Candidates were required to use the scenario to list and explain the purpose of different tests of controls.

The question was worth 12 marks. As the requirement explicitly stated that 6 tests were required, the marking scheme was 1 mark for the test and 1 for the explanation.

Some candidates provided normally brief and succinct answers, clearly identifying the tests of control and reasons for each test. However, many candidates did not seem to appreciate the difference between a test of control and a substantive procedure.

A significant number of the points made were actually substantive procedures, which did limit the number of marks awarded for this section. This lack of knowledge was the main reason for the average mark in this section being far below a pass standard. Unfortunately, many candidates appear to list every single substantive procedure they could think of, making so very long and largely irrelevant answers.

Example comments provided and reasons why those comments did not obtain a pass standard are noted below:

Answer comment
Inspect the goods received note (GRN) for signature from the customer. To confirm that the GRN are signed for completeness.

Examiner’s assessment of comment
Does not state clearly what control the signature is achieving – in this case that the customer confirms that they have taken the goods listed on the GRN.

Answer comment
Test all orders, delivery notes and invoices to ensure the correct goods and amount has been recorded in the ledgers and correct invoice sent.

Examiner’s assessment of comment
A poor procedure for the following reasons:
• It is not a test of control (which is the primary reason it is not relevant to this question requirement)
• It appears all documents will be tested – hardly ever the case
• It is not clear which system is being tested (which ledgers? What invoice?)

Answer comment
Review goods despatched notes to ensure they are dated and signed by the customer.

Examiner’s assessment of comment
This comment is fine for stating the test of control – however, the second question requirement of explaining the reason for the test has not been mentioned. Marks would therefore be limited to 1 out of 2. An additional statement such as “to ensure that customer confirm receipt of goods stated on the GRN” would be needed to obtain the second mark.

Other common errors included:
• Stating weaknesses in the control systems, without mentioning any test of control. For example, stating “all goods should be maintained on trolley before GDN is raised to ensure completeness of the GRN”. This comment had no test of control or reason for the test and so was not relevant to the question requirement.
• Including comments on the debtors/receivables systems such as “ensure that the aged debtors report is produced on a timely basis”. The question requirement was for tests on the sales and despatch systems, not debtors.
• Providing detailed examples of substantive procedures. For example, “Agree details on GDN to computer system”. Marks would be obtained for listing an appropriate control such as the GDN being signed in the accounts department to confirm details had been entered onto the computer system.

Overall, the standard of answers was unsatisfactory.