The auditors of Pink Ltd have performed analytical procedures on the salaries figures in the financial statements and the salary per head appears to have increased by 10% from the previous year.

Assuming there are no errors in the salaries figure, which one of the following explains this movement?

At Blue Ltd, the payroll department is responsible for both processing salaries and for maintaining all staff records and contracts.

Which two of the following represent risks in this system arising from the above responsibilities?

In a system where wages are paid in cash, which three of the following duties should be segregated?

The following describes certain processes of the payroll system in operation at Orange Ltd. For each process select whether it represents a strength or a deficiency of the system.

There is no separate personnel department.

The following describes certain processes of the payroll system in operation at Orange Ltd. For each process select whether it represents a strength or a deficiency of the system.

Only selected payroll staff have access to standing information on staff

The following describes certain processes of the payroll system in operation at Orange Ltd. For each process select whether it represents a strength or a deficiency of the system.

All changes in salary rates are approved by the head of human resources.

The following are descriptions of internal controls in operation at Josh Ltd. For each description select the type of control activity which it illustrates.

Payroll information is agreed to personnel files prior to processing.

The following are descriptions of internal controls in operation at Josh Ltd. For each description select the type of control activity which it illustrates.

Budgeted salaries are compared to actual salaries on a monthly basis.

Maryland Ltd employs 150 employees and has very high annual staff turnover. Which one of the following controls would best ensure that only existing employees are paid and that leavers do not continue to be paid?

Picture Ltd maintains a computerised payroll system. All employees are paid by BACS directly into their bank account.

Which two of the following controls will be most effective in ensuring that accurate payments are made to employees?

Hill Ltd operates a number of controls over its payroll. For the following three controls, select whether they are preventative or detective controls.

All staff records are maintained by the human resources manager. Any changes in these records are promptly communicated to the payroll department.

Hill Ltd operates a number of controls over its payroll. For the following three controls, select whether they are preventative or detective controls.

Payroll costs are compared to budget on a monthly basis

Hill Ltd operates a number of controls over its payroll. For the following three controls, select whether they are preventative or detective controls.

All employees who are paid weekly by cash must show evidence of their identification prior to receiving their wages.

The following describes certain processes of the payroll system in operation at Ukulele Ltd.

For each process select whether it represents a strength or a deficiency of the system.

Payroll services are provided by a specialist outsourcing firm. However the payroll is not routinely checked in-house.

The following describes certain processes of the payroll system in operation at Ukulele Ltd. For each process select whether it represents a strength or a deficiency of the system.

The remuneration of company employees is set by directors.

The following describes certain processes of the payroll system in operation at Ukulele Ltd.

For each process select whether it represents a strength or a deficiency of the system.

The remuneration of executive company directors is set by a committee composed solely of nonexecutive company directors.

The following deficiencies have been identified at Ring Ltd. For each deficiency select the most likely consequence.

Suppliers are not approved prior to being added to the official suppliers listing

The following deficiencies have been identified at Ring Ltd. For each deficiency select the most likely consequence.

Goods received are not checked against the order made.

The organisational structure at Washy Ltd (a manufacturer and retailer of electrical goods) is as follows. The sales department is headed by Olivia Jones and her assistant is Mary Smith. Olivia Jones reports to the managing director, John Waters. There are several other departments (production, accounting, purchasing, HR and internal audit).

Which one of the following statements reflects the most effective segregation/allocation of duties with regards to sales ordering?

Twist Ltd is a large IT company that sells computer hardware and provides consultancy services. Which one of the following internal controls is most likely to prevent the theft of computers held for resale?

Staple Ltd, which makes all of its purchases on credit, has seen a fall in trade payables days from 45 on 31 December 20X5 to 30 days on 31 December 20X6.

Which two of the following are plausible reasons for this fall?

Which two of the following documents assist in testing cut-off for purchases?

Numerical sequence should not necessarily be applied to which one of the following types of documentation?

Mary prepares the reconciliation between supplier statements and the payables in the nominal ledger.

Which two of the following functions should Mary not be involved with?

The following describes processes which form part of the purchases system in operation at Green Ltd.

For each process select whether it represents a strength or a deficiency of the system.

All orders are placed directly with suppliers by the production department.

The following describes processes which form part of the purchases system in operation at Green Ltd.

For each process select whether it represents a strength or a deficiency of the system.

All supplier invoices are matched against purchase orders and goods received records prior to being entered into the accounting system.

The following are descriptions of internal controls in operation at Flash Ltd.

For each description select the type of control activity which it illustrates.

All goods received are stored in a secure storeroom with limited access.

The following are descriptions of internal controls in operation at Flash Ltd.

For each description select the type of control activity which it illustrates.

The payables account is reconciled with suppliers' statements on a monthly basis.

The directors of Park Ltd have just discovered an irregularity perpetrated by one of their suppliers. The supplier would deliver products that were not ordered to Park Ltd and then subsequently invoice Park Ltd for these goods.

Which one of the following controls would have prevented this fraud?

The following describes processes which form part of the purchases system in operation at Ochre Ltd.

