70.2K

Verified Solution

Link Copied!

The Bunny Hop manufactures cotton candy and any sweet things imaginable. It prides itself on maintaining close to a 100% delivery rate. However, more recently, many of its customers have complained that their delivery contained many incorrect items.

The following flowchart depicts part of its revenue cycle.

(a) Identify an economic event taking place in the diagram (1 mark) Enter your answer here (b) Identify a business event taking place in the diagram (1 mark) Enter your answer here Q1.2 6 Points (a) (i) Describe one risk in the current process that could threaten the accuracy of the shipme data, including when it occurs (1 mark) Enter your answer here (ii) Explain one potential risk of misstatement to financial statement accounts, if any (1 mark) Enter your answer here (b) (i) Identify and explain one present control that could help address the threat to the accura of the shipment data you identified in (a). (2 marks) Enter your answer here (ii) Identify and explain one missing control that could help address the threat to the accuracy the shipment data you identified in (a). (2 marks) Enter your answer here Q1.3 3 Points The general manager, James, is also concerned about the validity of the invoice data. He has heard that reconciliation (or matching documents) would be a helpful control to improve the validity of the invoice data. In your answer, explain how the reconciliation should work. Specifically, identify the document involved, the direction of reconciliation, and why it can hel achieve the validity of the invoice data. James was persuaded by your explanation. However, when he went to Peter, his supervisor, he was told that Bunny Hop is currently facing a budget constraint due to Covid. Peter told James that the only way to implement the reconciliation in (d) would be to remove the "review and reconcile order and shipment data step" in the current process. In Peter's mind, "A reconciliation is a reconciliation - it only needs to be done once." Do you agree with Peter's suggestion? Briefly explain your answer. Enter your answer here (a) Identify an economic event taking place in the diagram (1 mark) Enter your answer here (b) Identify a business event taking place in the diagram (1 mark) Enter your answer here Q1.2 6 Points (a) (i) Describe one risk in the current process that could threaten the accuracy of the shipme data, including when it occurs (1 mark) Enter your answer here (ii) Explain one potential risk of misstatement to financial statement accounts, if any (1 mark) Enter your answer here (b) (i) Identify and explain one present control that could help address the threat to the accura of the shipment data you identified in (a). (2 marks) Enter your answer here (ii) Identify and explain one missing control that could help address the threat to the accuracy the shipment data you identified in (a). (2 marks) Enter your answer here Q1.3 3 Points The general manager, James, is also concerned about the validity of the invoice data. He has heard that reconciliation (or matching documents) would be a helpful control to improve the validity of the invoice data. In your answer, explain how the reconciliation should work. Specifically, identify the document involved, the direction of reconciliation, and why it can hel achieve the validity of the invoice data. James was persuaded by your explanation. However, when he went to Peter, his supervisor, he was told that Bunny Hop is currently facing a budget constraint due to Covid. Peter told James that the only way to implement the reconciliation in (d) would be to remove the "review and reconcile order and shipment data step" in the current process. In Peter's mind, "A reconciliation is a reconciliation - it only needs to be done once." Do you agree with Peter's suggestion? Briefly explain your answer. Enter your answer here

Answer & Explanation Solved by verified expert

See Answer