Table of Contents Qn1. (a) Substantive procedures 2 TRADE PAYABLES AND ACCRUALS 2 RECEIVABLES 2 Reorganisation 3 SOURCES OF INFORMATION 3 The previous year Cherry Blossom’s audit file 3 The Cherry Blossom’s Management 3 Permanent Cherry Blossom’s Audit file 3 Cherry Blossom’s Website 3 Cherry Blossom’s Competitors financial statements 4 Audit risks and Auditors responses 4 The factors the finance director should consider before establishing an internal audit department. 6 WEAKNESSES IN THE SALES AND COLLECTION DEPARTMENT 7 The effects of the above weaknesses 8 Recommendations 8 REFFERENCES 10
Qn1. (a) Substantive procedures
TRADE PAYABLES AND ACCRUALS * The comparison of Sakura’s trade payables and list of the accruals should be done against the prior year and investigate the significance differences. * Check the after date payment and then compare if they relate to the current year so as to follow through the purchase ledger or accrual listing to ensure that they were all paid in the correct period as stated. * Discuss with management the process they have undertaken to quantify the understatement of trade payables due to the cut-off error that happened that the purchase ledger earlier than its period and consider the materiality of the error. * Calculate the trade payable days for Sakura Beauty Club Co (Sakura) and compare to prior years, investigate any significant difference, in particular any decrease for this year. * Select a sample of goods received notes before the year end and after the year end and follow through to inclusion in the correct period’s payables balance, to ensure correct cut-off.
RECEIVABLES
* For
