Jintian Clothing Ltd. manufactures sportswear and sells it to large department stores in western Canada. The company
Question:
Jintian Clothing Ltd. manufactures sportswear and sells it to large department stores in western Canada. The company records sales in a sales journal. When a customer orders merchandise, a sales clerk prepares a sales invoice. The credit manager must approve all sales to new customers, and a record is kept of all approved customers with their credit limit, as established by the credit manager. The company manufactures several styles of sportswear, and each item is listed in a catalogue with the price updated quarterly. Sales are not recorded until the goods are shipped. When the goods are shipped, the shipping clerk prepares a bill of lading in triplicate, with one part retained in shipping, one part accompanying the shipment, and one part forwarded to accounting. The accounting department matches the bill of lading to the sales invoice, records the sale, and adjusts the inventory records. All documents are pre-numbered.
Required
Identify five controls at Jintian Clothing. For each control identified, what is a test the auditor could perform to test the effectiveness of that control?
Step by Step Answer:
Auditing A Practical Approach
ISBN: 978-1118849415
2nd Canadian edition
Authors: Fiona Campbell, Robyn Moroney, Jane Hamilton, Valerie Warren