Go to the campus bookstore and buy something. Pay for your purchase and keep the receipt to bring to class.

a. Consider the assets of value in the bookstore. Identify these assets and describe the risk of misstatement associated with the asset.

b. If misstatements occur in the transactions recorded in the bookstore, what are the misstatements likely to be?

c. Note everything that the cashier does during the payment process. Explain why you think these procedures are done. Can you identify the controls the book-store used in recording the purchase?

d. Examine the information on your receipt and explain what it represents and why it is useful to the bookstore.

e. Note the store’s physical layout and the way in which the items for sale are arranged. Explain how this facilitates the safeguarding of the store’s assets.

f. Describe the procedures that you believe are in place to reconcile the daily sales with the cash counts. What is the purpose of these procedures?

g. Do you believe that sales clerks are assigned to a register? Do you think the cash box is changed as clerks are replaced? Is it likely that a clerk works for a full eight-hour day in a campus bookstore?

h. Suggest improvements that might be made to the physical layout of the store or the internal controls of the store to reduce the risk of material misstatement in the bookstore.

i. Can you identify a control the bookstore used to make sure that all sales are recorded (completeness)?

j. What are the relevant assertions for the sales revenue and inventory account for the bookstore?

k. How will the bookstore decide whether recommendations made by the auditor to improve controls in the bookstore are worth implementing?