Rhinelander Co. is a regional retailer with 45 stores located in the Southeast. The company accepts major credit cards and its own credit card in addition to cash. Approximately 25% of the company's sales are made on the firm's own credit cards. The company has decided to process sales and cash receipts itself. Monthly statements are sent out on a cyclical basis. The customers are requested to return the upper portion of the statement with their remittance as a turnaround document. The client has attempted to automate the cash collection process. The turnaround documents are machine-readable.

Required

a. Identify the important application controls that this system would include if the auditor had assessed control risk as low.

b. For each control identified, indicate (1) the sources of evidence the auditor would examine to determine whether the control existed, and (2) how the auditor would test to determine that the control is functioning as indicated.