Module No: BAA6003

________________________________________________________

ASSESSMENT DATE: Week Beginning 11 March 2024

Scenario 8

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 Fox Industries 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

Cegin Ltd (Cegin) was established 18 years ago. Its current year-end is
31 December 2023. Cegin designs and manufactures a range of
contemporary and traditional kitchen bar stools. It offers both off-the-
shelf furniture as well as a customisable range of products.

Cegin’s inventory consists of raw materials, work in progress (WIP) and

finished goods. Cegin has one production site in Monmouth. The
production site is a very large unit which is divided into four sections;
production, raw materials, WIP and finished goods. The unit has one
entrance for raw materials delivery and one entrance for finished goods
to be despatched from.

The inventory is material to Cegin’s financial statements and a year-end

inventory count is performed on the last day of the financial year. On the
day of the inventory count, the factory workers continue their production
duties and staff are drawn in from the accounts department to perform
the count. The count is organized and supervised by the Inventory
Manager, Aled White.

Aled distributes a set of pre-numbered count sheets to the accounts staff

carrying out the count. These are printed out from the computerised
inventory system and show the inventory ledger balances according to
the system. The counters will count the stock and either confirm the
amount showing on the count sheet or amend it to the correct number.
All staff are counting in teams of two and can call on Aled if there is a
query.

Three counting teams are allocated to the three areas of the stores (raw
materials, WIP and finished goods) to count, and the teams are allowed
to decide which pair of staff count which inventory within each area. Staff
are aware that they need to remember which inventory has been
counted.

Any amendments to the count sheets quantities are in done in pencil so

that Aled can make alterations if the counters have made a mistake. Any
inventory not located on the pre-numbered inventory sheets is recorded
on separate inventory sheets – which are numbered by staff as they are
used. Any items that appear damaged are noted by the counters on the
separate inventory sheets.

BAA6003 Coursework 2024 Page 3

Aled will then calculate the extent of the damage and hence the write
down of the inventory. At the end of the count, all count sheets are
collected and the numerical sequence of the sheets checked; the sheets
are not signed.

All customisable orders are paid for in advance and Cegin allows its
customers to collect their order directly from the production unit. These
bespoke items are held in the finished goods section inside a hatched
yellow box painted on the floor. These items are excluded from the
inventory count.

Cegin’s factory employees normally work five shifts of eight hours each
week. Demand for kitchen stools is particularly high from September
until December. In anticipation of the Christmas surge, Cegin offers
unlimited overtime for those employees who want to take advantage of
it.

Cegin employs around 180 factory workers who arrive to start their shift
at 6am. All factory workers and supervisors are paid on a weekly basis
according to the number of hours they work. They register their arrival
on the factory floor by holding an electronic identification card against a
monitor. The card is scanned by the time recording system and each
production shift-worker’s identification number is read from their card by
the scanner. The worker is then logged in as being at work. Shift-
workers are paid from the time of logging in. The logging in and out
process is not monitored as it is assumed that the workers will want to
swipe their card to get paid.

When the factory workers are offered overtime they indicate their
acceptance by signing their name on the supervisors’ list at the start of
the working day. This list is used as a form of overtime authorisation
when it is submitted to the payroll clerk, Gina, at the end of the week.
Before they leave for home, the supervisors check the monitor to see if
any employees have forgotten to swipe out.

Gina extracts the details of hours worked each week from the time
recording system. She compares the list of names on the supervisors’
overtime lists with the extracted data, which separates out the standard
hours from the overtime hours. When satisfied that the names on the
extracted report match the supervisors’ overtime list of names, Gina
BAA6003 Coursework 2024 Page 4
enters a code number which authorises the computerised payroll system
to import the hours worked from the time recording system. The code
number also acts as authorisation to calculate net wages. Gina, her
supervisor and the receptionist all know the code number.

Each week the computerised wages system calculates:

(i) gross wages, using the standard rate and overtime rates per hour
for each employee,

(ii) statutory deductions from wages, and

(iii) net pay.

A summary listing of net pay by employee according to date of birth is

generated. Gina maintains a list of employee bank details. A different
code number is used by Gina to authorise and make payment to
employees, using Cegin’s online banking systems. When the Financial
Accountant has sufficient time, she reviews the total amount of wages
paid and compares it to the monthly budgeted accounts. Any
discrepancies are discussed with Gina.

If an employee decides to leave Cegin, the Human Resources

department sends an email to the payroll department. The email outlines
the employee’s termination date as well as any unclaimed holiday pay.
Gina prints out a copy of the email and makes the adjustment to the
payroll records. No copy of the email is retained.

Cegin’s external auditors are Findlay LLP. You are employed by Findlay
LLP and your team has just finished its audit of Cegin. The engagement
partner has requested you present the results of your work as outlined
below.

Required:

(i) Outline the audit work your team has performed which assesses
the assertions underlying Cegin’s inventory and payroll figures in
the financial statements.

(ii) On the basis of the work performed in (i), analyse both the
strengths and weaknesses you have uncovered in the company’s

BAA6003 Coursework 2024 Page 5

 inventory and payroll cycles, making recommendations where
appropriate.
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

BAA6003 Coursework 2024 Page 6

 0 2 6 9 12

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