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Tutorial Solutions – Not for profit entities - KH
Concepts In Biochemistry And Microbiology (SHGB6115 )
Universiti Malaya
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Tutorial Solutions – Not for profit entities
Question 1
Compare the ‘statutory audit process’ to the ‘audit’ process involved in a VFM (3 Es) audit.
Students should now be able to outline the statutory audit process (and the reasons for it).
An EEE audit is very different.
EEE’s main objective is to enhance ‘objectives’ (a measure of effectiveness) by focussing on economy and efficiency (compare this to statutory audit).
Methods used fall much more in the ‘consultancy’ arm of the internal audit department (or outsourced auditors) and management accountant. Although there can be ‘standards’ by which to audit these are often difficult to measure, especially so in terms of outcomes/effectiveness.
The benefit of EEE audit is to stimulate best economies, efficiency and effectiveness in a not profit-making entity that does not have commercial pressures ‘forcing’ these issues.
Question 2
Controls over collecting boxes:
Physical controls – chain boxes to counter Responsible person at the outlet listed in central register Sealed boxes – so can tell if opened Regular collection Two people count cash together Regular banking
Question 3
Key factors Complexity and extent of regulation Significance of cash donations Accounting treatment of grants/revenue recognition Terms and conditions attached to grants/donations and compliance therewith Uncertainty of future income and lack of predictable relationships between expenditure and income Significance of restricted funds Extent and nature of trading activities must be compatible with charitable status Complexity of tax rules Sensitivity of key statistics eg proportion of resources used in administration Need to maintain adequate resources for future expenditure versus build up of reserves which could appear excessive
Question 4
Explain what a value for money audit is in reference to the 3 Es.
Refer to lecture material.
Give one example for each of the 3 Es of factors that the auditors would consider if they were to perform a VFM audit on Aqua’s behalf.
Suggested answer only – not an exhaustive list.
Economy Whether materials purchased to build wells are bought at the best price given the locations they are built in.
Efficiency Whether all sites dug resulted in a well successfully being built, or whether some digs were unsuccessful in finding a water supply. Whether any materials are wasted when building wells.
Effectiveness Consider cost of each well per the number of people benefiting from the new water supply to identify which projects were most successful. Look at how many wells have been built over a set time period. Have any projects not been successful (e. have they been unsuccessful in digging a well in one particular village).
Tutorial Solutions – Not for profit entities - KH
Course: Concepts In Biochemistry And Microbiology (SHGB6115 )
University: Universiti Malaya
