Auditing Assignment Harvard Case Solution & Analysis

Auditing Assignment Case Solution



Fee collection is on cash basis which is then placed in the metal box. There is a possibility that the amount of cash could be inappropriate by the collusion of the clerks. There should be a receipt for the admission fee that is serially numbered. The receipt must be checked by an individual on the other side of the entrance gate.
The treasurer counts the cash only. There will be no evidence of the total daily fee charged. There should be proper accountability of the cash proceeds. There should be an entry made or voucher made for the records on daily basis.
The cash deposited in the bank can also be misappropriated by the collusion of the clerk and treasurer. Firstly there should be reconciliation of the daily vouched cash proceeds and then the deposit should be made. The deposit slip will provide another evidence for the accuracy of the amount.

1. High integrity among the management

2. Hiring competent people increase the competency level of the management
3. Management has positive attitude towards the policy regarding accounts and practices.
4. Divisions are independent which gives them opportunity to work efficiently according to their potentials and making decisions on their own which will be more effective.

B (2)

There is a reactive approach. The head office only intervenes when planned was not achieved. There should be real time or periodic (proactive) monitoring of the operations and performance of the individual unit.
Each individual unit will require preparing its periodic performance report and sending to the head office.
The board of directors and audit committee are not very active. There should be active participation of the board; they should show good corporate governance. Audit committee should be more active and will have to make internal controls more effective. Moreover, the audit committee should be independent.

Low compliance of code of conduct

There should be monitoring of the code of conduct by the employees. There should be clear communication of such codes to each employee. Employee should be rewarded based on its compliance.
No internal audit function. More vulnerable to risk and frauds. The municipal should be made an internal audit department. This will enhance organization operations. Monitor and assess risks and confirms compliance of different policies and controls.

B (3)

• Firstly the controls over inventory are weak. There is no audit department which can improve and maintain proper control over the inventory management, valuation and safeguarding.
• The audit committee is not very active. John is certain that this manipulation will not be detected. As a result, this provides opportunity to John to use unfair means.
• No intervention of the head office in the operations of the individual units.
• Profit-based remuneration compelled John to use inappropriate means in order to save his salary and bonus.

1. D
2. D
3. B
4. D
5. A
6. B


1. A sale was recorded but no goods had been shipped. CUT-OFF, OCCURANCE Sales should be recorded against approved customer orders.
Segregation of duties(order, record, dispatch) Examine sales invoices and dispatch notes to look for signatures to ensure segregation of duties
Reconcile sales invoices with the goods dispatch notes.
2. A sale was not recorded. COMPLETENESS Maintain sequence numbered sales invoices.
Reconciliation of monthly sales invoices with dispatch orders Perform sequence number check of the invoices.
Trace sales invoices by comparing with goods dispatch notes................

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