One of the things you can do in a logical approach to the assessment of internal control
Question:
One of the things you can do in a logical approach to the assessment of internal control is imagine what types of errors could occur with regard to each significant class of transactions. Assume a company has the significant classes of transactions listed below.
Required:
For each one, identify one or more errors that could occur and name the accounts that would be affected if proper controls were not specified or followed satisfactorily.
1. Credit sales transactions
2. Raw materials purchase transactions
3. Payroll transactions
4. Equipment acquisition transactions
5. Cash receipts transactions
6. Leasing transactions
7. Dividend transactions
8. Investment transactions (short term)
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Starting the Logical Approach Identification of errors or irregularities and specification of accounts affected For each of the classes of transactions the possible errors or irregularities can be expressed in general in terms of the seven control objective categories Heres an expression of them and you can guide students suggestions to fit the list Possible Errors and irregularities 1 Invalid transactions are recorded 2 Valid transactions are omitted from the accounts 3 Unauthorized transactions are executed and recorded 4 Transaction ...View the full answer
Auditing An International Approach
ISBN: 978-0071051415
6th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley
