Financial Systems and Auditing

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COLLEGE OF BANKING AND FINANCIAL STUDIES DEPARTMENT OF PROFESSIONAL STUDIES Assignment (Semester IV) Assignment - 1 Qualification Unit number and title Pearson BTEC Level 5 HND Diploma in Accounting Unit 11 – Financial Systems & Auditing Semester Batch IV Spring 2016 - 17 Student name : Assessor name : Mr. Vaheed / Dr. Salman / Mr. Lakmal Student No.: Internal Verifier (IV) name : Ms Shobhna Date issued Completion date Submitted on th 20 April 2017 LO 1: Accounting Systems; and Assignment title Learning Learning Outcome LO 3: Planning and conduct of an Audit Assignment Assessment Cri Outcome In this assessment you will have the opportunity to present evidence that shows you are able to: Evidence Task no. (Page no) Criteriaa Understand the importance of 1.1 Explain the purpose and use of the different accounting records 1 keeping effective LO 1 accounting systems 1.2 within a business 1.3 Assess the importance and meaning of the fundamental accounting concepts Evaluate the factors which influence the nature and structure of accounting systems 2 3 Be able to contribute to the planning and LO 3 conduct of an audit 3.1 Plan an audit with reference to scope, materiality and risk 4 3.2 Identify and use appropriate audit tests 5 3.3 Record the audit process in an appropriate manner 6 assignment Learner Declaration I certify that the work submitted for this assignment is my own and research sources are fully acknowledged. Student signature : ____________ Date: ______________ Page 1 of 8 In addition to the above PASS criteria, this assignment gives you the opportunity to submit evidence in order to achieve the following MERIT and DISTINCTION grades Grade Descriptor Indicative characteristic/s Contextualisation M1 Identify and apply strategies to find appropriate solutions Effective judgements have been made. Task 1 - To achieve merit, give your judgements advocating the accounting software to the Chief Financial Officer of the mentioned firm. (M1) M2 Select / design and apply appropriate methods / techniques A range of methods and techniques have been applied A range of sources of information has been used referencing style to support accounting concepts and their usage to the case firm. (M2) Task 4 - To achieve merit, use a range of methods and techniques to justify your audit. You can use a specimen audit to justify the scope, materiality and risk. (M2) Task 5 - To achieve merit, use a range of sources of information during the audit tests. Use secondary data to justify the audit tests for the case firm. (M2) Task 3 - To achieve merit, use appropriate structure and approach to answer the question. Use the templates M3 Present and communicate appropriate findings Task 2 - To achieve merit, use a range of sources of information to answer the question. Use Harvard The appropriate structure and approach or specimen of accounting systems used by most of the business organizations. (M3) has been used Task 6 - To achieve merit, maintain appropriate structure and approach during the recording process. Audit record process should be reflected with the help of suitable templates or specimen. (M3) Task 3 - To achieve distinction, propose realistic improvements against the defined characteristics for D1 Use critical reflection to evaluate own work and justify valid conclusions Realistic improvements have been success for the firm. Suggestive and preventive methods should be reflected to improve and insulate the proposed against defined characteristics accounting systems of the case firm. (D1) for success Task 5 - To achieve distinction, suggest realistic improvements for the stated audit tests of the firm. The suggestions should be made for preventive and corrective action plans. (D1) Task 1 - To achieve distinction, demonstrate autonomy in critical evaluation of the accounting records. Use D2 Take responsibility for managing and organising activities Autonomy/independence has been proper referencing to reflect your judgements. (D2) demonstrated Task 6 - To achieve distinction, demonstrate autonomy while evaluating the above scenario. Use creative thinking, secondary references and real business examples to demonstrate your understanding. (D2) Innovation and creative thought have Task 4 - To achieve distinction, indicate innovation and creative thought applied with proper in text D3 Demonstrate convergent /lateral / been applied referencing. Planning of audit should be creative, so as to reduce the audit cost and improve its overall creative thinking A range of sources of information has productivity. (D3) been used Page 2 of 8 Assignment Brief Purpose of this assignment The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business. This information is then used to reach decisions about how to manage the business, or invest in it, or lend money to it. Financial statements are assembled under certain sets of rules, known as accounting frameworks, of which the best known are Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The results shown in financial statements can vary somewhat, depending on the framework used. The framework that a business uses depends upon which one the recipient of the financial statements wants. Thus, a European investor might want to see financial statements based on IFRS, while an American investor might want to see statements that comply with GAAP. The accountant may generate additional reports for special purposes, such as determining the profit on sale of a product, or the revenues generated from a particular sales region. Thus, the purpose of accounting centers on the collection and subsequent reporting of financial information. In an audit of the financial statements of a company with operations in multiple locations or business units, the auditor should determine the extent to which audit procedures should be performed at selected locations or business units to obtain sufficient appropriate evidence to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. This includes determining the locations or business units at which to perform audit procedures, as well as the nature, timing, and extent of the procedures to be performed at those individual locations or business units. The auditor should assess the risks of material misstatement to the consolidated financial statements associated with the location or business unit and correlate the amount of audit attention devoted to the location or business unit with the degree of risk of material misstatement associated with that location or business unit. Case Scenario The case study talks about Moon Hyper Market. Moon Hyper Market is similar to any other hyper markets dealing in consumer goods and having different retail outlets in Oman. The firm maintains different types of transaction in both cash and credit. Recently the firm faced issue of lack of proper data management at their offices. The Chief Financial Officer is worried about lack of proper