(d) (i) Discuss why it may not be possible to provide a high level of assurance over the stated key performanceindicators; and (4 marks)
题目
(d) (i) Discuss why it may not be possible to provide a high level of assurance over the stated key performance
indicators; and (4 marks)
参考答案和解析
正确答案: (d) (i) The main reason why it may not be possible to provide a high level of assurance is that the KPIs are not defined precisely: – The value of donated pharmaceutical products is compared to revenue to provide a percentage. However, it will be difficult to accurately value the donated products – are they valued at cost, or at sales price? Are delivery costs included in the valuation? The intrinsic value may be lower than sales value as Sci-Tech Co may decide to donate products which are not useful or relevant to the charities they are donated to. – The value of ‘cost of involvement with local charities’ is also not defined. If the donations are purely cash, then it should be easy to verify donations using normal audit procedures to verify cash payments. However, the ‘involvement with local charities’ is not defined and will be difficult to quantify as a percentage of revenue. For example, involvement may include: ? Time spent by Sci-Tech Co employees at local charity events ? Education and training provided to members of the local community in health care matters – Number of serious accidents is also difficult to quantify as what constitutes a ‘serious’ accident is subjective. For example, is an accident serious if it results in a hospitalisation of the employee? Or serious if it results in more than five days absence from work while recovering? In addition, the sufficiency of evidence available is doubtful, as such matters will not form. part of the accounting records and thus there may be limited and possibly only unreliable sources of evidence available. – Donated goods may not be separately recorded in inventory movement records. It may not be possible to distinguish donated goods from sold or destroyed items. – Unless time sheets are maintained, there is unlikely to be any detailed records of ‘involvement’ in local charities.
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