Acc311 assignment solution required

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Acc311 assignment solution required

Postby M habib ur rehman » Wed Jul 10, 2013 10:27 am

DUE DATE: 12TH JULY, 2013
ASSIGNMENT:
Model Manufacturing Limited (MML) assembles cell phones which comprises of up to 150 different parts. MML has maintained a list of 50 authorized vendors. MML’s accounting system is partly computerized bearing the following integrated attributes:
a) Software for designing various models of cell phone.
b) Vendor Database System (VDS)
c) Manually recording and transferring information of goods inwards to accounts department for making payment to vendors.
d) Payables ledger system maintained by the accounts department for on-line payments to the suppliers.
e) General ledger system which gets input from payable ledger system
A batch consists of 500 cell phones and the design software produces a list of parts whenever a new batch is planned for the production. The purchase department place orders using electronic data interchange (EDI) with the authorized vendors after receiving list of parts in official email which vendors confirmed using the same system.
The inventory department of MML receives the ordered parts and check against the orders before accepting the delivery. Manual GRN is prepared mentioning the goods received along with order number and date. This GRN is submitted to the accounts department for further processing for payment.
Invoice is received through courier service from the vendor after the successful delivery of the parts. In Accounts department, the invoice details are checked against the GRN by the accountant who also signs it to confirm its entry into the payables ledger system.
After the expiry of 30 days, the payables ledger system automatically generates an email to the chief accountant containing a list of payments to be made. The chief accountant approves the listed invoices and forwards that email to the accounts assistant who pays the vendor(s) using online banking system.
Required:
(a) Which audit procedures will be carried out to confirm the creditors balance in MML’s financial statements? Also explain the purpose of each procedure. (8 Marks)
(b) Which substantive audit procedures will confirm the assertions of occurrence, cut-off and completeness for purchases of MML? Also explain the purpose of each procedure. (12 Marks)
M habib ur rehman
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