The auditor learns that the auditee has a control procedure in place that addresses the validity of sales and existence of accounts receivable. When a truck driver picks up goods from the warehouse, the warehouse employee has the driver sign a “shipper’s receipt” showing the quantities and item numbers shipped, and the customer information. The shipper’s receipts are filed in date order in the warehouse office.
A copy of the signed shipper’s receipt is sent to the accounting office where it is used to record the reduction in inventory and issue a sales invoice. The invoice number is noted on the shipper’s receipt and it is filed by invoice number in the accounting area. Since the
auditee has a large number of customers, the auditor decides this is a key control that will be tested.

Required:
a. Why would the auditor decide this is a key control?
b. What will the auditor achieve by testing this control?
c. Design a control test the auditor could perform for this control procedure. Describe the two parts of the test in detail.
d. Assume the auditor performs a control test and finds the control procedure operated properly 95% of the time. How does this evidence affect the auditor’s control risk assessment? What if the control operated 60% of the time? 99% of the time?