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ACC311 – Fundamental of Auditing

In ACC311 Fundamental of Auditing, we are providing you digitized Mid and Final Term Papers, Chapter Wise Quiz, Quiz Preparation, Past Papers Quiz, Current Papers, Handouts, Past Paper, Solved Quizzes, Handouts, Search Course Code, Lessons, VU Videos and Slides. Fundamental of Auditing is an Audit which is an independent of Financial statement or an entity, which is enables to express an opinion from the financial.

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FINAL TERM
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MID TERM
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MID TERM PREPARATION

ACC311 – Chapter Wise 01 to 06

ACC311 – Chapter Wise 07 to 12

ACC311 – Chapter Wise 13 to 16

ACC311 – Chapter Wise 17 to 20

POSTED DATE:06-02-2019            IDEA SOLUTION

When the auditor examines the cash transaction and general audit of  XYZ Ltd leather manufacturing company, he will examine the following control measures.
1.Testing the Effectiveness of Internal Control
All receipts are accounted for and all payments are authenticated and relate to goods and services received for the purpose of running the business. The supervision of the execution and accounting of cash transactions are adequate and effective and in order to avoid fraud and pilferage, mechanical aids are used for accounting the receipts and payments wherever necessary. The balance of cash, stamps, stamp-papers etc., is physically verified periodically and suitable action taken in case of discrepancies, book balances are reconciled at regular intervals.
2.Testing the System of Accounting
The auditor should verify the accuracy of the system of recording the transactions in the books of accounts. If entries in the book are verified, then the following errors can be found out errors of omission, the error of commission, error of principle, Compensating errors etc. By suppressing the receipt of cash and by an overstatement of payments, fraud can be committed.
3.Suppression of receipt of cash
Adjusting the customer’s account with allowances and rebates not actually allowed by the organization and misappropriating the money collected from the customers to the extent of the adjustment. Omitting to record the miscellaneous receipts such as the sale of scrap and Omitting to account a part of Cash Sales or not accounting the money collected from the customer and treating that account as bad and writing it off.
4.Testing the transactions to verify their validity
To verify the validity of the transactions, the auditor has to verify the following:
The agreements between the organization and the third party.
The Articles of Association, partnership deed, trust deed, etc.
The Minutes of the Board of directors.
Legal requirements related to the business transactions.
5.Verification of Documentary Evidence
The accounting entries should be verified against the supporting documentary evidence. The evidence may be internal, which are generated and maintained by the organization or external, which are obtained from outside the organization. Counterfoils of receipts, payroll, etc., are internal documents. Purchase invoice, bank statement, loan agreement etc, are external evidence.

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1 Comment

  1. Ayesha Mumtaz

    CommentSUBJECTIVE QUESTION
    Question No: 1 ( Marks: 1 ) – Please choose one
    Which of the following statements best describes the purpose of an internal control questionnaire (ICQ)?
    An internal control questionnaire is a series of questions regarding accounting and control policies and procedures that the auditor considers necessary to prevent all misstatements in the financial report.
    An internal control questionnaire is a series of questions regarding accounting and control policies and procedures that the auditor considers necessary to prevent material misstatements in the financial report. An internal control questionnaire is a series of questions regarding accounting and control policies and procedures that the auditor considers necessary to detect material misstatements. An internal control questionnaire is a series of questions prepared by the entity about the entity’s accounting and control policies and procedures for which the entity seeks guidance on from the auditor in order to detect material misstatements in the financial report.
    Question No: 2 ( Marks: 1 ) – Please choose one
    A Beverages company is being audited by an audit firm. Audit procedures are being undertaken in all of its departments. During this, the audit team has to spend more time on physical examination of the company assets to get reliable audit evidence. In your opinion, auditors are considering which type of audit inquiry in this case?
    Recalculations Inspection of tangible assets Analytical procedures Confirmations. Existence of any immaterial mistake in the statements
    Existence of any fraud or error in the statements. Company s growth trend in the future in figures Market value of the company s stock

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