Question

auditing

The Green N Clean Recycling Services (GCRS) receives cash payment for services, fees and recycled products. Cash is defined as payments made in liquid cash by debit or credit cards, and by cheques. Five GCRS are located within the state which covers many hundreds of kilometers, the largest of which also acts as the headquarters. The sites have the following controls in place to assure proper cash receipt, handling, depositing and recording.

i.                    Payments are deposited within 24 hours

ii.                  Payments are recorded within five working days

iii.                Revenue reports are prepared for all bank deposits

iv.                Financial institutions are chosen based on their proximity to the Station

 

Wolf & Grang Public Accountants is the new auditor for GCRS. Two months before the financial year end, Wolf & Grang performed an interim audit to evaluate the operational effectiveness of the internal controls at the GCRS. The audit consisted of the following steps:

i.                    Interviews with management and staff, at headquarters and in the other locations; and an examination and analysis of site statistics

ii.                  The selection of three sites that each had different operating environments: Tankaloo, Triple Bend and Riverdale

iii.                Observation of physical controls and processes by conducting a walk-through of the facilities, reviewing manual and automated records of cash collected, reviewing monitoring controls and by talking to site staff.

 

Results of the audit revealed the following deviations:

i.                    Weaknesses regarding supervision of employees

ii.                  Lack of segregation of duties and safeguarding of monetary assets

iii.                Outdated policies and procedures at operational units

iv.                Lack of management review of operations to detect and correct control deficiencies

v.                  Lack of communication by management of their monitoring expectations, such that some offices did not know where to send their quarterly review reports

 

REQUIRED:

a.       With reference to the deviations identified by the auditor, discuss in detail two potential risks that are inherent in GCRS.                                                                                                            (6 marks)

b.      Outline and explain two other control measures (in addition to the five listed) that should be in place to ensure that cash is not mishandled.                                                                   (4 marks)

c.       The deviations identified reveal that there is likely to be high control risks. In addition to the four audit procedures listed, explain in detail four other substantive audit procedures the auditor might employ in auditing the financial statements of GCRS.                                                         (10 marks)


0 0
Add a comment Improve this question Transcribed image text
Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
auditing
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Similar Homework Help Questions
  • Question 1 (12 marks) Public accounting firms perform audits of financial statements. CAS 220, Quality Control...

    Question 1 (12 marks) Public accounting firms perform audits of financial statements. CAS 220, Quality Control for an Audit of Financial Statements addresses the specific responsibilities of the auditor regarding quality control procedures for an audit of financial statements. All firms that perform audits must have standards for audit fieldwork and quality control procedures that must be followed by all staff performing an audit of financial statements. Required: i. Briefly outline the requirements for Quality Control for an Audit of...

  • 1. Auditing includes the concept of materiality. Which of the following would be considered material? a)The...

    1. Auditing includes the concept of materiality. Which of the following would be considered material? a)The auditor confirms accounts receivable and notices one company has not sent in the confirmation form b)The auditor discovers a $200 error in the inventory account balance of $500,000 c)The auditor discovers related-party transactions are not recorded d)The auditor notices the name of the new CEO, hired in January 20x2 is not included in the annual report for 20x1 2. Substantive procedures would include: a)Gathering...

  • executed 6) An contingiation established The primary purpose for establishing the code of A) Outline criteria...

    executed 6) An contingiation established The primary purpose for establishing the code of A) Outline criteria for professional behavi o . honesty, dignity within the association B) Establish standards to follow for effective C) Provide a framework within which accounting polic e offeydded D) Outline criteria that can be utilized in conducting o n www 7) While assessing the risks of material misstatement is Wentify w i th could go wrong, consider the magnitude of risks, and A) Assess the...

  • 6) In the Three Lines of Defense Model, the primary responsibility for managing risks belongs to...

    6) In the Three Lines of Defense Model, the primary responsibility for managing risks belongs to A)   The CEO B)   Internal auditing C)   The risk management function D)   Operational management E)   The board of directors 7) Which of the following components of the IPPF is not considered to be mandatory? A) The Code of Ethics B) Definition of Internal Auditing C) Implementation Guidance D) Mission of Internal Auditing E)  Standards 8) Which of the following best describes internal auditing’s primary purpose in reviewing the organization’s existing...

  • 6. Which of the following statements is not correct? If (a) (b) (c) individual audit risk...

    6. Which of the following statements is not correct? If (a) (b) (c) individual audit risk remains the same, detection risk has an inverse relationship to inherent risk and control risk. The auditor may make separate or combined assessments of inherent risk and control risk. Detection risk cannot be changed at the auditor's discretion The greater the inherent and control risks the auditor believes exist, the less detection risk that can be accepted. (d) 7. Inherent risk and control risk...

  • Consider AICPA guidance. Why should an auditor perform risk assessment procedures? Also, what are three risk assessment...

    Consider AICPA guidance. Why should an auditor perform risk assessment procedures? Also, what are three risk assessment procedures an auditor should undertake in order to assess an entity's risks of material misstatement in an audit? Consider AICPA guidance. Can analytical procedures be used as a form of substantive testing? Citing from the applicable AU-C, justify your response. Locate the PCAOB's audit standard on performing integrated audits. When an auditor is reporting on the results of an audit, must the auditor...

  • Aman & Afdal is the auditor of Warisan Sdn Bhd. He is in charge of auditing...

    Aman & Afdal is the auditor of Warisan Sdn Bhd. He is in charge of auditing the sales and collection cycle for the company which is a small fish distributor in East Malaysia. The company is respected for its high quality fish products, but their accounting office is perpetually neglected, and the sales department frequently makes errors in billing clients. In previous years, Aman & Afdal has found quite a few misstatements in billings, cash receipts, and accounts receivable. Like...

  • 3) Role of internal audit function 30 Chapter 1: Auditing and Internal Contrel Management ii External...

    3) Role of internal audit function 30 Chapter 1: Auditing and Internal Contrel Management ii External auditor i Internal audit To whom should the Director of Internal Audits report. Explain your answer. Comment on the audit committee member's per- spective as to the committee's current composition. 3. Role of Internal Audit Function Nano Circuits Inc. is a publicly traded company that pro- duces electronic control circuits, which are used in many products. In an effort to comply with SOx, Nano...

  • 1. Consider the following statements:        I. Per COSO, Control Activities are the policies and procedures...

    1. Consider the following statements:        I. Per COSO, Control Activities are the policies and procedures that help insure that management’s          directives are carried out.       II. A Reliance Strategy is used when control risk is considered High.       a. I is true; II is true       b. I is true;   II is false       c. I is false; II is true       d. I is false; II is false 2. Management's attitude toward aggressive financial reporting and its...

  • Can you answer these questions? Thank you 13. cd so Generally Accepted Auditing Standards (GAAS) and...

    Can you answer these questions? Thank you 13. cd so Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as: a. ideals to work towards, but which are not achievable. maximum standards that denote excellent work. c. minimum standards of performance that must be achieved on each audit engagement. benchmarks to be used on all audits, reviews, and compilations. 14. The auditor's judgment concerning the overall fairness of presentation of financial position,...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT