KayPee
16-04-09, 08:32 PM
Hi guys I got this from my F8 tutor last night he says he culled this from some popular site.Let's try our hands on this
You are an Audit Senior with PKF and you are undertaking the audit of KAMA Limited for the year ended 29 October 2008. KAMA Limited operates a highly successful retail pharmacy business in the central business district of a very busy town is largely cash-based. The audit firm has audited the client for the last seven years and the client has relatively simple internal controls which have always operated effectively. The integrity of the management has never been brought into question. Cash is reconciled on a daily basis and passed to the accounts office cashier for subsequent recording in the bookkeeping system and banking. One person is employed in the accounts department whereas in previous years three have always been employed.
You are undertaking the audit of the cash takings for the year which contribute significantly to the company’s turnover for the year. During the course of re performing the cash reconciliation in the sample, it transpired that there was a significant difference between the cash that has been taken from till sales against the cash that has been banked in the same sample. You therefore increased the sample accordingly and that was confirmed in the increased sample, discrepancies in the region of £19,000 have been discovered. The senior has also discovered that the cash sheets have been amended by the cashier and the explanations she has given are “they are ‘over rings’ on the till”. The planning section of the audit file (which is up to date) suggests that any ‘over rings’ on the till are corrected and reviewed by a Director. There is no evidence that this authorization/review has been sought and this suggests that the apparent ‘over rings’ have not, in fact, occurred.
You also noticed that the cashier drives a brand new Volvo S.80.Having undertaken the wages audit, the cashier’s annual salary is £12,000 per annum and she has been telling the you about her forthcoming three-week cruise around the West-Indies and how much she is looking forward to it as she has recently redecorated her (recently purchased) four-bedroom detached house. You have questioned the marital status of the cashier and it turns out that she is single and not in a relationship.
Further investigation by you and the audit manager strongly suggests that a fraud has been committed. It appears the cashier has been stealing cash from the takings on a daily basis and amending the cash sheets to read what has been banked, as opposed to the actual takings in an attempt to cover up the fraud. It would appear she has committed this fraud to finance her lavish lifestyle. The fact that she is single and is not in a relationship immediately eradicates the question of whether her husband/partner has a high income level, which would support that sort of lifestyle.
Let's discuss the issues raised by the scenario above.I]Let's assume that her only source of income is her salary.
[/I]:chatterbox:
You are an Audit Senior with PKF and you are undertaking the audit of KAMA Limited for the year ended 29 October 2008. KAMA Limited operates a highly successful retail pharmacy business in the central business district of a very busy town is largely cash-based. The audit firm has audited the client for the last seven years and the client has relatively simple internal controls which have always operated effectively. The integrity of the management has never been brought into question. Cash is reconciled on a daily basis and passed to the accounts office cashier for subsequent recording in the bookkeeping system and banking. One person is employed in the accounts department whereas in previous years three have always been employed.
You are undertaking the audit of the cash takings for the year which contribute significantly to the company’s turnover for the year. During the course of re performing the cash reconciliation in the sample, it transpired that there was a significant difference between the cash that has been taken from till sales against the cash that has been banked in the same sample. You therefore increased the sample accordingly and that was confirmed in the increased sample, discrepancies in the region of £19,000 have been discovered. The senior has also discovered that the cash sheets have been amended by the cashier and the explanations she has given are “they are ‘over rings’ on the till”. The planning section of the audit file (which is up to date) suggests that any ‘over rings’ on the till are corrected and reviewed by a Director. There is no evidence that this authorization/review has been sought and this suggests that the apparent ‘over rings’ have not, in fact, occurred.
You also noticed that the cashier drives a brand new Volvo S.80.Having undertaken the wages audit, the cashier’s annual salary is £12,000 per annum and she has been telling the you about her forthcoming three-week cruise around the West-Indies and how much she is looking forward to it as she has recently redecorated her (recently purchased) four-bedroom detached house. You have questioned the marital status of the cashier and it turns out that she is single and not in a relationship.
Further investigation by you and the audit manager strongly suggests that a fraud has been committed. It appears the cashier has been stealing cash from the takings on a daily basis and amending the cash sheets to read what has been banked, as opposed to the actual takings in an attempt to cover up the fraud. It would appear she has committed this fraud to finance her lavish lifestyle. The fact that she is single and is not in a relationship immediately eradicates the question of whether her husband/partner has a high income level, which would support that sort of lifestyle.
Let's discuss the issues raised by the scenario above.I]Let's assume that her only source of income is her salary.
[/I]:chatterbox: