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    Af304 MST

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    Af304 MST

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    AF304_MST.docx

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    Af304 MST

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    SECTION B - SHORT ANSWERS (TOTAL 20 marks)

    (use approx. 40 minutes)

    1. Describe the principal – agent relationship and how it is used to explain the development
    of auditing. (5 marks)

    2. Describe the two sides of the enterprise governance framework. (5 marks)

    3. What is a forensic audit, and (briefly) what would the auditor be looking for? When
    might it be used? What would an audit involving the electronic environment feature?
    (10 marks)

    SECTION C - PROFESSIONAL/ ESSAY ( TOTAL 15 marks)

    (use approx. 30 minutes)

    1. AUDIT RISK ASSESSMENTS (15 MARKS)

    Navua Ltd owns a range of fashion clothing stores in Lautoka city. Each store manager operates
    with a degree of autonomy with regard to the types and quantities of clothes that they buy and
    sell. Head office has established a standard mark-up on cost that local managers must use to
    arrive at selling prices.
    Store staff tend to be younger people who work part time and move on after a year or two; as a
    result there is a significant staff turnover. This high staff turnover does not affect trade and
    business is booming having tapped into youth fashion.
    Each store maintains its own accounting records and returns are sent to head office reporting
    purchases, sales and any sundry expenditure incurred locally. These monthly returns are
    consolidated by the accountant who prepares monthly management reports.
    The recent success of the business has allowed senior management to adopt a strategy of
    growth by opening new stores, but they are worried about maintaining control as the business
    expands.

    Required
    Identify the weaknesses in the existing system and suggest improvements
    that should be included in any new system that senior management might
    choose to introduce.

    ‘THE END’

    This study source was downloaded by 100000866705029 from CourseHero.com on 08-25-2024 18:50:14 GMT -05:00

    https://www.coursehero.com/file/63097004/AF304-MSTdocx/
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