May Journal - 5th Week

 

WEEK 5

Date: 27 May 2024 - 31 May 2024
Day : Monday - Friday
Location : F Berhad, Kluang
Time: 8.30 a.m - 6.30 p.m

TASKS OF THE WEEK 

Second engagement at F Berhad, Kluang

Day 41 ( 27 May 2024)

Performing test of control and walkthrough of purchase cycle

For my second engagement, I joined the audit team for F Berhad, which comprises three subsidiaries: HA Sdn Bhd, FE Sdn Bhd, and FC Sdn Bhd. The audit team consisted of four members, led by Ryan, who served as the senior in charge. As part of this engagement, I spent nearly two weeks on-site in Kluang for the interim audit.

During this engagement, I was introduced to new working papers, particularly related to the Test of Controls (TOC). Understanding and implementing TOC is vital, especially in the revenue and purchase cycles, as it helps evaluate the effectiveness of internal controls in these areas. By testing controls, we can assess whether the processes in place are functioning as intended, thus reducing the risk of material misstatements in the financial statements. This exposure deepened my understanding of how robust internal controls can enhance the reliability of financial reporting and improve overall audit efficiency.

Lessons Learned:

Throughout the tasks given, I learned about the Control Testing Threshold (CTT) that highlighted the importance of evaluating internal controls. The CTT serves as a benchmark for determining the extent to which controls must be tested based on their design and operating effectiveness. This concept is essential for identifying potential areas of risk, as it allows auditors to focus their efforts on the most significant controls that could impact the financial statements.

Day 42 ( 28 May 2024)

Performing Test of Control and Walkthrough of Purchase Cycle

The next day, I continued my work by applying the same approach to the subsidiaries, focusing on the Test of Controls (TOC) related to the purchase cycle. I updated and reviewed the working papers, ensuring that all relevant controls were documented and assessed for effectiveness.

Performing Purchase Working Paper

Other than that, I also performing the purchase working papers for FC Sdn Bhd. As part of this task, I needed to choose the right sample for testing and detect any key value items that exceeded our predetermined materiality threshold (PM). By selecting significant transactions and assessing their controls, I was able to focus on areas of higher risk, enhancing the effectiveness of the audit.

Lessons Learned:

I learned the critical importance of selecting the appropriate sample for testing, particularly when identifying key value items that exceed our predetermined materiality threshold (PM). This process highlighted the need to focus on significant transactions that pose a higher risk of misstatement. By doing so, I enhanced the effectiveness of my audit procedures and ensured that the most critical areas were thoroughly examined.

Day 43 (29 May 2024)

Performing purchase working paper

The next day, I focused on performing the purchase working papers for FE Sdn Bhd and F Berhad. This involved selecting appropriate samples for testing the purchase transactions to ensure that internal controls were functioning effectively. I reviewed the purchase records and identified transactions that were significant in terms of value and risk, particularly those that exceeded our predetermined materiality threshold (PM).

Lessons Learned:

From this task, I learned the importance of strategic sampling in the audit process. Selecting the right samples not only enhances the effectiveness of testing but also ensures that we focus on the most critical areas of financial reporting. This experience reinforced my understanding of how targeted audits can help detect irregularities and strengthen overall financial integrity.

Day 44 ( 30 May 2024)

Performing purchase working paper

The next day, I concentrated on performing the purchase working papers for HA Sdn Bhd. This involved reviewing all relevant purchase transactions and ensuring that the documentation was complete and accurate.

In addition, I also made amendments to previous working papers that had already been reviewed by the senior in charge. This process required careful attention to detail to ensure that all feedback and recommendations were incorporated correctly. I cross-referenced my amendments with the seniors' notes to maintain consistency and accuracy in the documentation.

Lessons Learned:

From this experience, I learned the importance of incorporating feedback effectively. Amending previously reviewed working papers taught me how to critically evaluate my work and make necessary adjustments based on guidance from more experienced team members. This iterative process not only improved the quality of my work but also enhanced my understanding of the nuances involved in auditing purchase transactions.

Day 45 ( 31 May 2024)

Performing income and expenses working paper

The next day, I focused on performing the new working paper for T4 (Income and Expenses) for FC Sdn Bhd. This involved vouching the selected samples after completing the sampling worksheet. I carefully reviewed the transactions to ensure their accuracy and validity.

To validate these samples, I vouchered them against bank clearance records, confirming that the transactions were appropriately reflected in the bank statements. Additionally, I performed reasonable tests for certain expenses, analyzing whether the amounts recorded were justifiable and consistent with the nature of the transactions.

Lessons Learned:

From this task, I learned the critical importance of thorough vouching in the auditing process. By tracing transactions back to bank statements, I reinforced my understanding of the need for verification at multiple levels. This practice not only helps detect discrepancies but also enhances the reliability of financial reporting.

Additionally, performing reasonable tests for expenses taught me the significance of context in financial analysis. Understanding the rationale behind each expense allowed me to assess whether they were reasonable and aligned with the company’s operations.