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HERAKLION

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › HERAKLION

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • July 12, 2021 at 7:48 am #627494
    Jiya024
    Member
    • Topics: 168
    • Replies: 56
    • ☆☆☆

    ma’am this is related to the 3rd recommendation:

    “An exception report of changes made should be generated and reviewed by a responsible official.”

    ma’am what exactly is an exception report? And why is it generally prepared?

    July 12, 2021 at 7:55 am #627496
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6797
    • ☆☆☆☆☆

    “Exception reporting” or “reporting by exception” means just that – so rather than report every transaction, say, and expect management to scrutinise it for any any exceptions, only the exceptions (as pre-defined) are reported for the attention of the reviewer. So this could be:
    – changes to “standing data” (e.g. new staff added to the payroll”)
    – something missing that was expected (e.g. no pay slip for someone who is on the payroll)
    – exceeding some monetary threshold (e.g. a weekly wage in excess of $10.000)
    – impossible amounts (e.g. negative inventory quantities).

    July 13, 2021 at 3:59 am #627561
    Jiya024
    Member
    • Topics: 168
    • Replies: 56
    • ☆☆☆

    got it professor!

    Just one small doubt, if a clerk is responsible for say bank reconciliations, then for any unreconciled amounts can we suggest (as a part of TOC) that “enquire with the clerk if he prepared an exception report.”

    July 13, 2021 at 7:40 am #627574
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6797
    • ☆☆☆☆☆

    No. In any case “inquire” is not sufficient as a test of control (it merely provides information that might be useful in understanding the entity/risk assessment).

    You haven’t quite got it – an exception report will invariably be generated automatically and when processing or extracting information from a large number of transactions of balances.

    For example, processing the payroll – the computer must be able to find the employee to process their hours worked (input). If that employee is missing from the standing data file, the process will generate a report that identifies this exception (“data no file”) – someone (responsible) would need to check and correct as necessary. Perhaps it’s a “new hire” (starter) and their first payslip has to be raised manually. Of if there is an exception that there are no hours for someone on the payroll (“file no data”) – perhaps that’s a leaver, who needs to be removed from the standing data.

    For a bank reconciliation – frankly, if there are unreconciled amounts, it’s not reconciled! As a monitoring control, all monthly bank reconciliations should be reviewed and signed to confirm that it is correct.

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