Required:

The controls listed below relate to a system for processing sales transactions. Each numbered item indicates an error or irregularity that could occur and specifies a control procedure that could prevent or detect it. Identify the control objective satisfied by the auditee's control procedure. Write the test of controls audit program by specifying an effective control test to produce evidence about the auditee's performance of the control procedure. Hint:A control test is a two-part statement consisting of (1) identification of a data population from which a sample can be drawn and (2) expression of an action to take.

3. The company wants to control unit pricing and mathematical errors that could result in overcharging or undercharging customers, thus producing errors of overstatement or understatement of sales revenue and accounts receivable. The accounting procedures are as follows. Billing clerks use a catalogue list price to price the shipment on invoice copies 1, 2, and 3. They compute the dollar amount of the invoice. Copy 1 is sent to the customer. Copy 2 is used to record the sale and is later filed in the accounts receivable department by date. Copy 3 is filed in the billing department by date.