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CHAPTER 10 - Coggle Diagram

- - - - Despatch of goods
        
        Goods invoiced & recorded
        
        Payment received
  - - - Goods received
        
        Goods invoiced & recorded
        
        Payment made
  - - - Fraud
        
        Establish fake payroll records
        
        Change pay rates without authorisation
        
        Claim payment for more hours
        
        Theft (if paid in cash)
      - Errors
        
        Complexities relating to tax
        
        Other deductions
    - - Recognition of payroll liability
        
        Payment made
  - - - Only goods required by entity is accepted & recorded
      - Damaged goods are not accepted
      - Inventory appropriately recorded
      - Avoid stock outs
      - Inventory is kept securely
  - - - Monies received are recorded
      - Money received are banked
      - Cash & cheques are safeguarded against loss or theft
      - Payments are authorised, made to correct payee and recorded
      - Payment are not made twice
  - - - Many are overlap with purchase system
      - Capital expenditure is appropriately classified in acc. records
      - Capital items are recorded in NCA register
      - There is safe custody of assets
- - - - Volume
      - Importance to FR process
      - Amounts exposed to deficiencies
      - Subjectivity & complexity of determining estimated amounts
      - Interaction of def. with other def.
      - Susceptibility to loss or fraud of related asset/liability
      - Likelihood of deficiencies causing material misstatement in FS
      - Cause & frequency of exceptions identified as a results of def.
- - - - Statement confirming their independence
      - Any relationship that may affect their independence
      - Safeguards that have been implemented to reduce threats to independence
    - - Views on acc. policies, estimates & disclosures
      - Significant difficulties encountered
      - Significant def. in IC
      - Written rep. requested by auditor
  - - - The report has been prepared for the sole use of the entity
      - It must not be disclosed to 3rd party, quoted or referred to, without consent of auditors
      - No responsibility is assumed by the auditors to any other person
- - - - Deviations
        
        Assess whether deviations
        
        Indicate existence of errors in acc. records
        
        Isolated departures
        
        Regardless of monetary amount involved
        
        Should be recorded & investigated
      - Internal control effective
        
        Carry out TOC
        
        If results of TOC are unsatisfactory
        
        Preliminary assessment of control risk is not supported
        
        Perform extensive substantive procedures
        
        Auditor must test that control
        
        Has operated throughout the period
        
        Exist
        
        Is properly designed
        
        Gather audit evidence
        
        Enquiry plus
        
        Inspection
        
        Observation
        
        Re-performance
        
        Examination
        
        TOC activities performed by computer (CAATs)