fsa full.docx

8/17/2019 fsa full.docx

1/18

3.1. Planned audit with reference to scope, materiality and risk

Audit planning is defined as the process in which the strategy is designed to conduct the

expected result which also defines the scope of audit inside the company. The size, nature and

the time for the audit plan may vary. It depends on the size of the business. If the business is

spread to the large scale, the strategy making and its implementation will take more time and also

the overall scope of Audit plan may also increase. It’s basically the step by step methodology

where the audit in control reviews the financial process and the internal environment along with

the engagement preparation !eady !atio, "#$%&

Audit planning is fairly important since the aim of doing it is to make the error free of financial

statement as well as ensuring the time for reviewing or cross checking financial events' lesser

time in correcting accounts with different planning methods used to determine risk, internal

controls assessment, etc(.

a. Scope

An audit should have a clear scope that focuses its extent, timing and nature as well as

selected issues on the basis of their relevance to the audit ability.

)uring the early planning stages, the appointment activity to be audited is often defined in

broad terms. *ery seldom is it practical or cost+effective to audit everything. coping the

audit involves narrowing the audit to relatively few matters of significance pertaining to the

audit ob-ective, that can be audited with the resources available and that are critical to the

achievement of the intended results of the activity being audited Anon., "##&

/urton 0ousing should determine the review1s audit planning scope as it needs to include

examination of all activities related. The responsibilities of /urton 0ousing auditor are to

determine the performance risks and also financial statements audit risk. The three risks are

inherent risk, control risk, and detection risk.

b. Audit risk


2/18

Audit risk is the risk that auditors may give an inappropriate opinion on the financial

statements. There are three components of audit risk including inherent risk, control risk and

detection risk. /22, "##%&

Inherent risk

The susceptibility of an assertion about a class of transaction, account balance or disclosure

to a misstatement that could be material, either individually or when aggregated with other

misstatements, before consideration of any related controls 3azal, "#$$&. There two main

types of factors which are factors affecting client as a whole and factors affecting individual

account balances or transactions.

Factors affecting client as a whole

In the case of /urton 0ousing, the factor which can affect to the firm is the state of

the economy since the general level of economic growth can determine the profit as

well as the company performance due to the changes in customer demands as well as

inflation, technology, etc(.

The second is the competitiveness and industry factors since /urton 0ousing is small

charity and housing association which principal assets contains a restaurant,

accommodation for 4# young people and recreational facilities according to thescenario. The number of competitors in this field of industry is 5uite any and also

because of the size of the firm, /urton 0ousing needs to compete with many firms.

Factors affecting individual account balances or transactions

6ntering amount of invoice in ledgers is a risk that /urton 0ousing needs to

determine since accounting system cannot check on its own whether the amount of

invoice in the ledgers entering is correct or not. As the result, the risk of /urton

0ousing making mistakes when entering the values is available and if there is no

control made in order to eliminate the fault then the financial statement will be

affected due to wrong financial information.

7ther risk can be thief or fraud. In the scenario' rents are received from residents by

reception staff that is independent of the housing manager and bookkeeper then the


3/18

rent will be given to the bookkeeper by the staff. The problems can arise with such

process since the amount rent paid can be cheated by the employees by increase the

expenditure and amount of rent needed to be paid by customers or stealing rent paid

as cash is easier to divert than checks or credit card payments.

Control risk

The risk that a misstatement that could occur in an assertion about a class of transaction,

account balance or disclosure and that could be material, either individually or when

aggregated with other misstatements, will not be prevented, or detected and corrected, on a

timely basis by the entity’s internal control 3azal, "#$$&

According to the scenario, with /urton 0ousing, the charity is controlled by a management

committee which comprises the voluntary chairman and treasurer and other voluntary

members elected annually. 0owever day+to+day management is by a chief executive whomanages the full+time staff who performs accounting, cleaning, maintenance, housing

management and other functions. It is a risk as the risk of controlling over the company

operating system since the top manager will be lack of acknowledgment of the company

operation' affect the financial matters of /urton 0ousing.

