The auditor has documented the following internal control procedures used by the client. For each procedure, explain the test you would perform to determine whether the control was working and the assertion that you would be testing.
a. The warehouse clerk is required to have an approved sales order before goods are released from the warehouse to be sent to the shipping department.
b. Shipping clerks compare goods received from the warehouse with approved sales orders and initial the sales order indicating their agreement.
c. The accounting department compares the sales invoice price with the master price file and initials the sales invoice indicating agreement.
d. Control amounts posted to the accounts receivable ledger are compared with control totals of invoices. A daily reconciliation report is prepared by the accounting clerk and initialed at the end of each day.
e. Sales invoices are compared with shipping documents and approved customer orders before invoices are mailed. The accounts receivable clerk initials the shipping document indicating the agreement.
f. Goods returned for credit are approved by the supervisor of the sales department. The credit memo is initialed by the supervisor indicating approval.
g. The total cash payments posted to the accounts receivable ledger from remittance advices is compared to the bank deposit slip by the treasury department.
The clerk in the treasury department indicates that the two agree by initialing the reconciliation report.

  • CreatedJanuary 22, 2015
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