For each process select whether it represents a strength or a deficiency of the system.

Orders may only be placed with suppliers included on an approved list.

The following describes processes which form part of the purchases system in operation at Ochre Ltd.

For each process select whether it represents a strength or a deficiency of the system.

Purchase order forms are kept in the stationery cupboard.

The following deficiencies have been identified in the purchases system at Till Ltd.

For each deficiency select the most likely consequence which might arise as a result of that deficiency.

Purchase orders are not authorised prior to being placed.

The following deficiencies have been identified in the purchases system at Till Ltd. For each deficiency select the most likely consequence which might arise as a result of that deficiency.

Invoices are not always recorded

Which one of the following is a reason for pre-numbering purchase order forms?

Which two of the following would assist in testing for the overstatement of revenue?

Which two of the following documents assist in testing sales cut-off?

Which two of the following deficiencies could result in the misstatement of trade receivables?

Hammers Ltd operates a number of control procedures in its revenue system. Assuming all controls operate effectively, which one of the following procedures will help to ensure that invoices are correctly and accurately prepared?

Claret Ltd operates a number of control procedures in its revenue system. Assuming all controls operate effectively, which one of the following procedures is most likely to ensure that only goods ordered are delivered?

The following describes processes which form part of the revenue system at Blue Ltd, where all sales are made on credit.

For each process, select whether it represents a strength or a deficiency of the system.

Customers are not requested to sign as evidence of receipt of goods

The following describes processes which form part of the revenue system at Blue Ltd, where all sales are made on credit. For each process, select whether it represents a strength or a deficiency of the system.

Sales orders are accepted by fax and are processed directly into the system without further action.

The following describes processes which form part of the revenue system at Blue Ltd, where all sales are made on credit.

For each process, select whether it represents a strength or a deficiency of the system.

All sales orders are sequentially numbered within the computer system.

Which two of the following controls would help to ensure that money received is banked?

The following describes processes which form part of the purchases system at Red Ltd, where all sales are made on credit.

For each process, select whether it represents a strength or a deficiency of the system.

The quality of goods returned is checked by the warehouse manager.

The following describes processes which form part of the purchases system at Red Ltd, where all sales are made on credit.

For each process, select whether it represents a strength or a deficiency of the system.

Deficiency Delivery drivers must sign a copy of the delivery record on delivery of the goods.

The following describes processes which form part of the purchases system at Red Ltd, where all sales are made on credit.

For each process, select whether it represents a strength or a deficiency of the system.

Sales invoices are matched with despatch records.

The following deficiencies have been identified in Smart Ltd's revenue system. For each deficiency select the most likely consequence.

Sales discounts are not authorised prior to being given.

The following deficiencies have been identified in Smart Ltd's revenue system. For each deficiency select the most likely consequence.

Invoices are not checked for arithmetic accuracy prior to being issued to customers.

The following deficiencies have been identified in the revenue system at Cog Ltd. For each deficiency select the most likely consequence.

Credit checks are not made for new customers.

The following deficiencies have been identified in the revenue system at Cog Ltd. For each deficiency select the most likely consequence.

Invoices are not matched to sales order and despatch record prior to being raised.

Shown below (1 through 5) are the five types of tests which auditors use to determine whether financial statements are fairly stated. Which three are substantive tests?

1.       risk assessment procedures

2.       tests of controls

3.       substantive tests of transactions

4.       substantive analytical procedures

5.       tests of details of balances

The purpose of tests of controls is to provide reasonable assurance that the

In the context of an audit of financial statements, substantive tests are audit procedures that

Risk assessment procedures are performed by auditors during an audit in order to

Which of the following is an account that is not affected by the sales and collection cycle?

The auditor's objectives for the sales and cash collections activities when the client is primarily an e-commerce business as compared to a "brick and mortar" business are

What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?

Before goods are shipped on account, a properly authorized person must

Which accounts are involved in the sales class of transactions?

As a test of control, the auditor examines sales invoices for supporting documents. The relevant transaction-related audit objective is

The accurate recording of sales transactions concerns all of the following except for

Which of the following is a correct statement regarding analytical procedures?

The understatement of sales and accounts receivable is best uncovered by

Which of the following audit procedures would not likely detect a client's decision to pledge or factor accounts receivable?

When do most companies record sales returns and allowances?

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is to satisfy the audit objective of

Which of the following accounts is not part of the acquisition and payment cycle?

Which of the following is not one of the classes of transactions in the acquisition and payment cycle?

Which of the following accounts is not included in the acquisitions class of transactions?

An auditor is gathering evidence on the completeness assertion. To do so, she performs a test to verify that all goods received by the company have been recorded properly. The document population for this test would consist of all

Which of the following is not an accurate statement regarding the acquisition and payment cycle?

The auditor's internal control objective to determine that "recorded acquisitions are for goods and services received" satisfies the audit objective of

Failure to record the acquisition of goods is a violation of which audit objective?

The internal control that requires that "checks are prenumbered and accounted for" satisfies the objective of