- 15 Marks
AA – L2 – Q33 – Internal Control Systems
Discuss shortcomings in Samba Enterprises' expense claim system and suggest improvements. List tests of control for Samba Enterprises' expense claim system.
Question
Samba Enterprises employs 100 salesmen, each of whom covers a different area and is supplied with a car. At the end of each week, each salesman submits an expense claim on a pre-printed form with supporting vouchers attached. Expenditure is on fuel together with invoices for hotel accommodation, meals, and entertaining.
Each claim is scrutinised by the assistant accountant. He raises any queries with the salesman concerned and makes out cheques for signature by two directors.
The amount of salesmen’s expenses paid out annually is material to the financial statements.
Required:
(a) Discuss the shortcomings of this system and suggest ways in which it could be improved.
(b) List the tests of control that the auditor might perform on this system.
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