Reference no: EM133098509

Question - Tampa plc ("Tampa") is a small UK-based plc whose ordinary shares are traded on the London Stock Exchange. Tampa's principal businesses manufacture specialised components for the European aerospace sector. Based in the West Midlands, Tampa's key subsidiary companies employ more than 1,000 skilled workers.

You are an Audit Partner in Jones & Co. ("Jones") and you have been Audit Engagement Partner for Tampa for five years. Tampa has a board of directors comprising four executive members (one of which is the chairwoman) and three non-executive members. The non-executive members are all members of Tampa's Audit Committee. Tampa has no Internal Audit function.

For the audit of the previous accounting year, the Management Letter recommended that Tampa's audit committee should take steps to improve Tampa's corporate governance.

Tampa's Purchases System is described in Jones's permanent file as follows:

Jon Snow, Tampa's production department head, is responsible for identifying suppliers of the specialised raw material that the department uses

Jon Snow negotiates purchase prices and he completes and submits all purchase orders without any other authorisation.

Tampa has no independent purchasing department.

A three-part order form is used by the production department. This form is not pre-numbered. The top copy is sent to the supplier, the second copy is sent to the goods received department and the third copy is filed by Jon Snow.

When raw materials are received, the goods received department puts the items straight into the stores but makes no checks.

The advice note that accompanied the goods from the supplier and copy two of the purchase order for those goods are sent to the accounts department.

When the supplier's invoice is received the purchase ledger clerk checks it for accuracy, initials it, and attaches the advice note and purchase order. She then inputs the invoice into the purchase ledger system without pre-authorisation.

The invoice is sent to Jon Snow who codes the invoice and returns it to the purchase ledger clerk. Purchase invoices are coded, entered on an analysis sheet, and posted to the nominal ledger monthly.

Required -

(a) Briefly describe five different methods that auditors use to understand, and document an accounting system (or parts of an accounting system), noting any key strengths and weaknesses of each.

(b - 1) Briefly describe the function of a Control Objective and a Control Procedure.

(b -2) Identify four different Control Objectives and related Control Procedures for a purchases system.

c) c

d) Why does a company need to have effective corporate governance and explain the key elements of effective corporate governance systems.