List 6 audit procedures and reason for taking each procedure-ACCAF8

The above seem to be the favorite for you examiner in Q1.

Let do more detail on this area by looking at December 2007 Q1

"Parts inventory is monitored by the stores manager. When the quantity of a particular part falls below re-order level,

an e-mail is sent to the procurement department detailing the part required and the quantity to order. A copy of the

e-mail is filed on the store manager's computer:

The copy of email serve as the purchase requisition and all purchase system start with purchase requisition!

Staff in the procurement department check the e-mail, allocate the order to an authorised supplier and send the order

to that supplier using Electronic Data Interchange (EDI). A copy of the EDI order is filed in the order database by the

computer system. The order is identified by a unique order number

The order here refers to the purchase order as it has sent to the Supplier via EDI

When goods are received at DinZee, the stores clerk confirms that the inventory agrees to the delivery note and checks

the order database to ensure that the inventory were in fact ordered by DinZee. (Delivery is refused where goods do

not have a delivery note.)

This is when good are received and arranging to go into the warehouse

The order in the order database is updated to confirm receipt of goods, and the perpetual inventory system updated

to show the receipt of inventory. The physical goods are added to the parts store and the paper delivery note is

stamped with the order number and is filed in the goods inwards department

This enter the recording part which will decide whether your inventory will be accurate at day end

The supplier sends a purchase invoice to DinZee using EDI; invoices are automatically routed to the accounts

department. On receipt of the invoice, the accounts clerk checks the order database, matches the invoice details with

the database and updates the database to confirm receipt of invoice. The invoice is added to the purchases database,

where the purchase day book (PDB) and suppliers individual account in the payables ledger are automatically

updated.

This focus on the quantitative part on the final part of the purchase system which you need to handle with care

Dear and dearest look at the requirement properly. They need a test on the system therefore it is test of control!

So you should start with the sequence and take into some general areas which you can whack (standard area)

Purchase requisition

Select sample and trace the Email order (purchase requisition) to your order database (purchase order) to check for accuracy

This is to ensure that there is no arithmetical error in the error database

Purchase order

Select sample from order database and check to authorized supplier list to ensure only authorized supplier received the order

This is to ensure that only authorized supplier is recorded in the database and no fraud or negligence occur

From the order database also, check to the physical good received and the records to ensure the right inventory has been received

This is to ensure that the right inventory with the right quality is being received (physical security)

Good received in warehouse

Order database will then be selected to match with paper delivery note (or the other way round)

This is to ensure that all good order have been received (physical security)

In the financial system

In this part you need to look at the whole financial system example

From Purchase invoice matching to purchase ledger, purchase ledger matching to the ledger account and also towards the Payable listing.

Generally this is to ensure that no arithmetical occur and most important proper recording in the financial system.

Note:(Financial system is the process of financial recording form your source document to financial statement)

General area

Since it is IT environment testing of the control is essential

Reliability and accuracy of the processing is also important

With the above you surely have more than 12 points to write

Note: the above is just a brief explanation and the objective is to help you to understand the basic concept of the PYQ. Please refer to the Answer for more details. Should you required further information, please do not hesitate to contact me by leaving your comment or email me.