In Table 9.2 we provided you with key and subsidiary questions in a sales system. Two key questions in a purchases system are:

(a) Are all requisitions for goods and services initiated and approved by authorized responsible officials?

(b) Are all purchase orders based on valid, authorized requisitions and are they processed in a manner to ensure that prices, conditions, quantity, quality and suppliers are appropriate to the business?

What subsidiary questions might you ask, assuming that in this system the order is automatically generated by the computer system?

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TABLE 9.2 Key and subsidiary questions in a sales system (Continued) Stage or component Key questions Entry In general (or nominal) ledger Are all sales revenues and receivables properly determined, analyzed and dis- closed in the accounts? Subsidiary questions (e) is an ageing statement prepared, reviewed by a responsible official other than the sales ledger clerk and any old balances investigated to determine reasons for slow payment? (f) Are sales ledger balances made up of identifi- able sales invoices and other movements? (g) Are adjustments to the sales ledger accounts, such as bad debt write-offs and discounts authorized by a responsible official other than the sales ledger clerk? (a) Are sales invoices properly coded to enable analysis as required by management, for instance, by geographical area, type of product, etc? (b) Do responsible officials compare sales of the current period with sales in earlier periods of the year and with the same period in the prior year? (c) Are steps taken to ensure sales are prop- erly allocated to the year in which the sales occurred (that is, does a responsible official check that cut-off is accurate between sales/ receivables and inventories)? (d) Do responsible officials check that sales appear reasonable in the light of gross profit and other relevant ratios? (e) Does a responsible official review receivables for collectability and are appropriate adjust- ments and provisions authorized by that official?