Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.
GET A 40% DISCOUNT ON YOU FIRST ORDER
All presentation requirements met. Excellent written expression with very clear articulation of ideas and concepts. Superior grammar and spelling skills. References included are used accurately in accordance with APA (6th ed.) requirements.
(a) Identify and explain four (4) key controls relating to revenue and cash collection. Cash
receipts from sources other than these regular visitations and emergency call-outs need not be
considered. (10 marks)
(b) For the controls identified in (a), explain the tests of controls you would use to examine the
revenue from services account for the year ended 30 June 2017. Justify your choices. (10 marks)
(c) Identify any concerns that you would have about the controls that might cause you place
less reliance on the controls, even if the test of controls appear adequate. (5 marks)
A well supported and coherent description of four (4) controls and their purpose. Well supported and coherent explanation of an appropriate test for each of the four (4) controls. Well supported and coherent explanation for the identified weaknesses in the controls that would limit the reliance placed on the controls.
(a) Explain two relevant concerns you may have about the payroll application’s implementation. (5 marks)
(b) Identify and describe one application control that could be applied to salaries and wages expense to ensure the following:
i. The occurrence of the expense transactions. (2.5 marks)
ii. The accuracy of the expense transactions. (2.5 marks)
(c) Describe in detail an appropriate test of control that you would use to satisfy yourself about the effectiveness of the controls identified in (c). (5 marks)
A well supported and succinct discussion on the problems associated with the implementation of the new payroll system. Both application controls identified align with the assertion at risk provided and are comprehensively justified. Comprehensive descriptions and justifications of appropriate tests of controls are provided.
Please refer to: Textbook: Auditing & Assurance Services in Australia, 6th ed, Grant Gay & Roger Simnett. McGraw Hill Education.
Question 2 Topics 5 & 6 Internal control and tests of control (25 marks)
You are engaged in your first audit of VIPet Pty Ltd (VIPet) for the year ended 30 June 2017. The Managing Director is Matthew Stanton, a qualified veterinarian, and the company employs seven permanent staff. The permanent staff consists of two permanent veterinarians, three veterinarian assistants; a receptionist, an office assistant/typist and a bookkeeper. In July 2016 VIPet commenced providing “on farm” veterinarian services for small hobby farms, due to a large number of small holdings in the area. The company has 250 clients using this service within a 60 kilometre radius and employs an additional five veterinarians on an hourly basis to visit the client farms. The casual veterinarians submit weekly time reports, which include the customer’s name and the time devoted to each customer. Time charges for emergency visits are shown separately from regular monthly visits on the reports.
As part of your evaluation of the new service you note the following:
- VIPet requires customers to sign annual contracts which are pre-numbered and prepared in duplicate. The original is filed in numerical order by contract anniversary date, and the copy is given to the customer. The contract entitles the customer to one routine veterinarian service each month. However, the contract does not include emergency visits, which are billed separately.
- Fees for monthly services are payable in advance – quarterly, half-yearly or yearly – and recorded on the books as ‘income from services’ when the cash is received. All payments are made by cheque and are received by post.
- Pre-numbered invoices for contract renewals are prepared in triplicate from information in the contract file. The original invoice is sent to the customer 30 days before the due date of payment, the duplicate copy is filled chronologically by due date, and the triplicate copy is filed alphabetically by customer surname. If payment is not received within ten days of the due date, a cancellation notice is sent to the customer, and a copy of the notice is attached to the customer’s contract.
- Matthew Stanton approves all cancellations and reinstatements of contracts.
- The bookkeeper notifies the veterinarians of all contract cancellations and reinstatements and requires the veterinarians to acknowledge notification of cancellation.
- Pre-numbered invoices for emergency services are prepared weekly from the information shown on the veterinarians’ time reports. The customers are billed at 300 percent of the veterinarian’s hourly rate. These invoices, prepared in triplicate and distributed as outlined above, are recorded on the books as ‘income for services’ at the billing date. Payment is due 30 days after the invoice date.
- All remittances are received by the office assistant/typist, who prepares a daily list of cheques received and stamps a restrictive endorsement on the cheques. A copy of the list is forwarded with the cheques to the bookkeeper who posts the date and amount of each cheque received on the copies of the invoices in both the alphabetical and the chronological files. After posting, the copy of the invoice is transferred from the chronological file to the daily cash receipts binder, which serves as a subsidiary record for the cash receipts book. The bookkeeper totals the amounts of all the remittances received, posts this total to the cash receipts book and attaches the daily remittance tapes to the paid invoices in the daily cash receipts binder.
- The bookkeeper prepares a daily bank deposit slip and compares the total with the total amount shown on the daily remittance tapes. All remittances are deposited in the bank the day they are received.
- The financial report is prepared on an accrual basis.
Question 3 Topic 6 IT Controls (15 marks)
You are preparing for the audit of your client NSW Rural Heath, for the financial year ended 31 December 2017. The health service implemented a new payroll system and you have noted the following:
- The new payroll application is more complex than the old system, but its reporting function provides more detail. For example, the new application calculates leave, superannuation, payroll tax and work cover expenses, as well as the corresponding accruals.
- Due to the brief time available to implement the system, the previous application ceased operation on 31 December 2016 and the new application went live on 1 January 2017 without running parallel with the previous application. Staff training and testing of the new application was limited.
- Access to the master files is restricted to the payroll supervisor and her deputy. Access to transaction files is restricted to payroll staff who are responsible for the processing of fortnightly and monthly pay.
Prior to the introduction of the new payroll system, the payroll master and transaction files were kept in a separate database from the general ledger. At the end of each month, the IT staff imported transaction data from the payroll data base into the general ledger. Management decided to upgrade the existing accounting system to include a payroll system due to the frequent problems encountered by IT staff when importing data into the general ledger.