Assignment of Audit.

Name: Abdullah khan.

Roll #: 01
Program: MSc (A & F )
Semester: 2nd
Chapter: 05
Title: Internal Control
Submitted to:
Dr. Umer Qudoos Attari.
Report

To: Dr. Umer Ul Qudoos Attari

From: Abdullah Khan Roll # 01

Subject: Review of sales system

Period of fieldwork: June 2020

Terms of Reference:

The scope of the assignment was to carry out a thorough review of the sales system of King
Company, a small business. This involved carrying out tests of controls on the existing controls
to determine whether the controls were operating effectively. In addition, we considered the
key risks surrounding the sales function and identified any risks for which we found no related
controls. Thus, we have been able to give recommendations regarding existing controls as well
as suggest new controls where we believe they are needed.

Executive Summary

The main findings from our review are:

• the sales system, on the whole, comprises adequate controls.

• some specific control weaknesses were identified and recommendations are

given in the Appendix to the report.

Follow-up

Responsibilities have been allocated for introducing/improving control procedures which

we found to be deficient.

We propose a follow-up review in six months’ time.

Dated 12th June, 2020

Appendix
Potential weakness in king's company present system of accounting fo sales and receivables.

After reviewing the working and accounting system of King Company, I have pointed out the
following weaknesses, their risks, reasons and recommendations.

Weaknes Reasons Risks Recommendations

Inadequate Failure in establishing Inadequate Financial documentation

documentation proper financial documentation may should be pre-
record dur to not provide satisfactory numbered to ensure all
deficiency f capital an record about transaction are recorded
personnel. receivables and other and accounted for.
financial operations.

Lack of division Due to less numbers It may reduce the There should be proper
of job and of employees, opportunity to evaluate division of job and
responsibilities responsibilities are different transactions everybody should aware
not authorized in as it is hard to obtain of his/her duty.
proper ways. quotation.
Job rotation may also
bring better results

No review and Owner is involved in There may exist of Owner should take
oversight. day to day operations fraud. Moreover, it some time and interest
as he is the manager may create difficulties in financial record. Not a
of the company in evaluation of lot time is required to
business operations review revenues,
and decision making. expenses, payable,
receiveables and other
reports.

Inefficient Small businesses run Lack of information Many user-friendly

information lean resources and may lead to systems are out there,
system very little time is often systematically which are helful in
spent evaluating ineffeciency and poor processing information
information system. performance. effectively and
efficiently.