Auditing
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Indiassignment3FINAL.docx
Clint Name: Kathmandu
Detective controls detect errors that may have occurred during company processes. In my client's case Kathmandu, who is listed in the Australian stock exchange, these controls are necessary because of the numerous exchanges and transactions that take place and the likelihood of errors being high.
For the financial report audit for the year ended 31 December 2020, the detective controls to be applied are reviews of account reports and reconciliation. Consequently, control tests will be applied to test the accuracy of controls used and the report's reliability. This will make sure that investors get true picture of the financial position on the company. The processes examined are purchase and account payables and payrolls.
AIM
To test the payroll payable and the payroll paid to the employees to make sure everyone is being paid fairly and there are no double payments going through. It will also help us catch any ghost employees.
SAMPLE
A sample of employees listed on the payroll and employees available at work.
A sample of paid payroll transactions and record of hours worked in a time frame.
CONTROL TESTS APPLIED
A list of employees signing in and signing out will be crosschecked against hours employees have been paid for and check on its accuracy. The payroll records are reconciled with business ledgers to ensure that the expenses recorded in both are accurate and detect errors, if any. Most importantly, payroll records are reconciled with my client's company bank statements. This will bring out any differences in the amounts listed in the payroll records and the amount withdrawn from the bank.
It will also help detect the amount of taxes withheld and that is due to employees and to ensure that they match those recorded in the payroll records to avoid any potential issurs from the ATO.
AIM
The aim is to eliminate any errors associated are unrecorded liabilities, omitted purchase and credit information, duplicate payments, and manipulated figures.
SAMPLE
(Considering that my clint is a big company. It is better to have bigger sample sizes to bring down DCR)
A Sample of 50 invoices from each month, a sample from Accounts payable to check against.
A sample of list on Inventory to check against inventory in hand.
CONTROL TESTS APPLIED
Credits provided will be checked with the company policy to determine if it matched the company policy.
Payments made will be tested against the records of Accounts payable. This will help us catch any duplicate payments being made or any frauds being committed.
Check the inventory in the warehouse against the invoices paid by the invoicing department. This will catch any lost inventory or misstatement on papers.
Reviewing helps in identifying the mistakes and areas that need improvement Records provided are thoroughly analyzed and critiqued for any errors. If any is discovered, the report is submitted to my client’s risk management team, and a possible solution is pursued.
