ABC Ltd. is a distributor of ski equipment. The company’s records include pre-numbered shipping and purchasing invoices, a sales journal, a purchases journal, and sub ledgers for both payables and receivables.

All customers have a pre-determined credit limit that is noted in their files. If a customer’s order exceeds the authorized credit limit, the credit manager must approve the sale; otherwise, the sales clerk enters and approves the order for processing.

Access to the company’s order-entry system requires a password so that all entries can be tracked. Approved orders are received in the warehouse by one of the shipping supervisors, who assigns each order to 1 of the 10 shipping clerks. The shipping clerk then selects the merchandise and packages it for shipping. The clerk also prepares the shipping order, which is checked by the shipping supervisor before the merchandise is loaded to a delivery truck. The shipping supervisor then enters the shipments at the end of each day so that the sales department can track the orders in case of customer queries. The accounting department receives a report each day of goods shipped and purchased goods received.

Write 4 test of controls for ABC. For each auditor procedure, be clear in the type of procedure e.g. tracing, vouching, observing, scanning, and so on and state the related control objective

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Answer objective Tests of control to obtain avdit means evidence about th... View the full answer