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Coursework 4

The objectives of internal controls in a payroll system are to ensure accurate payroll processing and security of payroll information. Fox's procedures achieve some objectives but have weaknesses, including a lack of oversight and controls over payroll data. Procedures should be strengthened, such as segregating payroll duties and instituting reviews. The audit used evidence collection methods like analytical review, reconciliation, inquiry and observation to obtain evidence about Fox's payroll system as required by standards.

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17 views

Coursework 4

The objectives of internal controls in a payroll system are to ensure accurate payroll processing and security of payroll information. Fox's procedures achieve some objectives but have weaknesses, including a lack of oversight and controls over payroll data. Procedures should be strengthened, such as segregating payroll duties and instituting reviews. The audit used evidence collection methods like analytical review, reconciliation, inquiry and observation to obtain evidence about Fox's payroll system as required by standards.

Uploaded by

Bình NGuyễn Công
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Module No: BAA6003

________________________________________________________

ASSESSMENT DATE: Week Beginning 11 March 2024

Scenario 4

TIME ALLOWED: 25 minutes

________________________________________________________

Learning Outcomes:

Students should be able to:


 Understand the advanced theory and practice of auditing practice and
procedures.
 Analyse and apply different audit approaches to structured and
unstructured problems.

BAA6003 Coursework 2024 Page 1


INSTRUCTIONS:

In your team prepare a presentation on Fox Industries Ltd,


answering the parts (i) to (iii). You will have a maximum time
allocation of 15 minutes per group (excluding questions).

Following your presentation, your team will be asked additional


questions, so ensure that you make yourself aware of all relevant areas,
not just the area you are presenting on.

How you allocate the work to be presented is up to you, but bear in mind
that there are marks allocated for team work.

If a team member is asked a question to which you are able to add


supplementary, relevant information, then additional marks will be
allocated to you.

Marks will be allocated as shown in the table below:

Presentation Additional questions


40% content (slides and 30% if additional
verbal) question answered well
15% presentation style 15% extra marks if
supplement answer to
team mates question

The marking scheme that will be used to assess your presentation forms
part of this document. This coursework represents 50% of your final
module mark.

All groups will be recorded, for IV purposes.

The lecturer will need an electronic copy of your Powerpoint


presentation before your presentation. This should reach the lecturer no
later than Friday 15 March 2024 by 11am, via Turnitin on Moodle.
You will not be able to alter the presentation after this date and it will be
the copy the lecturer holds that you will use for your presentation.

BAA6003 Coursework 2024 Page 2


Fox Industries Ltd (Fox) manufactures children’s building block toys and
have been trading for over 40 years selling to a variety of large and
small toy retailers across the country. The company manufactures 24
hours a day, seven days a week on a three shift system. Fox has a
workforce of 360 hourly paid employees, who operate the block
manufacturing and packing machines. There are six shift supervisors
who are also hourly paid. In addition, Fox employs 100 salaried
employees who work in the marketing, sales, HR and administration
departments.

With the exception of the shift supervisors, Fox’s hourly paid employees
clock in and out of the factory using an employee swipe card.
Employees are paid on an hourly basis for each hour worked and the
money is paid by cash, weekly. There is no monitoring of the clocking in
and out process.

The employee swipes their card through a monitoring machine which


identifies the employee number and links the total number of hours
swiped to the hours worked report. At the end of every week, the
monitoring machine automatically closes the week off and uploads the
hours worked report to the payroll system. This is accessed, like the rest
of the payroll system by a password. Only two people have access to
the password; Hanna and Abdul the purchase ledger clerk. Abdul covers
for Hanna when she is absent due to sickness or annual leave. For each
employee, the hours worked report allocates total swiped hours between
standard and overtime categories. Hanna prints out the hours worked
report and reviews it for any obvious errors. If she spots a problem, she
overrides the error and adjusts the relevant figure directly in the payroll
system.

The payroll system calculates, on a weekly basis, the cash wages to be


paid to the hourly paid employees. Using the hours worked report it
identifies the standard hourly multiplies the hourly wage rate by number
of hours worked by each employee and generates the gross pay, net
pay and appropriate tax and pension deductions. These calculations are
not checked by anyone as they are performed by the payroll system. An
annual hourly wage increase is given to the employees and the Human
Resources (HR) department notifies the payroll department by email. No
review of the change to the payroll master file is performed.
BAA6003 Coursework 2024 Page 3
Every Thursday a security company delivers money to Hanna plus any
spare office-based employee who can help prepare the pay packets
from the money. On a Friday, day shift factory employees collect their
pay packets from the receptionist who sits just outside the payroll office.
The pay packets for night shift workers are left in the payroll office for the
night shift supervisors who collect them, using their spare key to access
the office. The night shift supervisors physically distribute them to the
workforce. If any employees are absent then either the receptionist (day
shift) or the factory supervisor (night shift) keeps these wages and gives
them to the employee on their return to work.

All salaried employees are paid by direct transfer into their bank
accounts. All calculations are performed using the payroll system.
Overtime is sometimes available for the salaried staff. Before Hanna
enters the overtime for the salaried staff she requires written authority
from the Financial Accountant. In addition, if any new staff are recruited,
the Financial Accountant authorises Hanna by email to add them to the
payroll system.

You are employed by IPD & Co, who are Fox’s external auditors. Your
team has just finished its audit of Fox and the engagement partner has
requested you present the results of your work to date on the following
areas:

Required:

i Identify the objectives of exercising internal controls in a payroll


system and discuss the extent to which the procedures exercised
by Fox achieve these objectives; outlining both the strengths and
weaknesses.

ii Describe the procedures which would strengthen Fox’s payroll


system.

Iii Evaluate the procedures you used to obtain evidence during your
audit of Fox, as prescribed by the relevant accounting standards;
including analytical review, reconciliation, inquiry, inspection,
observation and recalculation.

BAA6003 Coursework 2024 Page 4


Marking Scheme

As a group member

1. Did the presentation have a logical structure – an introduction, main body and conclusion?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 4

2. Was the presentation (excl. questions) to the point and timeliness adhered to?

More than 15 minutes or less 5-6 min or 7-10 min Between 11-15
than 5 minutes 16-17 min min
0 2 3 4

3. Was the font large enough to be read and the slides not overcrowded?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 4

4. Did the audit work performed clearly identify internal controls?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 4

5. Were the weaknesses clearly outlined?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 4

6. Were the recommendations appropriate to remedy the weaknesses?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 4

7. Was there evidence that six evidence collections methods were clearly understood?

Not evident Weak Satisfactory Good Very Good


0 2 6 9 12

BAA6003 Coursework 2024 Page 5


8. Was there evidence that the presentation was performed in a cohesive manner, that
indicated the group had worked together?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 4

As an individual

9. Was body language appropriate? e.g. eye contact, smile

Not evident Weak Satisfactory Good Very Good


-1 1 2 3 5

10. Was the dress code appropriate?

Weak Satisfactory Good Very Good


-1 3 4 5

11. Did the student speak clearly, confidently, concisely and at an appropriate speed?

Not evident Weak Satisfactory Good Very Good


0 1 2 3 5

12. Was the student’s additional question answered in a manner which displayed the
question was understood and relevant information brought in to support the answer?

Not answered Weak Satisfactory Good Very Good


0 5-14 15-19 20-24 25-30

13. Did the student supplement a team member’s question?

Not evident Weak Satisfactory Good Very Good


0-1 2-5 6-7 8-10 11-15

Mark out of 100 =

BAA6003 Coursework 2024 Page 6

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