Module No: BAA6003

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ASSESSMENT DATE: Week Beginning 11 March 2024

Scenario 3

TIME ALLOWED: 25 minutes

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Learning Outcomes:

Students should be able to:

 Understand the advanced theory and practice of auditing practice and
procedures.
 Analyse and apply different audit approaches to structured and
unstructured problems.

BAA6003 Coursework 2024 Page 1

INSTRUCTIONS:

In your team prepare a presentation on Squirrel Fashions Ltd,

answering the parts (i) to (iii). You will have a maximum time
allocation of 15 minutes per group (excluding questions).

Following your presentation, your team will be asked additional

questions, so ensure that you make yourself aware of all relevant areas,
not just the area you are presenting on.

How you allocate the work to be presented is up to you, but bear in mind
that there are marks allocated for team work.

If a team member is asked a question to which you are able to add

supplementary, relevant information, then additional marks will be
allocated to you.

Marks will be allocated as shown in the table below:

Presentation Additional questions

40% content (slides and 30% if additional
verbal) question answered well
15% presentation style 15% extra marks if
supplement answer to
team mates question

The marking scheme that will be used to assess your presentation forms
part of this document. This coursework represents 50% of your final
module mark.

All groups will be recorded, for IV purposes.

The lecturer will need an electronic copy of your Powerpoint

presentation before your presentation. This should reach the lecturer no
later than Friday 15 March 2024 by 11am, via Turnitin on Moodle.
You will not be able to alter the presentation after this date and it will be
the copy the lecturer holds that you will use for your presentation.

BAA6003 Coursework 2024 Page 2

Squirrel Fashions Ltd (Squirrel) manufactures and distributes fashion
clothing to retail stores in the UK and Europe. There is a workforce of
175 employees who are engaged in either the manufacture or
distribution side of the business. These are all weekly paid. In addition,
there are between 30-40 employees who work in sales and
administration; the numbers vary according the sales campaign being
run by the company. These are salaried and paid monthly. All
employees, both weekly and monthly, are paid by direct transfer into
their bank accounts. Squirrel’s payroll requirements are dealt with by the
payroll clerk called Zac.

Squirrel operates three shifts a day with employees working eight hours
each. Each shift has a shift supervisor. The production workers are
required to clock in and out using an electronic identification card. The
card is scanned by the time recording system and each employee’s
identification number is read from their card by the scanner. On a
regular basis, the manufacturing and distribution workers may be
required to work overtime. This overtime may be taken as time off or can
be taken in a weekly payment. Each employee who has worked
overtime, emails Zac to let him know whether they wish to be paid for
their extra hours or whether they wish to take time off in lieu of payment.
The shift supervisor is not required to monitor the extent of any overtime
working although the supervisor does ensure that workers are not taking
any unnecessary or prolonged breaks which would automatically
increase the amount of overtime worked.

Zac accesses the payroll system using a password which is known to

him and two others; the Financial Accountant and Choi the purchase
order clerk, who covers for Zac’s leave of absences. On entering the
password, Zac imports the hours worked from the time recording
system. The system compares the hours worked per employee to the
standard hours per week and allocates the excess as overtime. Zac
checks his emails to see which option the employee has chosen with
regard to their overtime hours. If the employee chooses to be paid
overtime, Zac will phone the supervisor for approval if the overtime
exceeds 15% of the standard hours. No supervisor approval is required
if the overtime hours represent less than 15%. If no email has been sent
by the employee, Zac assumes that they have selected the time off in

BAA6003 Coursework 2024 Page 3

lieu of payment and enters a holiday code into the relevant programme
which, automatically reduces the overtime rate by the number of
holidays selected.

Following these modifications, a printout of the week’s payroll is

generated, detailing for each employee; hours paid, split between basic
and overtime, gross pay, deductions, net pay, employer’s tax and totals.
This information is produced in three different reports:

Summary: Cumulative details to date per employee

Payslips: Details of gross pay, deductions and net pay

Autopay list: Bank sort code, account number and net pay per
employee, and total net pay.

Salaries are paid on a monthly basis using standing data stored in the
monthly payroll system

On a weekly (wages) or monthly (salaries) basis, the Financial

Accountant reviews the autopay list before Zac uses the same password
to transmit the details via direct transfer to the company’s bank. Two
days later a printout, listing bank and net pay details per employee
together with the net pay total, is received from the bank.

Details of starters, leavers and amendments to hourly paid employee

details are recorded on standard forms by the supervisors and passed to
Zac for input into the system. Any amendments to salaried members of
staff are emailed by Human Resources (HR) directly to Zac. During the
year the hourly wage is increased by the HR department and Zac is
always notified of this by email. After updating the standing data on the
payroll system, he discards the forms and emails.

Required:

i Identify the objectives of exercising internal controls in a payroll

system and discuss the extent to which the procedures exercised
by Squirrel achieve these objectives; outlining both the strengths
and weaknesses.

ii Describe the procedures which would strengthen Squirrel’s payroll

system.

BAA6003 Coursework 2024 Page 4

Iii Evaluate the procedures you used to obtain evidence during your
audit of Squirrel, as prescribed by the relevant accounting
standards; including analytical review, reconciliation, inquiry,
inspection, observation and recalculation.

BAA6003 Coursework 2024 Page 5

Marking Scheme

As a group member

1. Did the presentation have a logical structure – an introduction, main body and conclusion?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

2. Was the presentation (excl. questions) to the point and timeliness adhered to?

More than 15 minutes or less 5-6 min or 7-10 min Between 11-15
than 5 minutes 16-17 min min
0 2 3 4

3. Was the font large enough to be read and the slides not overcrowded?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

4. Did the audit work performed clearly identify internal controls?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

5. Were the weaknesses clearly outlined?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

6. Were the recommendations appropriate to remedy the weaknesses?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

7. Was there evidence that six evidence collections methods were clearly understood?

Not evident Weak Satisfactory Good Very Good

0 2 6 9 12

BAA6003 Coursework 2024 Page 6

8. Was there evidence that the presentation was performed in a cohesive manner, that
indicated the group had worked together?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 4

As an individual

9. Was body language appropriate? e.g. eye contact, smile

Not evident Weak Satisfactory Good Very Good

-1 1 2 3 5

10. Was the dress code appropriate?

Weak Satisfactory Good Very Good

-1 3 4 5

11. Did the student speak clearly, confidently, concisely and at an appropriate speed?

Not evident Weak Satisfactory Good Very Good

0 1 2 3 5

12. Was the student’s additional question answered in a manner which displayed the
question was understood and relevant information brought in to support the answer?

Not answered Weak Satisfactory Good Very Good

0 5-14 15-19 20-24 25-30

13. Did the student supplement a team member’s question?

Not evident Weak Satisfactory Good Very Good

0-1 2-5 6-7 8-10 11-15

Mark out of 100 =

BAA6003 Coursework 2024 Page 7