You are a member of the team engaged on the audit of Flamingo Part (Pty) which...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are a member of the team engaged on the audit of Flamingo Part (Pty) which sells second hand motor spares and accessories. The company purchases its inventory from two sources, namely scrap yards and manufacturers of car spares and accessories, who sell their production overruns and slightly damaged inventory items to Flamingo Part (Pty) Ltd. You have been assigned to the year-end audit of the acquisitions and payments cycle and have ascertained, inter alia, the following information. 1. One of the major business risks faced by Flamingo Part (Pty) Ltd is that the company may purchase parts and accessories which have been stolen from manufacturers, or which come from stolen or hijacked vehicles. To counter this, the company carries out a comprehensive investigation into their suppliers before conducting business with them. The company's accounting systems are fully computerised (they are run on a local area network (LAN) which links all departments/sections) and once a supplier has been approved, it is entered on the "approved supplier Masterfile". The financial controller, Bernard Bunz, has emphasised the importance of dealing only with approved suppliers, and maintaining detailed supporting documentation for all purchases, due to the widespread dishonesty and criminal activity in the trade. 2. No Inventory is purchased without an official printed order. Order forms are computer generated and cannot be created for a supplier not on the approved supplier Masterfile. Orders are initiated on the strength of a signed requisition sent to buying department by the warehouse manager. Note: Suppliers, both scrap yards and manufacturers, regularly contact the warehouse manager to notify him of availability of second-hand parts, overruns or damaged items. If the warehouse manager considers the item should be ordered, he negotiates the price which he then enters, with other details, on the requisition. Controls over the ordering function, both manual and computerised, are sound. 3. All deliveries from suppliers are routed to a physically secure Deliveries Bay for the unloading and receiving of goods. The three receiving clerks make use of a single terminal in the bay which is linked to LAN. As goods delivered are mostly second hand or slightly damaged, receiving clerks do not perform quality checks on deliveries, All deliveries are sent with a computer generated copy of the goods received note, to the "Quality Check and Reconditioning" section where all items purchased are put into saleable condition, e.g. cleaned, rubber seals etc replaced, tested and repackaged. From this section they are moved into the warehouse, where they are stored by part number, description etc. (Any items which are "damaged beyond repair" are returned to the supplier). 4. Hard copy of all documentation is sent to, or printed out in, the accounting department where it is matched and filed temporarily to await the supplier's invoice. The necessary checks are carried out before the purchase journal is written up. The supporting documentation is then filed alphabetically by supplier. At an interim audit conducted earlier in the year, you had extracted a sample of purchase transactions for detailed testing. Although these tests had proved satisfactory, you decided to extract a small sample of purchase transactions from the purchase journal for the month of April (financial year-end 30 April) on which to perform detailed procedures. One of the purchase transactions selected, and for which you obtained the supporting documentation was: Creditor: Ximex (Pty) Ltd :Amount: R97620.20 QUESTION 1 Required 1.1 Explain why there is increased risk of unauthorised access to data and programmes in a networked environment (e.n Flamingo (Pty) Ltd's local area network). 1.2 State the controls which should be in place at Flamingo (Pty) Ltd to ensure that additions to the "approved supplier masterfile" are valid, accurate and complete. (Do not concern yourself with controls or procedures to approve suppliers). 1.3 Discuss the manual and programmed (automated) application controls which you would expect to be in place for the receiving of deliveries from suppliers. You are a member of the team engaged on the audit of Flamingo Part (Pty) which sells second hand motor spares and accessories. The company purchases its inventory from two sources, namely scrap yards and manufacturers of car spares and accessories, who sell their production overruns and slightly damaged inventory items to Flamingo Part (Pty) Ltd. You have been assigned to the year-end audit of the acquisitions and payments cycle and have ascertained, inter alia, the following information. 1. One of the major business risks faced by Flamingo Part (Pty) Ltd is that the company may purchase parts and accessories which have been stolen from manufacturers, or which come from stolen or hijacked vehicles. To counter this, the company carries out a comprehensive investigation into their suppliers before conducting business with them. The company's accounting systems are fully computerised (they are run on a local area network (LAN) which links all departments/sections) and once a supplier has been approved, it is entered on the "approved supplier Masterfile". The financial controller, Bernard Bunz, has emphasised the importance of dealing only with approved suppliers, and maintaining detailed supporting documentation for all purchases, due to the widespread dishonesty and criminal activity in the trade. 2. No Inventory is purchased without an official printed order. Order forms are computer generated and cannot be created for a supplier not on the approved supplier Masterfile. Orders are initiated on the strength of a signed requisition sent to buying department by the warehouse manager. Note: Suppliers, both scrap yards and manufacturers, regularly contact the warehouse manager to notify him of availability of second-hand parts, overruns or damaged items. If the warehouse manager considers the item should be ordered, he negotiates the price which he then enters, with other details, on the requisition. Controls over the ordering function, both manual and computerised, are sound. 3. All deliveries from suppliers are routed to a physically secure Deliveries Bay for the unloading and receiving of goods. The three receiving clerks make use of a single terminal in the bay which is linked to LAN. As goods delivered are mostly second hand or slightly damaged, receiving clerks do not perform quality checks on deliveries, All deliveries are sent with a computer generated copy of the goods received note, to the "Quality Check and Reconditioning" section where all items purchased are put into saleable condition, e.g. cleaned, rubber seals etc replaced, tested and repackaged. From this section they are moved into the warehouse, where they are stored by part number, description etc. (Any items which are "damaged beyond repair" are returned to the supplier). 4. Hard copy of all documentation is sent to, or printed out in, the accounting department where it is matched and filed temporarily to await the supplier's invoice. The necessary checks are carried out before the purchase journal is written up. The supporting documentation is then filed alphabetically by supplier. At an interim audit conducted earlier in the year, you had extracted a sample of purchase transactions for detailed testing. Although these tests had proved satisfactory, you decided to extract a small sample of purchase transactions from the purchase journal for the month of April (financial year-end 30 April) on which to perform detailed procedures. One of the purchase transactions selected, and for which you obtained the supporting documentation was: Creditor: Ximex (Pty) Ltd :Amount: R97620.20 QUESTION 1 Required 1.1 Explain why there is increased risk of unauthorised access to data and programmes in a networked environment (e.n Flamingo (Pty) Ltd's local area network). 1.2 State the controls which should be in place at Flamingo (Pty) Ltd to ensure that additions to the "approved supplier masterfile" are valid, accurate and complete. (Do not concern yourself with controls or procedures to approve suppliers). 1.3 Discuss the manual and programmed (automated) application controls which you would expect to be in place for the receiving of deliveries from suppliers.
