Assessment - Financial Systems and Auditing

Learning Outcomes

LO1 - Evaluate the effectiveness of accounting systems within a business (Q1)

LO2 - Analyse the management control systems of a business (Q2)

LO3 - Contribute to the planning and conduct of an audit assignment (Q3)

LO4 - Prepare audit reports. (Q4)

Question One

Learning Outcome One

a) Explain the key purposes of the financial statements contained within an Annual Report.

b) When compiling financial statements, certain core accounting concepts must be adhered to; give a definition and an example of each of the following :

a. Matching

b. Going concern

c. Business entity

c) Using a table format, show the key differences and advantages and disadvantages of using either a manual accounting system or a computerised accounting system.

Question Two

Learning Outcome Two

“Management control is a critical function in organisations. Management control failures can lead to large financial losses, reputation damage, and possibly even to organisational failure.” (Merchant and Van der Stede, 2007:3)

a) Explain, the following, give real life examples where appropriate and possible :

a. Business risk

b. How risk should be identified

c. Who is responsible for identifying risk

d. Controllable and uncontrollable risk

b) Explain, with supporting examples, what is meant by the terms „compliance risk?, „financial risk? and „operational risk?.

c) Explain, with academic support, what is meant „corporate governance?.

d) Discuss the factors that led to the formation of the Cadbury Committee – provide supporting materials for your discussions.

Question Three

Learning Outcome Three

a) Explain the differences between an internal and an external audit.

b) Identify ten operational areas that should be considered for practical application of internal control, give examples to support answer.

c) Identify what you consider to be the key procedures required in planning an audit.

d) What is meant by „audit risk? and „audit testing? – give examples to support your answer.

Question Four

Learning Outcome Four

a) Explain the key contents? of a company?s statutory audit report and identify the legal requirements of this report and the dates to be included.

b) An audit report may be qualified or unqualified, explain the difference between these two terms and give examples, where appropriate, to support your explanations.

c) Explain the key points of SAS610 „Reports to Directors? & Management? – give examples within your discussions to support your answer.