- February 2, 2022 at 7:55 pm #648011simran98Member
- Topics: 17
- Replies: 18
You are an audit senior of KLT & Co, and your firm has recently been appointed as the auditor to South, a private
company that runs seven supermarkets in the UK. You are currently planning your firm’s audit of South and are shortly due to make a preliminary visit to South’s head office.
Four months before the year end, the company installed a new till system in all supermarkets. The new till system is linked to the accounting system at head office and automatically posts transactions to the accounting system.
Previously journals were made manually based on totals on till rolls. The cost of the new till system which South has capitalised as a non-current asset.
The audit engagement partner has also said that she has is concerned that the new till system may not be reliable, and that consequently not all sales have been recorded, resulting in an understatement of revenue. She is also
concerned that staff may not yet be familiar with the system, leading to an increased risk of errors relating to data entry.
The audit engagement partner has stated that the new till system may not be reliable. Which TWO of the following statements represent valid responses to this audit risk?
1) Perform analytical procedures by comparing daily/weekly sales by store with both the prior year and
with expectations, in order to determine whether any unusual patterns have occurred following the
installation of the new system
2) Vouch the sales revenue per the system to the till receipts to confirm the accuracy of the sales
3) Obtain a copy of the training manual relating to the new till system and discuss with directors the
extent of training staff have received on the new system
4) Agree sales revenue from till receipts to the cashbook to determine the accuracy of till receipts
The answer is 1 and 3.
I did not understand why will training of staff be the appropriate answer
Wont checking the sales till receipt be more apt?
Thank you!February 3, 2022 at 7:18 am #648029Kim SmithKeymaster
- Topics: 100
- Replies: 6794
Welcome to my AA forum!
The clue is in this sentence: “The audit engagement partner has also said that she has is concerned that the new till system may not be reliable, and that consequently NOT ALL SALES HAVE BEEN RECORDED, resulting in an understatement of revenue.”
Both 2 and 4 are based on what HAS been recorded – not what should/might be expected to have been recorded.
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