Question

-Separation of duties for employees maintaining A/R.

-How do results of control tests from prior years affect decision this year about balance of control vs. substantive testing

-What are the factors that most and least affect sample size?

please answer all three.

Answer 1

Segregation of duties, sometimes referred to as separation of duties, is an accounting internal control which means that a financial process is dealt with by at least two individuals in order to prevent error, misappropriation or fraud.

• Separate the accounts receivable function and cash collection function.
• Separate Individuals needs to review credit balances on accounts receivable accounts
• Separate Individuals shall review all journal entries made to the accounts receivable ledger accounts.
• Separate Individuals shall check cash settlements discounts given to customers.

Tests of control	Substantive tests
Tests of control involve the auditor testing processes or procedures carried out by staff at the client.	Substantive tests are the procedures that the auditor undertakes to detect possible misstatementsthat may exist in the financial statements - that is, testing the numbers at the year end.
Testing controls involve the auditor selecting some of these controls that the client carried out during the year, and checking to make sure they operated effectively	When carrying out a substantive test, the auditor is testing to ensure that the figures included in the financial statements can be traced back to source documents and meet one or more of the audit assertions
An example of a control could be where the client had a control whereby the monthly payroll summary had to be approved by the finance director before payment was made.	An example of a substantive test would be the auditor selecting a sample of employees paid in the year, and agreeing amounts paid to the payslips and bank statements.

Most effect Sample Size	Least effect Sample Size
Margin of error	Research Methodology
Confidence level	Motivation, Interest
The proportion	Skills & Experience