Authorization of Credit Tests of Controls Using IDEA For this exercise, your client, Bright IDEAs Inc.,
Question:
Authorization of Credit Tests of Controls — Using IDEA For this exercise, your client, Bright IDEAs Inc., has provided you with data for two related files, a listing of sales invoices, and a listing of customers with credit limits. To test whether credit authorization controls are in place, the auditor must complete a series of related steps:
1. Import the client’s database of sales invoices (pp. 28–45 of the IDEA Workbook).
2. Summarize the Accounts Receivable balance by customer (pp. 67–79 of the IDEA Workbook).
3. Import the client’s customer credit limit data into IDEA (pp. 70–79 of the IDEA Workbook).
4. Join the Accounts Receivable balances by customer with the credit limit data (pp. 80–87 of the IDEA Workbook).
5. Extract customers with exceeded credit limits (pp. 88–89).
Required Data Available on Connect
• ACC_REC201ACCDB
• CUSTOMER.TXT
Required:
Complete the preceding steps and answer the following questions:
a. How many customers were granted credit with no indication that they had any credit limit assigned to them?
b. How many customers exceeded their credit limit?
c. What effects would the findings in parts (a) and (b) have on the auditor’s assessment of the risk of material misstatement? What accounts and assertions are most likely influenced by these findings?
Source: C1202 IDEA Data Analysis Workbook: IDEA Version Ten. 2016. CaseWare IDEA, Inc. Toronto, CA.
Auditing and Assurance Services
ISBN: 978-1260152166
7th edition
Authors: Timothy Louwers, Allen Blay, David Sinason, Jerry Strawser, Jay Thibodeau