Required
For each of the following controls:
(a) Identify whether it is preventive or detective, and
(b) Indicate whether it relates to the control objective of authorization.
1. The computerized accounting program will not allow a sale to be processed if a customer has exceeded its credit limit.
2. The computer checks the account coding on each purchase order against a table of valid account numbers, and then performs various logic tests.
3. Bank reconciliation and follow-up is conducted of unexpected outstanding items (such as unexpected or large deposits not yet cleared by the bank and cheques presented by the bank but not recorded in the general ledger).
4. Sales invoices are automatically priced using a master pricing file.
5. The computer performs a daily comparison of quantities shipped to quantities billed. If differences are revealed, a report is generated for review and follow-up by the billing supervisor.
6. Amounts cannot be paid to employees without first matching a valid social insurance number to the employee master file.
7. Quarterly reviews are conducted of credit balances in accounts receivable to determine their causes.
8. The sales manager reviews daily shipments, total sales, and sales per unit shipped.