Another risk /urton 0ousing might have to face with over its human resource as according

to the scenario the restaurant comprises the manager and four staff, who prepare and sell food

to residents and other individuals. The number of staff is low as when there is problem occur

such as a staff need day off because of sickness, /urton 0ousing will have difficulty in

covering the absent staff workload as well as not having enough experience of the -ob.3urthermore, segregation of duties is also a risk to /urton 0ousing as with /urton 0ousing

systems for purchasing food, the restaurant manager orders the food by sending an order to

the supplier' the food received is checked by the restaurant manager and then authorizes

purchase invoice, confirming the food has been received. The risk of this system is that the

person who re5uests order of fittings for ships shouldn’t be the person who authorizes the

re5uest. 8oughran, n.d&. This could lead to the excess or unnecessary amount of order

re5uests. 7n the other hand, /urton 0ousing should also have different employee to keep

files of related purchase orders and paid invoices.

/urton 0ousing needs to determine with the matter of ade5uate documents and records also

since cash takings from the restaurant are recorded on a till and each day’s takings are given

to the bookkeepers who records and pays them into the bank. )etails of cash takings are

recorded on the till roll. /urton 0ousing needs to remain source documents like purchase


4/18

orders, paid invoices, and customer invoices in a proper filing system to be able to correct the

financial records as if there are problems occur like missing invoice number with no void

information.

etection risk

According to the International Auditing tandards IAs&, detection risk is the risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not

detect a misstatement that exists and that could be material, either individually or when

aggregated with other misstatements 3azal, "#$$&. As the matter of fact, detection risk is the

risk that material misstatements will escape auditor’s procedures which has been applied to

detect material misstatements. ince the risk of material misstatement has two components

including inherent risk and control risk and if inherent and control risk is high, it will be the

same to the risk of material misstatement while detection risk will increase if the risk of

material misstatement increases.

As the result the risk of detection risk will goes up according to the inherent and control risk

and in the case of /urton 0ousing, since the firm inherent risk and control risk is 5uite high,

the detection risk of /urton 0ousing is also at a disturbing amount. This could leads to the

increase of increased of business risk as it will affect the performance of /urton 0ousing

business. The firm auditor needs to take more responsibility to reduce the risk to an

acceptably low level by applying suitable audit procedures to be able to have exact and fair

financial information to the financial statement.c. Materiality

9ateriality is an expression of the relative significance or importance of a particular matter in

the context of financial statements as a whole, or of individual financial statements. A matter

is material if its omission or misstatement would reasonably influence the decisions of an

address of the auditors’ report /22, "##%&

/elow is the information on the company1s financial performance according to the scenario:

!"#!

Forecast

$"""

!"#1

%ctual

$"""

ervice !evenue %4,;"< %#,


5/18


6/18

+ I will ensure that cash from residents is correct by asking depositbill sent from

bookkeeperin the bank + I will ensure that cash from residents is correct by asking residentsabout receiptof

payment

+ I will ensure that number on sales ledger is correct by asking bookkeeper the numbers of received cash in all rooms for rent with numbers of void room

+ I will ensure that cash from residents is correct by looking at the instruction activity of

reception staff with residents

+ I will ensure that cash from residents is correct by asking bookkeeper about cash posted

to sales ledger for a residents+ I will ensure that the payables ledger is correct by asking bookkeeper number on

purchase invoice

+ I will ensure that the payables ledger is correct by asking the supplier ordersfrom

restaurant+ I will ensure that purchase invoices are authorized by checkingsamples of purchase

invoice and the signature of manager

+ I will ensure that payable invoices is correct by askingwaiters sold food and inventory

food

! (ubstantive procedure

Substantive procedures are intended to create evidence that an auditor

assembles to support the assertion that there are no material

misstatements in regard to the completeness, validity, and accuracy of

the nancial records of an entity. Thus, substantive procedures are

performed by an auditor to detect whether there are any material

misstatements in accounting transactions (Cardine, 2013).

1 Test of details of classes of transaction, account balances, and

disclosuresIn the case of /urton housing, by using substantive procedure, there are some activities:+ I will confirm cash from residents of cash book by depositbill of the bank + I will confirm receivable accounts of residents account by receivable bills from

reception staffs


7/18

+ I will confirm management regarding the collectability of customer accounts by

receivable bills from reception staffs+ I will confirm receivable accounts of residents account by customer orders to invoices

billed from reception staffs

+ I will confirm receivable accounts of cask book by invoices billed from receptionstaffs

+ I will confirm void rooms on of report to management committee by customer orders

from reception staffs

+ I will confirm inventory of food by customer orders from reception staffs and

purchase invoice+ I will confirm purchase invoice of food by inventory of food and sold food from

waiters

+ I will confirm purchase invoice of food by payable invoices from suppliers

+ I will confirm payable accounts of sales ledger by signed che5ues from the chief executive

2 Substantive analytical procedure

!"#!

