internal control system of an entity;
• the components of internal controls;
• role of technology and information system;
• the monitoring of controls;
• the process of developing standard procedures for internal control system.

Scenario:
Xee Tech is a rapidly growing manufacturing company of electronic devices. It understands how
crucial is to keep an efficient internal control system in place while its operations continue to
expand. The management of the organization is concerned about the security of its assets as well
as the integrity of its information system. You have been hired as an auditor to evaluate the
efficiency of the company's internal controls and information system.
During audit, you found that Xee Tech’s expansion has led to an increase in transaction volumes
and complexities, making it crucial to ensure that the information system can accurately capture
and process these transactions. The company relies heavily on technology for its operations
including order processing, inventory management and financial reporting. Additionally, Xee
Tech's internal controls need to adapt with the changing business environment as there is a
higher risk of errors, fraud and non-compliance with growth. You also assessed the risks faced
by Xee Tech both at the financial statement level and at the assertion level for various classes of
transactions, account balances and disclosures. This risk assessment will help you identify areas
where the company may be more vulnerable to material misstatements. By understanding these
risks, you will be able to address specific control weaknesses and mitigate the potential impact
on the accuracy and reliability of the financial statements.
 Semester Spring 2023
Fundamentals of Auditing (ACC311)
Assignment
Required:
Your task is to identify areas for improvement and give recommendations against each of the
questions asked in the table given below: (2.5 x 4 = 10 Marks)

Question Solution/Recommendations
1. Identify and explain the key
components of effective information
system that should be ensured by the Xee
Tech.
2. Describe the role of communication in
internal control system and provide two
examples at least.
3. Explain the role of control activities in
the internal control system.
4. Discuss the importance of monitoring
internal controls and give examples of
three methods of monitoring.

IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above-mentioned
due date should always be treated as final to avoid any inconvenience.

IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL

INSTRUCTIONS
BE NEAT IN YOUR PRESENTATION
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
• Make sure to upload the solution file before the due date on VU-LMS.
• Any submission made via email after the due date will not be accepted.
 Semester Spring 2023
Fundamentals of Auditing (ACC311)
Assignment

FORMATTING GUIDELINES:
• Use the font style “Times New Roman” and font size “12”.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.

REFERENCING GUIDELINES:
Use APA style for referencing and citation. For guidance search “APA reference style” in
Google and read various websites containing information for better understanding or visit
https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_formatting_and_style_guide/index.html

RULES FOR MARKING:

Please note that your assignment will not be graded or graded as Zero (0), if:
• It is submitted after the due date.
• The file you uploaded does not open or is corrupt.
• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
• It is cheated or copied from other students, handouts, internet, books, journals etc.

Note related to load shedding: Please be proactive

Dear Students
As you know that Pre Mid-Term semester activities have been started and load shedding problem
is also prevailing in our country. Keeping in view the fact, you all are advised to post your
activities as early as possible without waiting for the due date. For your convenience; activity
schedule has already been uploaded on VU-LMS for the current semester to manage the time.