Exhibit EP9–6 contains an arrangement of examples of transaction errors (lettered a – g) and a set of auditee control procedures and devices (numbered 1–15). You should photocopy. Exhibit EP9–6 to use for completing the requirements of this question

Required:

a. Opposite the examples of transaction errors lettered a – g in Exhibit EP9–6, write the name of the control objective organizations wish to achieve to prevent, detect, or correct the error.

b. Opposite each numbered control procedure, place an X in the column that identifies the error(s) the procedure is likely to control by prevention, detection, or correction.

c. For each error/control objective, identify the financial statement assertion most benefitted by the control.

d. For each company control procedure numbered 1–15 in Exhibit

Write an auditor’s control test that could produce evidence on the question of whether the company’s control procedure has been installed and is operating effectively.

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a. Sales recorded, goods not shipped b. Goods shipped, sales not recorded c. Goods shipped to a bad credit risk custormer d. Sales billed at the wrong price or wrong quantity e. Product ine A sales recorded as Product line B f. Failure to post charges to customers for sales g. January sales recorded in December Control Procedures 1. Sales order approved for credit 2. Prenumbered shipping doc prepared, sequence checked 3. Shipping document quantity compared to sales invoice 4. Prenumbered sales involces, sequence checked 5. Sales invoice checked to sales order 6. Invoiced prices compared to approved price ist 7. General ledger code checked for sales product lines 8. Sales dollar batch totals compared to sales journal 9. Periodic sales total compared to same period accounts receivable postings 10. Accountants have instructions to date sales on the date of shipment 11. Sales entry date compared to shipping document date 12. Accounts receivable subsidiary totalled and reconciled to accounts receivable control account 13. Intercompany accounts reconciled with subsidiary company records 14. Credit files updated for customer payment history 15. Overdue customer accounts investigated for collection