2021 Auditing 302 Test 2 Suggested solution LIGENTIA CRES UNIVERSITY OF ZULULAND University of Zululand, Private Bag X1001, KwaDlangezwa, 3886 W: www.unizulu.ac.za FACULTY OF COMMERCE, ADMINISTRATION & LAW DEPARTMENT OF ACCOUNTING AND AUDITING 2AUD302 & 2AUT302- Auditing 3B TEST 2 -29 September 2021 Suggested Solution Internal Examiner: Mr C Mkhabela CA (SA) Internal Moderator: Mr INT Mthembu CA (SA) 1 | Page
2021 Auditing 302 Test 2 Suggested solution Question 1 Weakness 1. Wage application for creation of clock cards is accessed using a general password available to all payroll department (1) 2. Staff decides on the need to work overtime and work overtime before gets authorised (1) As the staff is not supervised for the rest of the week this is likely to results into a risk of clocking for fictitious employees (2). 3. The clocking in and out of the staff at the factory is not supervised for rest of the week (1). 4. The clock cards from past wage week is collected by the payroll administrator (Kat Edison) instead of supervisor (1) 5. On collection of the clock cards Kat Edison does not reconciles the clock cards from the rack to the employees list (1) 6. Once Kat Edison has calculated both normal time and overtime there is no senior person reviewing the clock cards before payment (1) Explanation The use of a general password creates the risk of unauthorised access to the wage application software (2). This risk is likely to result into various risks such as creating of fictitious employees including unauthorised changes to the masterfile (2) This results into an increased risk of working overtime not required due to hours to be worked not authorised on time (2). This may also result into employees clocking in and out for fellow employees not at work, employees may also clock in and leave (2). Kat Edison performs most of the connected activities as a result this increases the risk of fraud through adding fictitious employees as there is lack of segregation of duties (2). This increases the risk that the clock cards collected might be inclusive of fictitious clock cards or might be short and result into incorrect payroll (2). This is likely to increase the risk of error in the payroll being paid as there has been no review of calculations done by Kat Edison (2). Thus this could also result into paying fictitious staff as this is the stage she can also add her own staff not existing (2). There is also a risk of paying unauthorised overtime worked as the clock cards are not reviewed and authorised before submitted for payment to Sutton Brady (2). Available: 24 Maximum: 15 2 | Page
Auditing 302 Test 2 Suggested solution 2021 2 Describe the audit procedures you would perform to test the occurrence and completeness of wages in The Bold Type (Pty) Ltd as at 30 September 2021. Assume that your audit firm's software is compatible with the wage application used by The Bold Type