Forecast

$"""

!"#1 %ctual

$"""

)ariances

!evenue %4,;"< %#,#

)istribution costs ",4##& ",4##& #

@et profit %> $,;> $,"4


8/18

Financial Statement extracts

=ash and bank 4## $,4;# $,#;#

Table: The variances in financial performance of Burton ousing

As we can see the table above:

The amount of revenue as well as gross profit forecasting and actual is 5uite different. The net

profit is four times larger than expected. This number was due to the decrease in the cost of sale

and administration costs of the actual amount.

3.3

1. Documentary of audit process:

Audit working paper:

De!nition: Audit working papers contain information from accounting and

statistica" records, persona" o#ser$ations, t%e resu"ts of inter$iews and

in&uiries, and ot%er a$ai"a#"e sources. Audit working papers may a"so

inc"ude contract #riefs, copies of correspondence, e'cerpts from corporate

minutes, organiation c%arts, copies of written po"icies and procedures,

and ot%er su#stantiating documentation (*+, 2013)

orma""y, audit working paper is di$ided into 2 main types:a. *ermanent !"e:

-%e permanent !"e on eac% contractor is a centra" repository ofinformation gat%ered during t%e course of an audit w%ic% %as continuing

$a"ue and use to su#se&uent audits e'pected to #e performed at t%e same

contractor. *ermanent !"es are usefu" in preparing t%e audit program and

in determining t%e appropriate scope of su#se&uent audits. -%ey a"so

pro$ide ready means for auditors to #ecome fami"iar wit% t%e contractors

operations and any e'isting audit pro#"ems or contractor system

weaknesses. /%i"e summary information on t%e contractors organiation,

!nancia" structure and po"icies may sometimes #e inc"uded in permanent

!"es for sma""er contractors, suc% information on "arge contractors wit%

continuing audit acti$ity is genera""y maintained in t%e !e"d audit oce att%e centra" reference "i#rary (*+, 2013)

-%ere are kinds of matters w%ic% are in$o"$ed in permanent !"e. t

com#ines: nformation of companys nature, %istory, p"ace of production 4emorandum of association Artic"e of association5s copies Content "ist of a"" important #ooks of company.


9/18

6ist of working c%arts *%oto copy of a"" directions of emp"oyers *re$ious years a7cs audit report 6ist of a"" reports re"ating inter$a" audit or inter$a" inspections

(*rof. 8inod 9umar, 200)#. Current !"e:

-%e current !"e usua""y consists of working papers w%ic% %a$e "imited useon future assignments. DCAA orms ; a, #, and c are t%e Agency

wide /orking *aper nde'es and pro$ide a concise summary of items

genera""y found in audit working papers (*+, 2013).orma""y, current !"e com#ines ; kinds of matters w%ic% are:

Audit and audit programs copies C"earance t%e pro#"ems and confusion during t%e time of audit work Copies of annua" records "ike trade a7cs and pro!t and "oss account

and #a"ance s%eet ?ank reconci"iation statement *aper of ca"cu"ation of ta' #onus.

6ist of "ost proofs *aper regarding stock e$a"uation

(*rof. 8inod 9umar, 200)c. App"ication:

C"ient: @estaurantu#Bect: Auditors

ear end: 201=*repared #y: -racy@e$iewed #y: 4r. un A"eBo ?at%an

+#Becti$es -o ensure t%e purc%ase "edger #a"ance fair"y/ork done • C%eck t%e information of restaurant and

its manager to get t%e sc%edu"es ofordering foods and time recei$ed

• C%eck t%e information as we"" as t%e

transactions of de"i$ering foods of

supp"ier.

• Compare t%e information and t%e data in

purc%ase "edger of #ot% restaurant and

supp"ier.@esu"t -%eres a kind of foods %a$ing some diEerent

#rands w%ic% were not ordered #y restaurant

manager #ut t%eir &ua"ity and con!rm are goodso it can #e accepted.Conc"usion /eig%ing up a"" to t%e conc"usion, t%e purc%ase

"edger are fair"y stated and some sma""

mistakes can easi"y #e impro$ed in t%e ne't

turn.

