Mercy Company is a manufacturer of sports equipment and is a new audit client for your firm. You are an audit supervisor of SLP Company and are currently preparing for the forthcoming interim and final audit for the year ending 31 October 2020. You are required to document and assess the sales system, recommend control improvements to deal with a specific fraud issue as well as undertake substantive testing of revenue. Mercy Company sells a range of large and small sports equipment retailers in several countries. Sales are made through a network of sales staff employed by Mercy Company, but new customer leads are generated through a third party company. Sales staff are responsible for assessing new customers’ creditworthiness and proposing a credit limit which is then authorized by the sales director. The sales staff have monthly sales targets and are able to use their discretion in granting sales discounts up to a maximum of 10%. They then record any discount granted in the customer master data file.

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Since the customers of Mercy Company are sports goods retailers it would be a more efficient and qu... View the full answer