You are on an engagement to provide an integrated audit on the financial statements of Carson’s Orthopedic Shoes. This company is a small-size online retailer that sells custom shoes to the public. All orders are processed, packaged, and shipped by company employees at a small warehouse.
At the beginning of the audit engagement, the company provided your senior with the process diagram related to the shipping process. After reviewing the diagram, you have identified two “holes” in the diagram. First, the diagram doesn’t identify how the shipping department receives the signal to ship the product. Second, the diagram indicates that no invoice is included with the shipped shoes.
You are assigned by your senior to conduct an inquiry of the shipping process. Prepare a list of questions which will provide you with an understanding of the controls that are in place. Additionally, what documentation would you ask management for?