financial records maintained at the head office. Last year a fire broke at the head office damaging the source documents. Next year there is a state audit, which requires thorough investigation of accounting books and source documents. The Chief IT Officer has argued to convert all the accounting procedures and records to a computer based accounting software. The IT officer emphasizes that using an accounting software will be productive and efficient for the firm. The Chief Financial Officer is concerned about the heavy investment cost to purchase and install the software. In addition, it requires further investment of training the employees so that they can use the software properly. Page 3 of 8 LO1 - Assessment Criteria 1.1: Explain the purpose and use of the different accounting records Task 1 To achieve pass, answer what is an accounting record and explain the purpose and usage of appropriate accounting records to Moon Hyper Market. (Pass) To achieve merit, give your judgements advocating the accounting software to the Chief Financial Officer of the mentioned firm. (M1) To achieve distinction, demonstrate autonomy in critical evaluation of the accounting records. Use proper referencing to reflect your judgements. (D2) LO1 - Assessment Criteria 1.2: Assess the importance and meaning of the fundamental accounting concepts Task 2 To achieve pass, assess the importance and meaning of the fundamental accounting concepts with reference to the attached case study. (Pass) To achieve merit, use a range of sources of information to answer the question. Use Harvard referencing style to support accounting concepts and their usage to the case firm. (M2) To achieve distinction, indicate innovation and creative thought with proper in text referencing. The use of creativity and innovation should be reflected in demonstrating accounting concepts to the case firm. (D3) LO1 - Assessment Criteria 1.3: Evaluate the factors which influence the nature and structure of accounting systems Task 3 To achieve pass, evaluate the factors, which will influence the nature and structure of accounting systems in Moon Hyper Market. (Pass) To achieve merit, use appropriate structure and approach to answer the question. Use the templates or specimen of accounting systems used by most of the business organizations. (M3) To achieve distinction, propose realistic improvements against the defined characteristics for success for the firm. Suggestive and preventive methods should be reflected to improve and insulate the accounting systems of the case firm. (D1) LO3 - Assessment Criteria 3.1: Plan an audit with reference to scope, materiality and risk Task 4 To achieve pass, consider external audit, plan an audit with reference to scope, materiality and risk of the mentioned firm. (Pass) To achieve merit, use a range of methods and techniques to justify your audit. You can use a specimen audit to justify the scope, materiality and risk. (M2) To achieve distinction, indicate innovation and creative thought with proper in text referencing. Planning of audit should be creative, so as to reduce the audit cost and improve its overall productivity. (D3) LO3 - Assessment Criteria 3.2: Identify and use appropriate audit tests Page 4 of 8 Task 5 To achieve pass, identify and use appropriate audit tests for the mentioned audit. (Pass) To achieve merit, use a range of sources of information during the audit tests. Use secondary data to justify the audit tests for the case firm. (M2) To achieve distinction, suggest realistic improvements for the stated audit tests of the firm. The suggestions should be made for preventive and corrective action plans. (D1) LO3 - Assessment Criteria 3.3: Record the audit process in an appropriate manner Task 6 To achieve pass, record the audit process in an appropriate manner. (Pass) To achieve merit, maintain appropriate structure and approach during the recording process. Audit record process should be reflected with the help of suitable templates or specimen. (M3) To achieve distinction, demonstrate autonomy while evaluating the above scenario. Use creative thinking, secondary references and real business examples to demonstrate your understanding. (D2) Evidence Summary of evidence required by student checklist Evidence presented Task 1 Explain the purpose and use of the different accounting records Task 2 Assess the importance and meaning of the fundamental accounting concepts Task 3 Evaluate the factors which influence the nature and structure of accounting systems Task 4 Plan an audit with reference to scope, materiality and risk Task 5 Identify and use appropriate audit tests Task 6 Record the audit process in an appropriate manner Guidance notes: 1. Use standard document formats and structures. 2. Word process the documents. 3. Use 12 point Arial or Times New Roman script. 4. Provide a list of references and use the Harvard referencing system. 5. Complete the title page and sign the statement of authenticity. 6. Upload the entire assignment in MS word format only on Turnitin. 7. Staple only once to keep the pages of your work together. Page 5 of 8 8. Late submission, late work will only be marked on the next occasion the unit is taught. 9. Submit the work along with the Turnitin report to the respective assessors in their offices. 10. Collect the assignment submission form duly signed by the assessor and the learner. 11. Grades are subject to External Verification. Word limit = 4500 words Achievement Summary Pearson BTEC Level 5 HND Qualification Assessor name Diploma in Business Unit Number and title Mr. Vaheed / Dr. Salman / Mr. Lakmal Unit 11 – Financial Systems & Ms Shobhna IV name Auditing Student Number Criteria Student name To achieve the criteria the evidence must show that the student is able to: Reference Achieved? (tick) LO1 1.1 Explain the purpose and use of the different accounting records 1.2 Assess the importance and meaning of the fundamental accounting concepts 1.3 Evaluate the factors which influence the nature and structure of accounting systems 3.1 Identify and use appropriate audit tests 3.2 Record the audit process in an appropriate manner 3.3 Explain the purpose and use of the different accounting records Higher Grade achievements (where applicable) Grade descriptor Achieved? (tick) Grade descriptor Achieved? (tick) Page 6 of 8 M1: Identify and apply strategies to find D1: Use critical reflection to evaluate appropriate solutions own work and justify valid conclusions D2: Take responsibility for managing M2: Select/design and apply appropriate and organising activities methods/techniques D3: Demonstrate convergent/lateral M3: Present and communicate appropriate /creative thinking findings Page 7 of 8 Assignment Feedback Formative Feedback: Assessor to Student Action Plan Summative feedback Feedback: Student to Assessor Assessor Signature Date IV Signature Date Student Signature Date Page 8 of 8
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Running Head: FINANCIAL SYSTEM

