To test an organization's internal control procedures, auditors design a test of controls audit program. This audit program is a list of control tests to be performed, and each is directly related to an important auditee control procedure. Auditors perform the tests to obtain evidence about the operating effectiveness of the auditee's control procedures.

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.

1. The company wants to avoid selling goods on credit to bad credit risks. Poor credit control could create problems with estimating the allowance for bad debts and a potential error by overstating the realizable value of accounts receivable. Therefore, the control procedure is as follows. Each customer order is to be reviewed and approved for 30-day credit by the credit department supervisor. The supervisor then notes the decision on the customer order, which is eventually attached to copy 2 of the sales invoice and filed by date in the accounts receivable department. The company used sales invoices numbered 20,001 through 30,000 during the period under review.