10.8 Munro Limited is a small company with two divisions. One division trades in
ID: 2542450 • Letter: 1
Question
10.8 Munro Limited is a small company with two divisions. One division trades in specialized equipment for walkers and mountaineers, and the other sells artists' materials. The company has acquired rights of access to a rocky area near a major city, where it runs weekend schools for climbers and groups of artists. The school is stffed by one full-time member of the company's staff and a number of university students and local artists on a part-time basis. The company sells equipment and materials on both cash and credit terms and also rents equipment to student climbers on a daily basis and to experienced climbers for longer periods of time. People attending the schools pay a fee on the spot as the weather does not always allow schools to take place. The company receives a grant from the local authority for running the weekend schools. State basic controls you would like to see to ensure that fees received for weekend schools are completely and accurately recorded and tests of details you would perform to satisfy yourself that this is so.Explanation / Answer
Basic controls to ensure that fees received for weekend schools are completely and accurate are as follows
1. Authorization: All Transactions are approved by someone with the authority to approve the specific transactions.
2. Completeness: All valid transactions are included in the accounting records.
3. Accuracy: All valid transactions are accurate , are consistent with the originating transaction data, are correctly classified , and the information is recorded in the timely manner.
4. Validity: All recorded transactions fairly represent the economic events that occured, are lawful, and have been executed in accordance with management's authorization.
5.Physical safeguards & safety. Access to pnysical assets and information systems are controlled and restricted to authorized personnel.
6. Error Handling: Errors detected at any point in processing are promptly corrected and reported to the appropriate level of mangement.
7. Segregation of duties: duies are assinged in a manner that ensures that no one person is in a position to both perpetrate and conceal an irregularity.
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