Task-6

Apply the controls procedures and test of control for cash system of B-Star.
Objective of controls:

The objective of controls in the cash system are to ensure that –

1.All cash receipts are properly collected, recorded and banked.

2.All cash payments are for proper purposes and have been authorized for payment
3.Receipts are recorded accurately and completely in the accounts

Control over cash sales:

1.Cash sales should be recorded when the sale is made normally by entering the sale in
a cash
till and giving the customer a cash receipt.

2. The total cash received should be reconciled daily with the total till slips, and
should be banked daily.

Control over banking:

1. Receipts should be banked intact daily.

2. The banked amount should be entered promptly in the cash book .
B-star is a theme park based on a popular series of children's books. The park is open all
year and has been in operation for the last seven years. B-Star is now very successful;
customer numbers are increasing at approximately 15% each year. They have a good
control on their cash system. Now they decided to test their cash system and identify the
risks.

Test of control:
Control Procedures that Tests of the Control that The possible risk
the Company Perform the Auditor Might Perform

All ticket sales are recorded Observe and make inquiries
on a computer. This
information is transferred
electronically to the accounts
office.
Cash is collected regularly
from each ticket office by
two security guards.
The cash is counted by two
accounts clerks and banked
on a daily basis
that all ticket sales are
correctly recorded.
Observe and make inquiries
about their performance
Observe the cash counting
and compare information to
bank deposit records and
sales record
If there is a problem in server
sales data may be not
received by the accounts
office.
If there is no collection
receipts may be they make
mistake
If accounts clerks made
mistake in counting bank
deposit records and sales
record have no match
Control Procedures that the Tests of the Control that The possible risk
Company Perform the Auditor Might Perform

Total cash received is

recorded in the cash book,
and then the general ledger
 Task-5

Apply the controls procedures and test of control for the payroll
system of Boulder
Personnel management and the payroll accounting cycle
include transactions that affect the wage and salary
accounts and a number of related accounts:
Personnel and Labour Relations: Hiring and firing.
Supervision: Approval of work time.
Timekeeping and cost accounting: Payroll preparation and cost
accounting.
Payroll Accounting: Cheque preparation and related payroll
reports.
Payroll Distribution: Actual custody and distribution to
employees.
 Start Here

Cash disbursement Personnel

hiring / firing
Payroll
Payroll Cycle
distribution
Compensation
determination

Payroll
accounting Supervision,
attendance,
and work
The objectives of controls:

The objectives of controls for the payroll cycle are to ensure that the company will :
•Pay the right people
•At the right rate
•For valid work done
•Deal correctly with taxes and other deductions
Control procedures & Test of control:

Control Procedures Test of Control

Authorize control Written authorization required to employ or

dismiss any employee, or to pay overtime
Comparison control Monthly payroll total should be compared with the
previous month and with the budget
Computer control Deduction should be calculated by the computer
for each employee each month
Physical control Clock cards and timing device should be carefully
maintained
Arithmetical control A sample of calculation should be checked

Managing control accounts An overall wages control account should be

checked
Accounting reconciliations Payroll reconciliation should be regularly carried
out by a senior manager
Substantive Procedures
Audit procedures to gather direct evidence on account balances are called
substantive procedures.
recalculation, observation, confirmation, enquiry, vouching, tracing, scanning,
analytical review
dual purpose procedures – gain substantive purpose and control purpose
evidence with the same test.
 Task-4
Apply the controls procedures and test of control for the sales cycle of Rhapsody
Co.