2. Accounting and contro" system


10/18

a. "owc%artA Fowc%art is a forma"ied grap%ic representation of a "ogic se&uence,

work or manufacturing process, organiation c%art, or simi"ar forma"ied

structure. -%e purpose of a Fow c%art is to pro$ide peop"e wit% a common

"anguage or reference point w%en dea"ing wit% a proBect or process

(@ouse, 200).According to t%e scenario, ?urton Gousing system for purc%asing food

comprises H steps:i. -%e restaurant manager orders t%e food #y sending an order to t%e

supp"ierii. -%e food recei$ed is c%ecked #y t%e restaurant manager.iii. -%e restaurant manager aut%ories purc%ase in$oice, con!rming

t%e food %as #een recei$ed.i$. -%e #ookkeeper posts t%e purc%ase in$oices to t%e paya#"es "edger.$. -%e #ookkeeper makes out t%e c%e&ues to pay t%e supp"iers, w%ic%

t%e c%ief e'ecuti$e signs. -%e c%e&ues are posted to t%e paya#"es

"edger and cas% #ook.A"" H steps a#o$e wi"" #e demonstrated #y Fowc%art to %e"p manager and

#ookkeeper easi"y fo""ow and keep pace wit% t%e system of t%e restaurant.

*urc%a

se

2

1

n$oic

Ca 1

C%e&ue"

*aya#"e

6edger


11/18

#. arrati$e notesarrati$e notes %a$e t%e ad$antages of #eing simp"e to record. -%e

purpose of narrati$e notes is to descri#e and e'p"ain t%e system (?**,

2010). arrati$e notes are usua""y used for supporting Fowc%art to c"arify

more t%e stages and systems of auditing.orma""y, to create a narrati$e notes, it must #e #ased on H &uestions:

/%at functions are performed and #y w%omI /%at documents are usedI /%ere do t%e documents originate and w%at is t%eir destinationI /%at se&uences are retained documented !"ed inI /%at #ooks are kept and w%ereI

(?**, 2010)

o. Acti$ities Done #y @eference1 -%e restaurant manager

orders t%e food #y sending

an order to t%e supp"ier

-%e manager /orking paper

2 -%e food recei$ed is

c%ecked #y t%e restaurant

manager.


3 -%e restaurant manager

aut%ories purc%ase

in$oice, con!rming t%e

food %as #een recei$ed.


= -%e #ookkeeper posts t%e -%e /orking paper


12/18

purc%ase in$oices to t%e

paya#"es "edger.

#ookkeeper

H -%e #ookkeeper makes out

t%e c%e&ues to pay t%e

supp"iers, w%ic% t%e c%ief

e'ecuti$e signs. -%ec%e&ues are posted to t%e

paya#"es "edger and cas%

#ook.

-%e

#ookkeeper

/orking paper

c. Juestionnaires nterna" Contro" Juestionnaires:

nterna" Contro" Juestionnaires (CJs) are used to c%eck w%et%er a

particu"ar contro" e'ists or not to detect or pre$ent and correcting a

materia" misstatement (or simp"y misstatement) at an assertion

"e$e". n simp"e words CJs are used to appraise t%e design of t%e

interna" contro" system. And if a certain contro" is not present,w%ic% in auditors opinion was necessary, it represents a de!ciency

in t%e interna" contro" system (aa", 2011). n CJs, peop"e must

answer t%e &uestion #ased on t%e form of es7o &uestion. f t%e

answer is o, t%ey must oEer t%e impro$ement or so"ution for t%at

matter in recommendation.?e"ow are some standard &uestions w%ic% wi"" #e designed in t%e

CJs

Juestion es o @ecommendationAre written departmenta"

accounting, po"icy, andprocedura" manua"s regu"ar"y

updated and distri#uted to

appropriate personne"I

Are "arge e'penditures for

purc%ases, tra$e", etc.,

o#"igated a%ead of time to

ensure #udgeted funds are

a$ai"a#"eI

s a system in p"ace to

pro$ide appropriate

management wit%

e'p"anations of signi!cant

$ariations #etween #udgeted

and actua" !nancia" statusI

+n a mont%"y #asis, are

ad$antage reports reconci"ed

to department copies of

-%ere are some

un!t data and

information


13/18

transaction documentsI #etween reports

and t%e copies of

transaction

documents. o

t%at, t%e

accountants andauditors need to

#a"ance and state

it fair"yf t%e Department maintains

a separate accounting

system, is it reconci"ed to

Ad$antage eac% mont%I

(CJs, n.d.) nterna" Contro" K$a"uation Juestionnaires (CKJ)

