case study report

ACCG340- Case Study Assignment Templates

Part 1

(a) Using the data you have obtained, provide an overview of Pythree’s purchases and trade  payables for the year under audit, outlining the implications of these for the auditor. Your  overview should be conducted at a relatively high level (e.g. not concerned with individual  suppliers) – it should include your visualisation/s of the data (using Qlik Stories function or  screenshots/copied images) and narrative explanation of the overview and audit  implications and should not exceed three (3) pages.


 ACCG340- Case Study Assignment Templates     Introduction of the new service requires explanation and observation of the implications of the settled contracts and pending contracts including obligations terms and conditions and how it is accounted for in their payables


      Purchases and payables contracts from international suppliers – including contracts with the companies and how the conversion rate is settled as well as the terms and conditions of the suppliers

      Given the current absence of the Central accounts manager, observation of the current temporary central accounts manager including terms and conditions of employment, responsibility and training as well as observation of statements generated for the year

      Given the current procedures for the purchases and trade payables, there will be observation of current training of procedures to employees and if it leads to any  potential implications of material misstatements in these account


      Procedure for high value payments to creditors exceeding $3,000 (how to know who are creditors?)

      Trade payable system (payables clerk level) for categorisation, overdue payments and goods received [GRAPH 1]

      Trade payable system (supervisor level) for updating supplier details [GRAPH 2]

      Requisition procedures (purchasing manager level) processes

      Procedure for Received good Discrepancies including the effectiveness of detecting and correcting such discrepancies/ including potential explanations for errors and degree of material misstatements (purchasing manager level) [GRAPH 3]

      Review reconciliation of accounts

GRAPH 1. Trade Payable:

-the payment period in reality

-in the supplier detail list:

GRAPH 2. Applying discount rates for different suppliers and missing supplier’s information in Supplier File record:

GRAPH 3. Error notes and Error actions in the purchase process:

=> consequences:

Graph 4: (the accounts supervisor’s  responsibility to add and modify supplier account details.) but driver and storeperson regarded in this file.

Graph 5: purchase order data

( If the purchase order exceeds $5,000, it requires approval by the purchasing  manager.)

1145/4999 orders over $5,000 need Purchasing manager’s approval

Purchasing officers have responsibilities to  issues a  purchase order and sends this to the relevant supplier and copies to the accounts  department => 3760 orders they prepared the order.

=>  other positions also joined in these order processes (not their works)

And 3 orders without any confirmation from purchasing officers, (2 orders > 5000)

  1. b) and c) —– Bibi
(b) Account         at risk(b) Assertion at risk(b) Explanation of risk(c) Substantive test of detail
SalesOccurrenceThey may overstate sales to boost their profit because they need funds(bank loan or crowdfunding) to keep up with the increase in demand.Select a sample of sales entries from the sales journal and trace them back to shipping documents to ensure that the sales weren’t
Trade receivables Accuracy, valuation and accuracyThere is potential risk that the account is understated. There have been cases where the percentage of credit terms were longer than that in real payment period. The longer the credit term, the higher is the chance that we might not receive payments from them.Review the credit terms and mail out outstanding debts to follow up payment.
Trade payablesExistenceAccounts payable is potentially overstated because there have been 3 cases where orders were processed without any approval and 2 of them were over $ 5,000 from graph 5.







Select those 3 orders and trace it back to the supplier ledger that they have in their records to check if that supplier is a registered one. If it doesn’t match, ask the person who processed the invoice to prove that the trade payables of the 3 orders are real.

Part 2


Audit approach: Combined approach
Tests of controls Extensive
Substantive analytical procedures Medium
Substantive tests of details Small

With reference to the case information provided above, it is observed that the internal controls implemented at Pythree are effective as various procedures are undertaken to ensure that all recorded information is accurate. For example, verification from the corresponding manager is required when payments or purchases are greater than a specific level.  As a result, extensive test of controls would be undertaken to confirm that reliance can in fact be placed on these internal controls. Given the substantial amount of transactions and the demand for their comprehensive services from technological start-up companies are significantly high, a medium amount of substantive analytical procedures would be useful in confirming the recorded amounts. If the test of controls prove that internal controls are effective, substantive test of details would be of a small level.

  1. e) and f)
(e) Control(f) Test of control
i. When preparing the purchase order, if the purchase is greater than $5000, it need approval from the purchasing manager The auditors could inspect all the purchase orders on a monthly basis and obtain a sample of orders that are greater than $5000 and ensure that all these orders have been approved by the purchasing manager by seeking a signature along with the date that it was approved.
ii. Before the invoices are included in the payment run, the payables clerk matches the details on each invoice to its corresponding goods received note and purchase order. The auditor can select a sample of invoices that are included in the payment run and check to see that they were included only after the payables clerk has matched the details of each invoice to it corresponding goods received note by sighting a signature.
iii. Any payment to a single creditor is greater than $3000, it would need approval from the purchasing manager. The auditors should observe the purchasing manager checking all supporting documents such as the purchase orders and goods received to ensure that invoices are accurate. In addition, approvals and verification can be confirmed by seeking a signature and date of the purchasing manager.


Assessment of effectivenessData limitationsFurther evidence required
Specify i., ii. or iii.
Specify i., ii. or iii.


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