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Effect of an unauthorized transaction to audit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Effect of an unauthorized transaction to audit

  • This topic has 1 reply, 2 voices, and was last updated 10 years ago by Ken Garrett.
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  • May 21, 2015 at 3:04 pm #247686
    Binh
    Member
    • Topics: 41
    • Replies: 78
    • ☆☆

    Dear Mr. Gromit,

    If a transaction, say, a purchase of non-current asset which is perfect in all matters except it was not authorized properly by suitable management level as required by internal policies of the entity, so what is the effect of this transaction to our audit? Could I consider it just is a deficiency of internal control and include it in management letter only?

    May 21, 2015 at 5:28 pm #247741
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10607
    • ☆☆☆☆☆

    Almost certainly that is correct. Even if the transaction were fraudulent, as opposed to not having been properly authorised, it would only affect the audit report if the effect were material.

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