Fabulous Fashion Ltd (FF) runs four private colleges which provide education and training for people in the fashion industry. Its two-year course includes training in design, textiles, manufacture and retail of fashion garments. You are conducting the interim audit for the year ended 30 June 20X1. The tangible fixed assets of each college are recorded in an asset register which is maintained at each college location by each college manager. The system operates as described below:

• In order to obtain new assets, a purchase requisition form is completed and approved by the manager at each college.

• The requisition is sent to head office, where the purchasing officer checks the requisition for approval and completes a purchase order for the new asset.

• Assets costing more than £5,000 are approved by the financial accountant. All assets over £20,000 require board approval.

• The purchase order is then sent to the supplier and a copy is sent to the central store at the head office location.

• The asset is received by the central store where the receiving clerk checks that all the asset details agree with those on the goods received note and the copy of the purchase order. The receiving clerk will then issue the asset with its computer-generated sequential barcode number. This barcode is fixed to the asset and written on the goods received note and the supplier invoice.

• The relevant college manager inputs the new asset details into the asset register using a copy of the purchase order, the original requisition and the asset’s barcode.

• For disposal or write-off of an asset, an asset disposal write-off form is completed by the relevant college manager, signed and sent to head office. Disposals and write-offs are approved by the financial accountant. A copy of the form is filed at head office and the approved original returned to the college manager for action. The college manager will then update the fixed asset register for the subsequent disposal.

• The asset register is maintained on FAST, a tailored fixed assets computer system, and reconciled monthly to the general ledger by each college manager.

• The FAST system automatically calculates depreciation each month using the rate input by the college manager at the time the asset was added to the register.

Required 

(a) Identify five internal control strengths on which you would rely for your audit.

(b) Design tests of control to evaluate the effectiveness of each of the controls identified.