Auditing

B. to control TUPL could implement following measures for reducing each of the deficiencies : a. update the website ,that shows all the inventory within the system that are available and which are out of stock on proper time. test control is testing the data by ordering the items which are out of the stock, the ordered items should be showing sign as being out of stock and shows time of available. b. TUPL should remind couriers to take customer signatures after delivering goods as a proof of despatch. TUPL should also remind that any document without sign may lead to the unpaid for despatches. ask TUPL for checking the signatures of customer by collecting different sample of despatches by couriers c. credit limit duties should be assign for higher level or senior member of the sales department not by the clerks. similarly, all the transaction should be viewed on the regular bases by responsible officers. makes sure that sales clerk could not see or have the information regarding the credit limit. on the other hand, take a sample of new customer who are being limit authorised for credit limit and review their credit limits and making sure that all work are performed by right person. d. only person with the authority should access the purchase ledger like purchase ledger supervisor. the master file data could be controlled by passwords., any changes to purchase ledger should be review by the responsible person. and make sure that the purchase ledger clerk could not make any changes. e. proper review of the machinery items should be done by the person holding high responsibilities or by senior for recognising the old equipments. the old equipments should be repaired well and if it could not be repaired it should be replaced. each replaced equipment should be mentioned and senior member should be identifying and making treatment of old equipment by doing proper observation during review process. https://www.acowtancy.com/exam-centre/acca-f8/9b8347df-73d7-c7fb-f701-202bcbfa5555 Part D (10 marks)

event

description

impact of materiality

explanation

1 Resign by finance management and no financial manager has been found.

- decrease

Since the financial manager resign in rush and there is no one as financial manager who handles all the financial data. As a result there is possibility for misstatement because financial manager may use different method to classify the expenses and profit of the organisation and auditor might need some time to understand the methods as a result there could be errors in materiality.

2 Resign by HR manager and new manager is appointed.

No impact

Human resource has great importance for running the organisation. Human resource is controlled by HR managers as a result when there is no manager there would not be any control, however, human resources does not deal with financial statement and a new HR manager has been appointed which makes no impact on materiality.

3 Detect error while transferring data from SuperD to SuperB and management confirmed the error will be fixed.

increase

The error has been detected and manager also confirmed the error will be fix which helps rectifying the financial statement.

event

description 4 Among 40 samples selected for testing, 14% does not have purchase document and the reason behind the case was due time period which is taken by the Dune Ltd and other entities.

impact of materiality

explanation

decrease

There is no list on which item the business invest money as a result without documentation of purchase items the financial statement can not be have accurate result. Financial statement could be manipulate through miss place of accounts payable and wrong entries of cash may be there. Material misstatement could be take place so, it is important that the auditor increase sample size because there is possibility of population misstatement is greater than the sample size (ASA 30 para 23 ) https://www.legislation.g ov.au/Details/F2006L013 89