Identify at least three risks that auditors need to consider for companies that process Web-based sales transactions,
Question:
Identify at least three risks that auditors need to consider for companies that process Web-based sales transactions, including credit card payments.
- For each risk identified, develop a mitigation risk strategy. Provide specific examples.
o Three risks that auditors need to consider for companies that process web-based sales transactions are timing of sales recognition, recording accurate returns, and credit card disputes or rejected transactions. Auditors need to evaluate when a client with web-based sales transactions is recording their sales. Do they record the sale when the customer completes their order or when the order is shipped? The auditor needs to make sure the client has controls in place where the online transaction automatically receives an order number and shipping documentations are produced. The auditor will then have to ensure that the sale is not recorded until the goods are shipped to the customer. The auditor will also have to test returns to ensure they are recorded accurately. The client should have a process where returns are recorded in the system and not resold as new. There should be a strict process where returns are accepted by the receiving department and then put in used inventory. Finally, auditors should evaluate the client’s valuation of non-receivables from credit card disputes or rejected transactions. Customers can dispute transactions with their credit card companies after the fact that will result in lost revenue for the client. The client needs adequately estimate this account to ensure that their financial statements are accurate.
Expert Answer:
Risks for Web Based Companies For companies that deal with webbased transactions the biggest challen... View the full answer