nterna" Contro" K$a"uation Juestionnaires (CKJs) are used to

c%eck w%et%er a certain e'isting contro" is operating eEecti$e"y ornot to detect or pre$ent and correct a materia" misstatement (or

simp"y misstatement) at an assertion "e$e". n simp"e words CKJs

are used to appraise t%e operating eEecti$eness of t%e interna"

contro" system. And if a certain contro" is operating eEecti$e"y up to

t%e standards, w%ic% in t%e opinion of auditor was necessary, t%en

it represents a de!ciency in t%e interna" contro" system (aa",

2011). Gowe$er, it is not designed in t%e form of es7o &uestion

#ut in narrati$e &uestion. -%at means, peop"e not on"y norma""y

answer "ike in CJs #ut a"so e'p"ain, descri#e t%e content of t%e

answer. f t%ere is a weakness detected, t%ey must put it inrecommendation?e"ow are some standard &uestions w%ic% wi"" #e designed in t%e

CKJs

Juestion Answer @ecommendationDoes your company

appoint an audit

committee t%at is

composed entire"y of

outside (nonemp"oyee)

directorsI

es. -%e

restaurant %as

#een appointing a

separate"y audit

committee

outside. t %irest%e auditing

company to

support it t%is !e"d

t is $ery

ad$antageous

#ecause t%e audit

committee outside

%a$e a

compre%ensi$eand genera" "ook

to a"" of system of

t%e restaurant.Does t%e audit

committee pro$ide an

independent re$iew of

t%e actions of corporate

o. -%e audit

committee Bust

gi$e a

compre%ensi$e

-%e restaurant Bust

%ires audit

committee for

supporting and


14/18

managers on #e%a"f of

t%e companys

s%are%o"dersI

re$iew of t%e

actions #ut not on

#e%a"f of

companys

s%are%o"ders

de$e"oping t%e

restaurant. t is not

considered as a

s%are%o"der.

Does t%e auditcommittee work c"ose"y

wit% t%e companys

#oard of directors,

e'terna" and interna"

auditorsI

A#so"ute"y yes.Auditing is $ery

important to #oard

of directors,

"eaders or CK+

#ecause t%roug%

it, t%ey can %a$e a

compre%ensi$e

and t%oroug%

a#out t%e !nancia"

or accounting

status of t%e

restaurant.

-%is wi"" make t%erestaurant more

de$e"oped in t%e

future #ecause t%e

re"ations%ip

#etween #oards of

directors, e'terna",

interna" auditors

and audit

committee is &uite

c"ose.

Does t%e management

proper action

recommended in t%e

audit reportI

o. -%e audit

report Bust focuses

on !nancia" and

accounting status

wit% t%e

information and

data of t%e

restaurant #ut not

in t%e propermanagement

action.

-%is is a"rig%t

#ecause t%e audit

report is p"aying

t%e rig%t t%e rig%t

ro"e for t%e

de$e"opment of

t%e restaurant.

(@ase", 2013)

=.1

1. De!nition and #ene!ts of audit report:

An audit report is an appraisa" of a sma"" #usinesss comp"ete !nancia" status.

Comp"eted #y an independent accounting professiona", t%is document co$ers a

companys assets and "ia#i"ities, and presents t%e auditors educated assessment of

t%e !rms !nancia" position and future. Audit reports are re&uired #y "aw if a

company is pu#"ic"y traded or in an industry regu"ated #y t%e ecurities and

K'c%ange Commission (KC). Companies seeking funding, as we"" as t%ose "ooking

to impro$e interna" contro"s, a"so !nd t%is information $a"ua#"e. (9 Genderson, n.d.)


15/18

t s%ows t%at t%e !nancia" transaction of t%e company is true and fair and comp"ies

wit% (AA*) it attracts in$estors.

2. -%e content of audit report

Auditor s%ou"d c%eck t%e #ooks of accounts and #a"ance s%eet and need to prepare

t%e audit report addressing to t%e s%are%o"ders and present it to t%e concerned

department and to t%e company. Copy of suc% report s%ou"d #e sent to a"" t%e

s%are%o"ders. Audit report s%ou"d contain t%e fo""owing t%ings.

• Answer, c"ari!cation and e'p"anation of furnis%ed &uestions are gi$en #y t%e

concerned aut%ority satisfactory or not.

• Ga$e an introduction to identify t%e !nancia" statements audited.

• Auditor s%ou"d pro$ide suggestion if necessary.

