Audit & Assurance 5

The following are examples of computer controls which operate in the payroll system at ABC Ltd. For example, select the type of computer control which it illustrates: Manual checks to ensure that timesheets are authorised before details are processed

• General
• Application

For each of the following statements, select whether they are true or false in respect of the information system in a company. The information system includes the process of preparing the financial statements, such as the production of journals

• True
• False

The following are examples of internal controls which operate at ABC plc. For example, select the type of control activity which it illustrates: The payables ledger clerk posts invoices to the payables ledger. The cash book clerk posts cash receipts to the payables ledger

• Segregation of duties
• Performance review.

One of the five elements of internal controls is monitoring of controls. Which TWO of the following are activities which would be used to monitor controls

• Management's review of whether bank reconciliations are being prepared on a timely basis
• Internal auditor's evaluation of whether the sales team are following company policy regarding customer discounts
• Authorisation of purchase invoices before they are paid
• Authorisation of purchase orders by the department manager

Which TWO of the following are reasons why organisations need to have effective systems of control? To assist the organisation in

• Minimising business risks
• Maximising its profitability
• Managing its assets and liabilities
• Cutting down the time needed for the audit
• Complying with laws and regulations

Which TWO of the following are authorisation control activities

• A bank reconciliation signed by the finance director
• A cheque payment run approved by the finance director
• An appraisal of the sales ledger clerk by the finance director
• A trial balance complied by the finance director

For each  of the following statements select whether they are true or false in respect of business risk: Business risk is the risk inherent to the company in its operations.

• True
• False

The following are examples of internal controls which operate at ABC plc. For each example, select the type of control activity which it illustrates: The financial controller counts petty cash on a monthly basis

• Authorisation
• Information processing
• Physical control

The following are examples of internal controls which operate at XYZ plc. For each example, select the type of control activity which it illustrates: The receivables ledger clerk posts invoices to the receivables ledger. The cash book clerk posts cash receipts to the receivables ledger

• Performance review
• Information processing
• Segregation of duties

For each  of the following statements select whether they are true or false in respect of the limitations of a system of internal control. Standard controls may not be designed to deal with unusual transactions

• True
• False