The following are internal controls that the auditor has identified for various cycles.
1. Sales invoices are matched with shipping documents and customer orders before recording in the sales journal.
2. Receiving reports are prenumbered and accounted for on a daily basis.
3. Sales invoices are independently verified before being sent to customers.
4. Payments by check are received in the mail by the receptionist, who lists the checks and restrictively endorses them.
5. Overtime hours for payroll are approved by the employee’s supervisor.
6. Checks are signed by the company president, who compares the checks with the underlying supporting documents.
7. Unmatched shipping documents are accounted for on a daily basis.
8. All payroll payments must have a valid employee identification number assigned by the human resources department at the time of hiring.
9. The accounts receivable master is reconciled to the general ledger on a monthly basis.
a. For each internal control, identify the type(s) of specific control activity (or activities) to which it applies (such as proper authorization and adequate documents and records).
b. For each internal control, identify the transaction-related audit objective(s) to which it applies.