1 A draft audit report

Ln&ua"i!ed opinion: ?urton Gousing

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF BURTON

HOUSING

/e %a$e audited t%e !nancia" statements of ?urton Gousing t%e year ended 31

Decem#er 20M1 w%ic% comprise pro!t and "oss account, rents and t%e income and

e'penditure account of t%e restaurant, t%e #a"ance s%eet, t%e cas% Fow.

irst"y, the responsibilities of directors and auditors wi"" #e mentioned

-%e director must prepare t%e !nancia" and annua" report, t%e !nancia" statements

fo""owing t%e ru"es and "aw of L9 Accounting standards.

/e #ased on t%e audit resu"ts and reports t%ose w%o use t%e audit resu"ts as

re&uested, t%e purpose of t%e audit and t%e aut%orities if t%ere are $io"ations of t%e

"aw at certain "e$e"s re&uired #y "aw to report. /e report to you w%et%er in our

opinion t%e information gi$en in t%e directors report is consistent wit% t%e !nancia"

statements. According to Company Act 200


16/18

/e report independent"y t%eir opinion #ased on t%e audit resu"ts on t%e "e$e" of

%onesty and reasona#"eness of !nancia" information, %a$e p"ans for co""ecting t%e

information, ensure t%e safety and amount of t%em, a$oid t%e mistake and fraud.

ina""y, in our opinion t%e !nancia" statements:

• *reparing accounts t%at are intended to pro$ide a true and fair $iew fo""ow

t%e @C (inancia" @eporting Counci") are e'p"ained t%e aut%ority, scope and

app"ication of accounting standards.

• *reparing fo""ows t%e Companies Act 200< and t%e information gi$en in t%e

directors report is suita#"e wit% t%e !nancia" statements.

• -%e !nancia" statements %a$e enoug% information to ensure t%e safety and

amount of t%em, a$oid t%e mistake and fraud.

Registered auditors Address

Date

Maa!e"et Letter

-%e ?oard of Director

?urton Gousing

o.H C%ua ?oc treet

Dong Da District, Ganoi 30t% 4ay,

201=

=.2

Dear mem#ers of t%e ?oard,

Management report- Financial Statements for the year ended 31

December 2011

/e %a$e audited t%e !nancia" statements of t%e company, as of and for t%e !sca"

year ended 31 Dec 2011. ?ased on our norma" practice we set out in t%is "etter

certain matters consider t%e audit work you wou"d perform on income from rents

and t%e income and e'penditure account of t%e restaurant.


17/18

/e are re&uired to address t%e fo""owing issues and point out t%at t%e matters dea"t

wit% in t%is "etter came to our notice during t%e conduct of our norma" audit

procedures.

1 Dispatch note

• *resent system

-%e a#sence of dispatc% note in e'penditure account and t%ere is no seria"

name and num#er of materia" used

• mp"ication

-%e restaurant must face to pro#"ems to c%eck sa"es, e'penditure account. n

addition, t%e storekeeper can make t%e fraudN t%ey wi"" %a$e wrong

information and use t%e price of materia" for t%em.?esides, t%ere is no seria" name and num#er of materia" used, t%e

management cannot contro" t%e raw materia" w%ic% are pro$ide for

restaurant, t%e price of product can #e c%anged.

• @ecommendation

/e suggest t%at t%e company s%ou"d create dispatc% note for e'penditureaccount so t%e restaurant can ca"cu"ate t%e sa"es and contro" t%e goods w%ic%

are used from customer wit% rig%t &uantity.2 Wages of sta

*resent system

-imes%eets comp"eted #y production department workers are su#mitted

to t%e payro"" department wit%out #eing c%ecked.

• mp"ication

taE cou"d comp"ete t%eir times%eets incorrect"y and %ence #e paid t%e

wrong amounts.

• @ecommendation

-%e production department super$isor s%ou"d c%eck a"" times%eets #eforet%ey are su#mitted to t%e payro"" department. -%e company s%ou"d a"so

consider introducing a computeried c"ock in system.+ur comments %a$e #een discussed wit% your !nance director and t%e

C%ief Accountant and t%ese matters wi"" #e considered #y us again during

future audits. /e "ook forward to recei$ing your comments on t%e points

made. Do not %esitate to contact us s%ou"d you re&uire any furt%er

information or e'p"anations./e s%ou"d "ike to take t%is opportunity of t%anking your staE for t%eir co

operation and assistance during t%e course of our audit.

Yours faithfully,

Smiley roup


18/18

fsa full.docx

Documents