Essay on Part A

Submitted By meghalkdesai
Words: 1187
Pages: 5

Part A : Multiple Choice Questions
Question : 1
a) 1
b) 1
c) 2
d) 4
e) 1
f) 4
g) 4
h) 4
i) 1
j) 4

Part B : Short Case

To: Edward Sloane Senior audit Partner
From: David Mynarski, CGA
Date: 15th May 2015
Subject: Vehicles for Hope Limited Audit Planning
This memo will discuss the issues that were noted in the VHL engagement for the current year. Several factors increase the level of audit risk associated with this engagement as outlined in this memo and we will discuss safeguards and procedures on how to approach them.
Familiarity threat
Before proceeding with engagement, I would like to address the issue on familiarity as I have been the auditor for VHL for the past five years and during this time have developed close friendship with some of the board members. As per our CGA independence standard and the code of professional ethics and rules of conduct, familiarity and self- interest threats are created by using the same personnel on an audit engagement for a long period of time. The significance of threat however will depend on a lot of factors including but not limited to the length of time involved on the engagement, the role of the individual in the engagement, the nature of the engagement and firm’s structure, changes in the clients management team and complexity of the client’s accounting and reporting issues. However, there may be safeguards available for us like rotation of staff, regular quality control and peer review and this we need to explore in our future discussion.
Information systems and Accounting Issues
VHL does not use accounting systems to track its financial information and only uses manual data processing through excel. This poses a risk on the reliability of the financial data. This system has been seen as time consuming and error prone so a move to an off the shelf accounting software program is being planned. A more advanced computerized accounting system will give daily accounting information and reduce manual processing of information and errors as well as the possibility of theft. It would help simplify payroll and other areas such as inventory and payables management. This can also aid in tracking grants and donations and properly classifying them as to their purpose, restrictions and availability. A computerized accounting system will improve the accuracy of the financial statements by ensuring transactions are recorded correctly and this should be adequate to VHL’s reporting needs. A change in systems however, would require an updating of policies and procedures for documenting transactions. With this comes strengthening of internal controls particularly on proper segregation of duties as the office accountant is performing incompatible functions. A review of the organizational chart and personnel’s assigned duties and job descriptions to suggest improvements like placing compensating controls to mitigate the risks must be conducted. We can include our findings and observations in a separate report to the client for their process improvements. For this audit, it is critical to check the cash balance and bank records to endure that there was no mishandling of the funds.

Key Performance indicators
Currently, VHL has no KPIs to measure its success as an organization. These are an indicator of the good performance of an organization, or of how successful a particular activity is. By not measuring performance, VHL is missing out on keeping its best practices and improving on its weaknesses. KPIs are also a good way to improve reputation with its stakeholders particularly the donors as it is a not for profit organization. Aside from the number of new applicants , we can recommend additional KPIs that VHL should track such as cost to run the program per applicant served, number of graduates of training program per year, and most importantly the number of these graduates who secured employment after their training. These KPIs will enable VHL to show its stakeholders that it is successful every…