Section 567 F8

Which of the following is NOT an inherent limitation of internal control systems?

• A Insufficient segregation of duties
• B Possibility that employees may collude together fraudulently
• C Possibility of human error in undertaking tasks

Which of the following controls of a sales system ensure that all goods despatched are completely and accurately invoiced?

• a) Good despatched notes are matched to sales invoices
• b) Sales invoices are sequentially numbered
• c) Sales invoices are matched to customer orders

ISA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment sets out the five components of internal control. Which of the following is NOT set out as a component of internal control within ISA 315?

• A Control environment
• B The information system relevant to financial reporting
• C Human resource policies and practices

Which of the following procedures are TESTS OF CONTROL an auditor should perform in testing the inventory cycle of their client whilst attending the inventory count? (1) Observe whether the client’s staff are following the inventory count instructions (2) Review inventory present in the warehouse for evidence of damage or obsolescence (3) Obtain a sample of the last goods received notes and goods despatched notes and follow through to ensure inclusion in the correct accounting period (4) Inspect and review management’s inventory count instructions

• A 2 and 3
• B 1 and 4
• C 1 and 2
• D 3 and 4

Is the following statement regarding the assurance provided by an internal control system true or false? An effective internal control system provides the auditor with absolute assurance that control objectives have been achieved.

• true
• false

Which of the following methods of recording an accounting and controls system is a series of questions used to determine whether controls exist which meet specific control objectives?

• A Internal control questionnaire
• B Internal control evaluation questionnaire
• C Flowchart

One of the control objectives of the sales system of B Co is to ensure that goods and services are sold to credit-worthy customers. Which of the following control activities would assist B Co in achieving this objective?

• A All sales orders are based on authorised price lists.
• B Credit limits are checked before sales orders are accepted.
• C Overdue debts are chased each month by the credit controller.
• D The aged-debt listing is reviewed by the finance director on a monthly basis

The draft financial statements of T Co show the following information: $'000 Revenue 420 Cost of sales 270 Gross profit 150 Trade receivables 160 Trade payables 130 What is the receivables collection period?

• A 139 days
• B 175 days
• C 758 days
• D 958 days

Which of the following controls helps to ensure that payroll payments are only made to bona fide employees? (1) Personnel records maintained for all employees (2) Comparison of bank transfer listing with payroll (3) Segregation of duties between staff involved in human resources and payroll functions (4) Reperformance of the calculation of a sample of payroll deductions

• A (1) and (2)
• B (1) and (3)
• C (2) and (4)
• D (3) and (4)

B Co maintains perpetual inventory records. Which of the following control activities would contribute to the auditor's confidence that inventory recorded in the financial statements exists? (1) Procedures to identify obsolete and damaged inventory (2) Physical safeguards to protect inventory from theft (3) Sequential numbering of goods dispatched notes (4) Reconciliation of inventory records to results of inventory counts

• A (1) and (2)
• B (1) and (3)
• C (2) and (3)
• D (2) and (4)