ACCA F8 - Audit and Assurance Revision Kit 2016

Deficiencies Recommended controls Test of control
The finance director reviews the
total list of bank transfers and
compares this to the total payable
per the payroll records.
This process does not prevent
employees to be omitted from the
payroll. There is equally a risk of
fictitious employees, or
employees who have left the
company, appearing on payroll.
As a result, fraudulent payments
could be made.
The finance director should agree
a sample of the employees on the
payroll records to the payment
list, and vice versa, to ensure that
payments are complete, and made
only to bona fide employees.
These checks should be
evidenced by the finance
director's signature.
Inspect payments lists for
evidence that the finance director
has agreed a sample of payees to
the payroll records, and vice
versa.
(b)
The differences between an interim and a final audit can be summarised as follows:
When it occurs Purpose Procedures performed
Interim
audit
During the period
of review
To carry out
procedures that
would be difficult to
perform at the
year-end because
of time constraints.
No statutory
requirement to
perform interim
audit.
Final audit After the year end To express an audit
opinion on the
financial
statements
covering the entire
period being
audited.
The performance of
the final audit is a
statutory
requirement.
Inherent risk assessment and gaining an
understanding of the entity
Documenting and evaluating the entity's
system of internal control
Carrying out tests of control on the company's
internal controls to ensure they are operating
as expected
Performing substantive testing of profit or loss
transactions/balances to gain evidence that the
books and records are a reliable basis for the
preparation of financial statements
Identification of issues that may have an
impact on work to take place at the final audit
Substantive procedures involving verification of
statement of financial position balances and
amounts in the statement of profit or loss
Obtaining third party confirmations
Analytical procedures relating to figures in the
financial statements
Subsequent events review
Agreeing the financial statements to the
accounting records
Examining adjustments made during the
process of preparing the financial statements
Consideration of the going concern status of
the entity
Performing tests to ensure that the
conclusions formed at the interim audit are still
valid
Obtaining written representations
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