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February 26, 2020 at 4:08 am #563164toushiga
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Hello Sir, For PYQ Sept/Dec 2019 Q3
Part(a) Under professional competence:” Any failure to follow the relevant protocol may render the evidence useless to the legal case”
1. What protocol is that? and why it will make the evidence become useless to the legal case?
1.” lack of reconciliation of the sales orders to the amounts invoiced allowed the cancellation of deliveries to avoid detection from any invoicing process” Will the examiner answer conflict to the question as the sale order is cancelled once good dispatch note is issued?
2. Under the “additional implications of the fraud” part, is it relevant to the requirement?as it appears like audit and business risk rather than control deficiencies and recommendation?
Thank you.February 26, 2020 at 8:40 am #563180Kim SmithKeymaster
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1. The published answer has to be non-specific in this respect as the protocol (i.e. standard rules and procedures to be followed) would depend on the jurisdiction (and this is an international exam). For example, confidential information relating to a criminal investigation that is leaked may be inadmissable in court.
What the answer is basically saying is that staff must be sufficiently experienced not to compromise a criminal investigation.
1. “Cancel” does not mean “destroy”. So if, for example, a scenario says that a purchase invoice is “cancelled” on payment that simply means it is somehow marked as paid so it cannot be paid again.
2. I don’t think many candidates would have made these points but as part of “evaluate the deficiencies” the examiner would give credit for consideration of the wider consequences of the deficiencies – in this case non-compliance with statutory requirements (e.g. in the UK) and increased business risk.August 5, 2020 at 1:45 pm #579345salman7
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For part a, the agreed upon procedures for quantification of inventory fraud will be reported by giving negative assurance. The same opinion and procedures can be used by the authorities for criminal investigation to support their findings in court? Presently, is it possible for authorities to provide information on possible investigation and nature of future services required from audit firm?
For part b, does “prior year report to management from the auditor” mean Management Letter of previous year?August 5, 2020 at 3:51 pm #579353Kim SmithKeymaster
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In general – if you want to measure a loss, it shouldn’t matter who that loss is reported to – the reporting accountant would carry out essentially the same procedures. For example, imagine a ram-raid on a jewellery shop or department store. A professional accountant could be engaged to report on the loss:
– by the jewellery shop/department to assist management in making a claim against an insurance policy;
– by the insurer – who wants to know that the amount claimed is claimed within the terms of the policy; or
– by the police in the event of a criminal prosecution – although this might be much later, if at all, because someone has to be found to prosecute.
Yes – “report to management”, “letter of weakness”, “report on internal control deficiencies” – these are all the same thing.
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