What are the functions normally associated with the production process? Why is an understanding of the production process, including the related data processing and cost accounting, important to auditors evaluating the control structure as part of their assessment of control risk?
Answer to relevant QuestionsDescribe a walk-through of a production transaction from production orders to entry in the finished goods perpetual inventory records. What document copies would be collected? What controls noted? What duties separated? What are the primary functions that should be segregated in the production process? What features of a payroll system can be expected to prevent or detect (a) Payment to a fictitious employee? (b) Omission of payment to an employee?Describe analytical procedures that can be used for payroll transactions and balances. What is the purpose of examining endorsements on the back of payroll cheques?
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