SECTION A

You must answer this question

Question 1

Jimmy Bloggs works in the goods received office of Sandy’s Shoes Ltd., which is a medium-sized manufacturer  of  high  quality  shoes.    Most  of Jimmy’s time  is  spent  receiving  deliveries  of materials from suppliers and checking the goods against the despatch note from the supplier. All of  the  items  that  Jimmy  receives  are  transferred  to  the  ‘stores’  department  after  he  has completed his checks.

(a) Identify five items of information that Jimmy would expect to find on each despatch note .

(5 marks)

(b)  Identify four checks that Jimmy should undertake on each delivery he receives.

(8 marks)

(c)  Which three departments within Sandy’s Shoes Ltd should Jimmy notify about the receipt of goods? For each department you should explain why it is important for them to be notified about the receipt of goods.

(9 marks)

(d) What is a purchase day book?  Identify three items of information that you would expect to be recorded in the purchase day book for Sandy’s Shoes Ltd.

(8 marks)

Total for Question 1: 30 marks

SECTION B

Answer TWO questions from this section

Question 2

(a)        Using the definition provided by the Turnbull Report in 1999 explain what an internal

control system is.  You should identify what a control system encompasses and what it is designed to achieve.

(17 marks)

(b)        What are the six accounting objectives of an internal control system?

(6 marks)

(c)        Identify an example of a specific objective that an organisation might have for each of the six answers you have provided in (b). You may choose examples from any of the business cycles that you have studied.

(12 marks) Total for Question 2: 35 marks

Question 3

(a)        Identify eight data entry controls that an organisation might use to ensure the integrity

of its data processing system.  You should name and describe each control.

(16 marks)

(b)        Identify eight systems availability controls that an organisation might use to ensure the

integrity of its data processing system.

(8 marks)

(c)       Why are data entry and systems availability controls important to the effective operation of a data processing system?  You should provide one example of how a failure in either of these controls might cause difficulties for a business.

(11 marks)

Total for Question 3: 35 marks

Question 4

Arum and Lily plc is an unlisted company whose financial year ended on 31 October 2018 . The company’s auditors are currently undertaking the final audit work. Bridget, an audit senior, has been given the responsibility of auditing the company’s trade debtor balances. The following relevant information is available in respect of Arum and Lily’s sales for the year ended 31 October 2018 and its trade debtor balance at that date, together with comparative figures for 2017:

Sales

Debtors

Less: allowance for bad and doubtful debts

Number of debtor accounts in the sales ledger

2018

£

7,664,600

2017

£

8,057,430