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Financial system
Student Name
University Name
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FINANCIAL SYSTEM

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Task 1:
“An accounting record is plot in light of the fact that most of the documentations stressed inside
the status of cash related clarifications, records that range unit noteworthy to monetary study, and
audits that embody the recording of points of interest and liabilities, records, journals, and the
other supporting chronicles like sales.”
For the Moon Hyper Market they need to keep proper:
Ledger: - “Maintaining a ledger may be a should altogether accounting systems. Records go unit
used for making arranged trial changes; that check the calculating precision of the accounting
books.
Prime segment books: - “a vital entry book is additionally insinuated as a book of exceptional
segment. These domain unit the books wherever trades locale unit beginning recorded. the most
prime section books locale unit Sales day book, Purchase day book, Sales come day book,
Purchase come day book, General Journal and money Book (Ducha et.al, 2008).”
“Accounting accepts a critical part. It gives data like however sensible or undesirable the
condition of the business is, and that activities or stock are beneficial. Accounting is fundamental
for a business substance for the resulting reasons:”
Accounting records strike the base of even practices, can help a business to check delayed
consequences of 1 aggregate with another whole.
Fundamental ideas of accounting:
“Collections develop of accounting: The accumulations premise of accounting includes the non-

FINANCIAL SYSTEM

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money of exchanges to be reflected inside the “fiscal explanations (for {the amount|the amount}
amid which those impacts range unit undeniable and not inside the period amid which cash is
truly gotten or paid)” (Open University Course Team, 2006). Going concern: This extra clears
the records are prepared on the possibility that the specialist can even now work for the
anticipated future. The Avenue Account and record expect no goal to impressively shorten town
Council's operations (Open University Course Team, 2006).”
Consistency idea: “There zone unit assortment of different courses in which amid which a few
thoughts might be connected. each business ought to choose the approach that gives the first
solid picture of the business, not just for this time, however after some time moreover”
Different factors of accounting system:
Modernized Accounting System: Keeping right accounting records might be a fundamental a
touch of coordinating assistant alliance. Close by serving to stay it above water fiscally and by
law, it's furthermore a request of financing bodies. More humble gatherings will every so often
make do with direct accounting systems however more noteworthy gatherings juggling with
more prominent entireties of money and extra progressed budgetary exchanges may understand
their work helped by utilizing a dealt with accounting.”
Manual Accounting Systems: “Accounting structures region unit manual or included.
Understanding a manual accounting is beneficial in seeing relationship among information and
reports. In like way, most orchestrated structures utilize models from manual frameworks. In
decision words, manual accounting and accounting frameworks develop unit the standard kind
for keeping up a business' records and records.”

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Corporate association:
“Corporate association is that the structure by that affiliations square measure created and
controlled. The bit of the shareholders is to name the authorities and therefore the outside
supervisors, relate degreed to fulfill themselves that a huge association structure is in situ. it's
likewise wherever heads square measure at danger for setting the affiliation's key concentrations,
giving the authority to put these into result, oversight the association of the busin...


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