ACCA F8 - Audit and Assurance Revision Kit 2016

Disadvantages
(b)
(c)
Questionnaires are only as good as their author: drafted vaguely, the questions could be
misunderstood, and if questions are incomplete, important controls could be missed
Unusual controls may be missed
It would be easy for staff members to overstate the level of controls
Gives the false impression that all controls are of equal weight; in reality, certain controls may be
more fundamental than others.
Control objectives
Occurrence and existence
To ensure that one person is not responsible for taking orders, recording sales and receiving payment
To ensure that recorded sales transactions represent goods provided
To ensure that goods are only supplied to customers with good credit ratings
To ensure that goods are provided at authorised prices and on authorised terms
To ensure that customers are encouraged to pay promptly
Completeness
To ensure that all revenue relating to goods dispatched is recorded
To ensure that all goods sold are correctly invoiced
Accuracy
To ensure that all sales and adjustments are correctly journalised, summarised and posted to the
correct accounts
Cut-off
To ensure that transactions have been recorded in the correct period
Classification
To ensure that all transactions are properly classified in accounts
Control deficiencies
Deficiencies
Telephone orders are checked manually after an
order has been placed.
This creates a risk of goods for which orders have
been placed being unavailable, leading to unfulfilled
orders. This gives rise to dissatisfaction from
customers and has a negative impact on the
company's reputation.
Order forms for telephone orders are completed
after an order has been placed.
This increases the risk that information on the order
forms is incorrect or incomplete, leading to errors in
fulfilling the order.
The order forms used for telephone orders are not
sequentially numbered. This increases the risk that
order forms are lost in transit, leading to unfulfilled
orders and reputational damage.
Recommendations
Orders should not be confirmed before the
availability of the product has been checked.
To ensure that orders are fulfilled consistently,
telephone orders and online orders should ideally be
processed through the same system, with automatic
notifications to the customer who has placed the
order once product availability has been checked.
All order forms should be completed at the time the
order is placed. For telephone orders, the order clerk
should confirm with the customer that all details are
correct.
All order forms should be sequentially numbered.
234 Mock exam 2: answers