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- This topic has 3 replies, 2 voices, and was last updated 7 years ago by Ken Garrett.
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- November 8, 2016 at 3:27 am #347969
Hi sir for june 2014 exam question 3a. In the answer key, for the third auditor’s response it is stated as
“The completeness of the continuous (perpetual) inventory counts should be reviewed. In addition, the level of adjustments made to inventory should be considered to assess whether reliance on the inventory records at the year end will be acceptable.”
I understand the first sentence. But I don’t understand the second sentence. Could you please explain? and are they referring to the level of adjustments made to the inventory records or the inventory itself ?
November 8, 2016 at 3:32 am #347970are they saying that the level of adjustments made to inventory, should be considered to assess whether the inventory records at the year end can be relied upon?
November 8, 2016 at 3:49 am #347973and for the 4th audit risk given in the answer key, stating ”
A sales-related bonus scheme has been introduced in the year; this may lead to sales cut-off errors with employees aiming to maximise their current year bonus.
What does a sales cut-off error mean ?
November 8, 2016 at 6:19 am #347978Putting sales in the wrong month (ie just before year-end rather than just after, where they should have been). This will boost sales, profits….and the bonus.
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