Expert Answer:
Answer rating: 100% (QA)
11 Explain why there is an increased risk of unauthorized access to data and programs in a networked environment at Flamingo Part Pty Ltd In a networked environment like Flamingo Part Pty Ltds LAN the... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these accounting questions
-
Create an especial environment, using pipenv to run your code. Catch any client errors, checkout this link https://boto3.amazonaws.com/v1/documentation/api/latest/guide/error-handling.html to learn...
-
Read the below article and provide feedback using the QQC (Quote, Question, Comment) Model. Quote: Select a phrase or concept from the article and share what stood out and why. Question: What...
-
Case Study: Quick Fix Dental Practice Technology requirements Application must be built using Visual Studio 2019 or Visual Studio 2017, professional or enterprise. The community edition is not...
-
Show by approximating with integrals that the number of distinct triples of integers between 0 and \(n\) is about \(n^{3} / 6\).
-
Use series to approximate the definite integral to within the indicated accuracy.
-
The price Fairness inc.'s stock is $195 per share. We do not expect Fairness inc. to pay any dividends in the next year. We further observe the price of several European put and call options on...
-
Consider the delivery time data discussed in Example 11.3. Data From Example 11.3 a. Develop a regression model using the prediction data set. b. How do the estimates of the parameters in this model...
-
Create a spreadsheet to calculate your projected total costs, total revenues, and total profits for giving a seminar on cost estimating. Below are some of your assumptions: You will charge $600 per...
-
Camera King is a retail store that sells cameras and photography supplies. The firm's credit purchases and purchases returns and allowances transactions for June 20X1 appear below, along with the...
-
In this question, you are given a Timed Petri net as shown below. The time stamps of the tokens (i.e., black dots in some places) are also provided on the figure below. The delay on the transition T0...
-
organizational leadership is considering buying a competitor and has asked the software security team to develop a plan to ensure the competitors point of sale system complies with organization...
-
The academic advisor to the football team of Rah Rah University is interested in the mean number of hours that players spend studying during the football season. Of the 100 members of the football...
-
You have been hired as an economist for the Federal Reserve Bank of New York. Your job is to forecast future interest rates. Summarize the theory of the interest rate, and formulate a mathematical...
-
The Mom and Pop Grocery Store has 115 employees. In a random sample of 30 of these employees, the mean number of days that an employee was late each year was 14 days, and the sample standard...
-
The citizens for Fair Taxes are interested in the average property tax paid by the 2,000 residents of their city. A random sample of 50 of these households had a mean property tax of $1,472 with a...
-
A regression analysis has two independent variables (x 1 and x 2 ). (a) What does it mean if x 1 and x 2 are independent of each other? In that case, what is the correlation between them? (b) Is...
-
A population of beetles are growing according to a linear growth model. The initial population (week 0) is Po 5, and the population after 6 weeks is P6 = 23. = Find an explicit formula for the beetle...
-
D Which of the following is considered part of the Controlling activity of managerial accounting? O Choosing to purchase raw materials from one supplier versus another O Choosing the allocation base...
-
You, the CPA, an audit senior at Grey & Co., Chartered Professional Accountants, are in charge of this year's audit of Plex-Fame Corporation (PFC). PFC is a rapidly expanding, diversified, and...
-
Identify the main factors to be used when ranking the importance of issues to be resolved.
-
Prepare the presentation slides and related speaker's notes for the presentation. Limit your presentation to five slides. Your presentation should provide recommendations related to the issues raised...
-
According to the monetary approach to the balance of payments, what type of economic policies would help a country resolve a balance of trade deficit?
-
If two countries had identical term structures of interest rates, what is the expected future exchange rate change between the two currencies?
-
Assume that the cost of a particular basket of goods is equal to $108 in the United States and 14,000 in Japan. a. What should the U/$ exchange rate be according to absolute purchasing power parity?...
Study smarter with the SolutionInn App