Auditing for Risk

FORMATIVE ASSESSMENT 2 [100 Marks] Select a business of your choice and analyse the business in detail. Please note that you may need to interview several members in the business to understand the following processes of the selected business in detail: You may need to sign a confidential agreement with the selected business to access the data you require. As the senior Auditor in your organisation, you have been requested to undertake an Audit for the business.

Answer ALL the questions in this section.

1. Acquisition and Payment

2. Inventory and warehousing

3. Revenue and Receipt Question 1 (20 Marks)

For the selected business, discuss the business processes according to the following three cycles namely Acquisition and Payment, Inventory and Warehousing and finally Revenue and Receipt. Students are encouraged to use visuals to discuss the process in detail. The following can be used to analyse the business for audit purposes: Acquisition and Payment: Expenses and liability recognition Cash versus credit purchases Controls (manuals and computerised) Inventory and warehousing Link between inventory process and other business cycles Period versus perpetual inventory system Stock counts & controls Revenue and Receipt Sales orders Dispatch Billing Cash Collection

Question 2 (20 Marks) Discuss the audit process that will be undertaken using the International Standards on Auditing?

Question 3 (20 Marks) Identify the weaknesses in the Acquisition and Payment cycle described above and provide recommendations to address them? Use the table below to identify the weaknesses and recommendations.

No.

Weakness

Recommendations

Question 4 (20 Marks) Identify the weaknesses in the Inventory and Warehousing cycle described above and provide recommendations to address them? Use the table below to identify the weaknesses and recommendations.

No.

Weakness

Recommendations

Question 5 (20 Marks) Identify the weaknesses in the Revenue and Receipt cycle described above and provide recommendations to address them? Use the table below to identify the weaknesses and recommendations.

no

Weakness

Recommendations