a) Explain the steps necessary to check the accuracy of the previous years internal control questionnaires.

This steps possibly will includes consideration of whether the work is perform by persons having enough technical training and skill as auditors and as clients and work is correctly supervised, reviewed and documented. And further sufficient appropriate audit evidence is obtained to afford a reasonable basis for the conclusions reached, conclusion reached are appropriate in the situation and any reports prepared are consists with the results of the work performed. Any exceptional or unusual matters disclosed by auditor are properly solved. It can be ensure by the one of the following ways Inspection- consists of investigative records, documents or tangible assets. Inspection of records and documents provides audit evidence of varying degrees of reliability depending on their nature and souse and the effectiveness of internal controls over their processing. Observation- consists of looking at a process or procedure being performed by others (previous auditors) Inquiry- Inquiry consists of seeking information of knowledgeable persons inside or outside the entity .Response to inquiries may provide the auditor with information not previously possessed or with corroborative audit evidence. Computation- Computation consists of checking the arithmetical accuracy of source documents and accounting records or of performing independent calculation.

b) Using information from the scenario, list SIX tests of control that an auditor would normally carry out on the dispatch and sales system at singa co and explain the reason for each test. Select a sample of GDN which have been sent to accounts department and Checked the approvals done by member of Singas dispatch staff confirming goods taken Cross check the amount with computerized sales system. For each an every GDN in sample, obtain relevant paper copies of invoices maintain in accounts department and compare prices, quantity, total value and other product details in invoices that of with relevant GDNs and check whether they have been properly authorized by accounts dept: and that process need to be cross checked, reviewed by at least one person other than person who signed it. Obtain a paper copies of receivable ledger control account and list of aged receivables and extract the sales which have been taken as GDN in sample and check the accuracy/ agree the amount on GDN to the amount due in receivable ledger.

Perform Cut-Off test as follow- for the last day of the financial year and the first day of the financial year , agree total sales income from warehouse records to the cash book and receivable ledger concerning GDN sequence ensuring they are recorded in the correct period. Select a sample of error reports concerning materiality level and check the breaks in the GDN sequence and check the necessary steps taken by client in this regard such as amendments , prior approvals , correction journal entries, cancellation.

c) State and explain the meaning of FOUR assertions to individual receivables in relation to a direct confirmation of receivables. Yet to be answer

d) (i) Describe the procedures up to dispatch of letters to individual receivables in relation to a direct confirmation of receivables. No idea , Ill try my best

(ii) Discuss which particular categories of receivables might be chosen for the sample. The above sample be supposed to be hand over, of the different items in the whole residents , for example , it should contain a similar proportion of high and low value items in the population and it must be material the sample should be large enough , so that the risk of not being a typical sample is insignificant. And it must be selected at random, so that the sample is free from unfairness. A random sample is one where each item in the population has an equal chance of being selected to sample. Statistical influences may not be valid unless the sample is chance. The selection of the sample, should not be influenced by the clients request. When design an audit sample, the audit should consider the specific audit objectives such as long outstanding receivable balances, material balances , population from which the auditor wished to sample and the sample size. And the auditor may select a sample either by using his own judgment or on a statistical basis In the case of judgment sampling the tests tends to involve larger samples than those selected by statistical means.

Selecting a sample of debtors for confirmation circulation should take into account both risk and materiality. Accordingly following suggestions are made Materiality level for the audit is assumed to be Rs. 75,000 and auditor will pay particular attention to smaller number of receivable balances which are of higher value. Eg: 20 debtors whose balances individually exceeds Rs. 75,000 constitute more than 50% of total receivable and hence should be included in the sample. If there are negative balances in the age analysis , some of these will also need to be tested in a sample to check whether credit balance is due to incorrect posting.