The client has the following control in place: Before sending out invoices to customers, the accounts receivable
Question:
The client has the following control in place: Before sending out invoices to customers, the accounts receivable clerk will match details on customer's sales orders with the packing slip and shipping documents.
The auditor performs a test on this control and randomly selects from the sales for the year journal fifty invoices. The auditor traces the sales amounts from the sales journal to invoices, sales orders, packing slips, and shipping documents. There are two exceptions:
Exception 1- The shipping document and packing slip are missing for two sampled items but the sales order matches with the invoice. No further work is considered necessary.
Exception 2. For three other sampled items, the amount invoiced matches with the sales order but the packing slip shows in each of the 3 sampled items either 1 or 2 units ordered were not shipped. This discrepancy would have led to an overstatement of sales of a minor amount. No further work is considered necessary.
Required:
A) Evaluate the two exceptions and what additional procedures (if any) should the auditor perform as follow-ups
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley